Some metro areas across the U.S. are experiencing steep discounts on foreclosed properties – upwards of 27% in some cases – but the overall mark-down is not as deep as it seems, Zillow said in a new report.

The online real estate listing firm said the national-foreclosure discount on distressed properties is about 7.7%, a paltry amount considering how much lower REOs sell for in certain locales.

Truth is, there are fewer foreclosures out there. Last month, RealtyTrac the online marketplace for foreclosures, reported a yearly decrease in 131 out of the nation’s 212 metropolitan areas.

“Two-thirds of the nation’s largest metros posted decreases in foreclosure activity in the third quarter, indicating that most of the nation’s housing markets are past the worst of the foreclosure problem” said Daren Blomquist, vice president at RealtyTrac.

Zillow uses a different methodology, of course, and compares the sales price of a foreclosure to the estimated-non-distressed sale level of the exact same property.

Metros like Pittsburgh and Cleveland experience foreclosure discounts as steep as 27.4% and 25.8%, respectively.

“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow chief economist Stan Humphries. “Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.”

Sacramento is a market where the foreclosure discount is a small 0.7% difference from an average property price.  In the high-priced Los Angeles and New York markets, foreclosure discounts are now running at 4.2% and 15.5%, respectively.

Denver is another market where housing demand is keeping up, and it’s foreclosure discount hovers around 6.4%, which is under the 7% national average.