April 07, 2008

Inland Empire Housing Auctions

One of the areas that was most frenzied during the housing boom is now the location of big auctions where hopeful buyers are looking for a remarkable deal. A couple of weeks ago, over 100 Inland Empire houses were put on the block.

A total of 119 homes and condominiums were up for auction at the DoubleTree Hotel on Sunday, and all but a handful were scooped off the market at prices far below what they would have fetched just a year ago.

The auction drew a crowd that quickly overwhelmed the 600 or so chairs assembled in the hotel's hall. Kennedy Wilson Auction Group, the Beverly Hills-based firm that hosted the auction, looked to unload homes from all over the Inland Empire which had reverted to bank ownership during the past year's market meltdown.

As foreclosures rise, buyers grow skittish and surplus inventory stacks, housing auctions have become in vogue again, a predictable cycle that has played out during prior housing market regressions.

According to DataQuick, prices plunged 20 percent countywide from January 2007 to January 2008, with median home prices in San Bernardino County dipping below $300,000.

At the same time, foreclosures have accelerated, and the San Bernardino-Riverside metro area is one of the national ground-zeroes for the market swoon.

Almost all the homes sold Sunday drew values between 15 percent and 30 percent below their Kennedy-Wilson's listed current prices and even more depreciated from market highs.

To get a feel of what the Inland Empire housing prices are doing, look here.

Just look at the size of the problem in this graphic. It looks like the prices are going to continue to fall for long time.

Posted by Mary at April 7, 2008 01:11 AM | Economy | Technorati links |
Comments

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Posted by: ccoaler at April 7, 2008 10:02 AM

I'm sorry, but all those prices look obscene to me.

Posted by: Scorpio at April 7, 2008 04:13 PM

Historically, housing bubbles take 3-4 years to unwind and here in Oregon, the peak prices occurred between August 2005- July 2006. So we're probably nearing the bottom within a year with most of the price drop already past.

But there's another downside. Over-development plus all the foreclosures means there's a housing surplus. Again, history tells us that the surplus has to sell off before real appreciation in values can begin again. So even when the price drops are complete, it'll be another 3 years (approximately) before the valuation rebound happens.

Thus buying in late 2010 makes sense. But in the meantime, it does not bode well for much economic growth no matter who the next president is. The 2010 midterm elections could be awfully ugly if Dems have a banner year in 2008.

Posted by: Kevin Hayden at April 8, 2008 12:21 AM

Six or so months ago a Portland developer put twenty some half-million dollar houses up to auction here in Bend for basically what they're worth - what it cost to build them - hundred and eighty-five thousand. No one showed up.

I've been through three booms and, now, three busts around here... my bet is this won't bottom out 'till ought twelve.

Posted by: Ten Bears at April 8, 2008 08:38 PM