ATLANTA , Georgia ( CNN ) -- The news on the housing market continues to be bleak as bleak can be . In just one example , the January numbers from the Case-Shiller index -- a popular collection of data about repeat sales of single-family homes -- show that home values in Phoenix are down almost 50 percent from their peak in July 2006 . Clark Howard has bought several foreclosures over the years and has his eye on another . There are similarly dismal numbers in Las Vegas and Miami ( both down more than 40 percent ) and San Francisco and San Diego ( both down 40 percent ) . But you 've got to realize that housing stats are skewed by bubble markets such as these , where people were trying to get rich quick on someone else 's money . Yet still , sometimes you can be left feeling like there 's no good news in all of this . Well , I have some for you . Half of all home purchases in February were by first-time homebuyers , according to The Financial Times of London . Those buyers were taking advantage of incredible interest rates and low housing prices , not to mention new tax incentives for first-time homebuyers . How about you ? If you want to get in the game , you 've got to look REO -- and I 'm not talking about the classic rock band REO Speedwagon ! REO stands for real-estate owned property . It 's where you buy directly from the bank after they foreclose on a property . Banks are notoriously bad property managers . It 's not uncommon for them to let a property go unloved and neglected for several months . Before long , the property starts looking like a haunted house on Halloween . The grass is unkempt , the shutters are falling off and windows may be broken . That 's when you can really swoop in and steal a deal . I 've bought a number of foreclosures over the years . My most recent purchase was last year , but I 'm thinking about buying another foreclosure I saw while filming with my HLN show crew . Watch Clark finding a bank-owned bargain » . I 'm particularly a fan of houses that smell ! The odors can usually be eliminated very easily . But buyers are quickly turned off by a stinky house , and that means I can really underbid on my offer . If you want to start looking for REOs in a specific part of town , try finding a real estate agent who farms that area . You can also try searching the web by visiting sites such as HUD.gov , HomeSales.gov , EmailForeclosures.com and Trulia.com . When searching for foreclosures or distressed property in the single-family home market , be on the lookout for several things : an established neighborhood that 's 10 years or older ; a neighborhood that is mostly owner-occupied ; and a house that is structurally sound with cosmetic damage only . My rule of thumb has always been that you want to buy 20 percent below fair market value for homes and 30 percent below fair market value for condos . Speaking of condos , the condo market in particular has a lot of hazards . When you buy a condo , you 're buying an obligation and a commitment in a condo association . Do not buy in a building that has been recently constructed . You want to look for established condo buildings that have been there six years or longer . With established buildings , you know that most people are paying their condo fees . And finally , remember that foreclosures and REOs are just part of a larger category of `` people problem '' houses . These are the kinds of houses that sit on the market as wounded ducks because the owners endured job loss , divorce , relocation or any other of a host of troubling scenarios . The real key to finding a deal is to know the local market conditions where you 're buying . Go after the properties that are REOs for 45 days or longer . Lenders are usually unrealistic about the pricing of properties on their books for about the first 6 weeks . Remember , out of adversity comes great opportunity .
Half of all home purchases in February were by first-time homebuyers . In REO , real-estate owned , you buy directly from bank after they foreclose on property . Clark is a fan of houses that smell , since he can really underbid his offer . The key to finding a deal is to know local market conditions .