These are very nice areas in which to have a home (and I hear Upstate New York isn't bad either :-). You asked about distressed properties in these areas and there are some, but I have to tell you that it has been my experience that most, if not all of the websites accessible to the general public tend to do almost more harm than good where information gathering is concerned.
I am not saying that Realtor.com, Zillow.com and Trulia.com among others don't have great information available, but I can tell you that without a guide and interpreter to help you find the true gems you will spend a whole lot of time looking at rocks and hoping to find the diamond.
A good buyer's agent (which is really what I believe you need) can make sure that you don't have to see every dadgum thing that may or may not be on the market. For instance, RealtyTrac, a website a lot of folks look to for Foreclosure's shows the information that is a matter of public record, i.e. the current defaulted amount which does not necessarily reflect the value of the home, what it would be listed for, or whether it is even for sale. I frequently see folks here who have stumbled upon one of these "listings" and get themselves all hot and bothered thinking they are going to be able to buy a 5 bedroom 3 bath home on 2 acres with a pool and a guest house in the middle of Beverly Hills for $30,000.
I don't work in the Newport Beach area myself but I do have a very good friend and colleague who specializes in that very area and is truly a local expert. His name is Kevin Hollingsworth and I would strongly urge you to give him a call at your convenience (714) 390-9707. He knows the area, he knows the market, he knows the contracts and he really knows how to treat a client. He is also a licensed contractor so he has an especially keen eye where properties are concerned.
Remember that a good buyer's agent costs you nothing and can save you money, aggravation and most importantly time.
As for whether it is realistic to try to purchase financially distressed properties in these areas, the short answer is "sure, as long as you have someone helping you who really knows the in's and out's of these challenging sales". Remember, that Short Sales are anything but short and homes that have been through the foreclosure process may not actually be your best buying deal depending upon the circumstances.
While I am not a Newport Beach based agent, I am something of an expert where distressed properties are concerned and if you want or need any additional information regarding purchasing these types of properties please do not hesitate to get in touch with me.
Thank you for stopping by and good luck with your property search.
Take care and have a great day!
Tisza Major-Posner, Realtor, IVPG Realty (909) 837-8922 email@example.com