Sue and I went to a foreclosure auction for residential homes at the LA Convention Center on Saturday. There were maybe 500 people there with 60+ foreclosed properties being sold. Most of the properties were cash only.
The homes went for about 1/3 to 2/3’s of what they sold for before and always for less than what the bank was asking. So, a condo that had sold for $136,000, with the bank asking $97,000 now went for $82,000, that kind of thing. The priciest was a condo in Playa del Rey near the ocean. It auctioned for $830,000 with a previous price of $1,385,000. So, someone ate half a million or so on that.
The buyers were mainly those looking to buy income property cheap, although some were obviously buying for themselves or family to live in. Auctions like these are where potential bottoms in prices happen (and indeed, in some areas bidding wars are happening at foreclosure auctions.) But there is a wave of option ARM resets coming and banks are keeping lots of property off the market, so things are still way dicey.
Thinking about the homes for auction, they represent a lot of pain and broken dreams. But the previous prices were just insane. Sure, Santa Monica is a desirable place to live. But someone previously paid $430,000 for a 521 sq. ft. condo. What were they thinking? (It went for $230,000, which is still high for such a tiny place)