Market Reports  
December 8, 2012

Auction Buyers are Not Nervous about Purchasing Property

There was some energetic bidding at some auctions on Saturday but, at others, would-be buyers were happy to wait and negotiate after properties were passed in.

Buyer's advocate Melissa Opie says buyers are not nervous about purchasing good property, with multiple bidders at some auctions.

A two-storey terrace on a double block at 102 Macpherson Street in Carlton North was quoted by Nelson Alexander at $1 million to $1.1 million. It saw strong competition from four bidders before selling for $1,272,000.

There was also a strong result in Brunswick East, where an original-condition, three-bedroom house at 213 Edward Street was sold under the hammer for $944,000 by Chambers Real Estate, well above the reserve of $850,000.

The auction of a single-fronted period home at 46 Albert Street, Footscray, attracted a crowd of 120. Quoted by Hocking Stuart at $440,000-$480,000, the house saw interest from three parties before it sold for $542,000.

Catherine Cashmore, of National Property Buyers, however, says the post-$1 million market remains patchy. She says an example was a four-bedroom, 1920s residence at 163 Manning Road, Malvern East, which ticked the right boxes but was passed in by Marshall White after a single genuine bid at $1.36 million. Negotiations are ongoing.

There were some successful post-auction negotiations in the unit market. Juanita Kelly, of Woodards, conducted two unit auctions; both were passed in but then negotiated to a sale later. A unit at 2/3 Alfriston Street in Elwood passed in at $400,000 and later sold at $431,000, while 5/60 Gourlay Street in St Kilda East passed in at $395,000 and sold after negotiations for $400,500.

Frank Valentic, of Advantage Property Consulting, says first home buyers are active. He points to the sale of a two-bedroom unit at 5/57 Darling Street in South Yarra. Quoted by Hocking Stuart at $480,000 to $530,000, it sold for $537,000.



November 2, 2012

$176 Million Dollar Fannie Mae auction Winner plans to create Rentals!

Colony Capital LLC, the investment firm founded by Tom Barrack, won an auction of 970 Fannie Mae foreclosed homes in Arizona, California and Nevada in the largest bulk sale of single-family houses announced to date.

Colony won the auction with a bid of about $176 million, according to a summary of the transactions posted on the website of the Federal Housing Finance Agency. The properties were valued at $156.8 million in a third-party valuation before they were put up for sale in February.

Private-equity funds including Colony, Blackstone Group LP and Waypoint Real Estate Group LLC have disclosed plans to raise more than $8 billion to buy as many as 80,000 single-family homes and put them up for rent. Colony, based in Santa Monica, California, plans to spend about $1.5 billion on such purchases, seeking to take advantage of a housing-market recovery and growing demand for rental homes.

Colony paid $34.1 million to become managing partner of the joint venture with Washington-based Fannie Mae, according to a transaction summary posted by the FHFA. Colony will get the first 20 percent of the rents as a management fee. After that, Fannie Mae will receive 90 percent of revenue until it gets to $136.5 million. Then, Fannie Mae’s share will drop to 50 percent.

The Colony portfolio is among about 2,500 foreclosed homes Fannie Mae put up for auction earlier this year. Pacifica Cos., based in San Diego, purchased 699 houses in Florida, and New York-based Cogsville Group LLC bought 94 properties in Chicago, the FHFA said today. A portfolio of homes in Atlanta didn’t find a buyer.

The U.S. home vacancy rate has been falling as an estimated 1.1 million new households were formed in the third quarter, according to an Oct. 29 Census Bureau report.

To contact the reporter on this story: John Gittelsohn in Los Angeles at

To contact the editor responsible for this story: Kara Wetzel at



July 17, 2012

Traditional form of real estate might be more of a hindrance than a help in today's market

(MoneyWatch) When the housing bubble burst in 2008, home values plummeted. The time it takes to buy and sell property has increased dramatically since then, and plenty of homes end up in foreclosure before the owners' have a chance to find a buyer.

According to some experts, the traditional form of real estate might be more of a hindrance than a help in today's market. There are tons of homes available, and buyers with decent price ranges are overwhelmed by their choices. Sellers get multiple showings, host numerous open-houses, and may even try more than one real estate agent, all to no avail. 

Many real estate gurus believe an auction may be just the ticket for struggling sellers.

Auctions "put the seller completely in control of the sale, which I think people like. "You get to pick the date your property will be sold, versus agents bringing you a mythical buyer in the traditional real estate market. You get to decide when your property closes, and the auction process forces buyers to compete for your home. The traditional method leaves you waiting and hoping for an offer."

This waiting-and-hoping for something that might not happen for months -- or years -- leaves many sellers looking for another option. According to experts, an auction is the ‘other method’ because it does three key things traditional marketing does not:


Auction creates competition. If you've hired a reputable auction firm, they know how to target buyers interested in your particular property. That means most of the people who show up to the auction are doing so because they want your particular house -- and they'll compete against each other to get it.

