As the housing slump drags on, a few stories this past weekend shed some light on two emerging market trends: auctions and the effect on the higher-end of the mortgage market. The Wall Street Journal reports on the growing auction trend for foreclosures, the result of a new glut of inventory sitting on banks’ books:
Nationwide, $16 billion in residential real estate was auctioned last year, says the National Auctioneers Association, a trade group, up 39% since 2003. Auctions have been used for years to sell trophy homes and other properties that can be tough to value, as well as homes owned by people who are relocating and need to move quickly. But much of the recent growth is coming from lenders seeking to unload foreclosed properties and builders and developers looking to move unsold inventory.
Interestingly, the auction companies are luring in lenders with the prospect of greater-than-market prices for the foreclosed properties:
In some cases, “auction fever” can produce a higher-than-expected sales price. About 11% of the bank-owned properties auctioned off by Williams & Williams, Tulsa, Okla., go for more than the bank’s previous asking price, says Dean Williams, the company’s president. A 1,400-acre ranch in Claremore, Okla., recently sold at auction for $4.9 million, more than $1 million above recent estimates of the property’s value.
Outside of auctions, both the Washington Post and the New York Times report on what appears to a conflicting trend in the upper-end mortgage market — one saying the market is booming like never before, while the other says foreclosures are hitting the silver-platter market like never before. Nothing like market clarity, I suppose.
