Fantastic question no matter what city or zip you are interested in. The number of REO properties is very low right now for a few reasons. The main one is the competition with home buyers vs investors is fierce. Another reason is that banks would rather work out a short sale than foreclose and distressed sellers are learning quickly about short sales. Buying a short sale is my recommendation right now because you only offer a fair market price, you know if the seller and listing agent choose your offer to submit that you are still in the game. Make your offer STRONG, be willing to be THE LAST GUY STANDING and put that in the offer and get out there today and start making offers. hope that helps and best of luck to you.
Think of a short sale as today's BANK OWNED with the seller choosing who he wants to let the bank sell to.