It put sellers in control. Unlike the business-as-usual way of selling homes, the auction process gives the seller the option to decide everything, including the date on which the house is sold.

The auction gives sellers a definite sale date. The date of the auction is the date of the sale, and the seller gets to decide when that is. Once it's over, the home is sold and the seller can move on.

The only thing not up to the seller is price, although that's not a function of the auction process. 

Experts say an auction is where "real estate meets reality." A seller may believe their home is worth one thing, but if the people bidding all stop at around the same number, that's probably the true value of the home. A home is only worth what someone is willing to pay for it, and that is the biggest hurdle of any real estate sale -- auction or not.

If you're interested in selling your home at auction, do your homework. Look for an auction company near you or that is referred to you that specializes in real estate, and ask the same questions you would pose to a real estate agent. Find out how they plan to market the property, what their success rate is, and how familiar they are with your area. You'll also want to ask specific questions about the costs of using an auction house, how much you'd net out in a variety of scenarios, and whether you can list a "reserve" price on the property (the minimum price at which you're willing to sell).

Finally, make sure you understand what sort of marketing the auction company will do on your behalf. You'll want to know where your home will be seen online, how the firm plans to drive viewers to the listing, and what sorts of results they've had with other properties in the same condition and price range as yours.

Selling by auction isn't as popular as the traditional way of selling a home, so be prepared to do a little more digging than normal. For sellers who have been sitting and waiting for a sale for months, the extra detective worth just might be worth it.



June 3, 2012

A flurry of flipping

In past six months, Vacaville company has spent $15 million on more than 70 Sonoma County foreclosures, fixing them up to sell at a profit

Greg Owen, the president of Blue Mountain Realty, tours a foreclosed McDonald Avenue home his company bought and remodeled in Santa Rosa.

John Burgess / PD
Published: Sunday, June 3, 2012 at 4:01 a.m.
Last Modified: Sunday, June 3, 2012 at 8:25 a.m.

In an unprecedented effort to buy and flip distressed properties in Sonoma County, a Vacaville company has purchased more than $15 million worth of foreclosed homes across the county in the past six months.

Blue Mountain Realty, which acquired its first home locally in November, has quickly become the single largest buyer of homes in the county. The company has purchased more than 70 area homes in foreclosure since December.

Blue Mountain seeks to buy the vacant properties, fix them up and sell them at a profit. It is targeting Sonoma County partly because the local economy and housing market seem to be improving -- and partly because it's become more difficult to find foreclosure properties elsewhere in Northern California.

"What we're constantly in the hunt for is, where are those opportunities?" said Rick Revetria, the company's vice president of operations.

Privately, some local real estate agents are questioning the wisdom of its aggressive entry into the local real estate market. Others say the flurry of purchases by Blue Mountain is a multimillion-dollar vote of confidence that the housing market has hit bottom.

John Duran, a broker with Frank Howard Allen in Santa Rosa, said the volume of purchases will have potential homebuyers asking, "What do they know that I don't know?"

While real estate speculators have been buying homes in Sonoma County since the market hit bottom in early 2009, none have done so at the scale of Blue Mountain.



May 25, 2012

Why that flat Facebook IPO isn't so bad after all.

"The debacle was not the IPO but all the whining by speculators who didn't make money," says Lise Buyer, who helps companies plan initial offerings. Says Jay Ritter, a finance professor at the University of Florida, "Selling something for what it's worth is the way most people think a market should work."


For all its flaws, the Facebook debut did fulfill the chief purpose of a stock offering— to raise money for a company to pay bills, buy rivals, invest and expand. That aim is often lost amid the inflated expectations accompanying high-profile debuts.


In an initial public offering, a company sells shares to investment banks at what's called an IPO price. Those investment banks, called underwriters, then turn around and sell the shares to big investors who've signaled they are willing to buy at the same price. The higher this initial price, the better because it means the company can raise more money. The much-anticipated pops on the first day of trading are mostly relevant to the big investors, not the company, since it has already pocketed the cash.


In fact, a big opening-day pop can suggest the company got rooked and could have set the IPO price higher and raked in more money.


Last year, several Internet IPOs soared 50 percent or more on their first days, recalling the Main Street excitement of dot-com offerings more than a decade ago. Shares of the online professional network LinkedIn, for instance, doubled in value on the first day.


"Some of the pops were excessive," says Ann Sherman, a DePaul University finance professor who feared another "IPO bubble" was brewing. Though disappointing to many, the flat Facebook debut came as a relief to her.


Whether Facebook blew it by committing the opposite sin — overpricing — is another issue. The stock closed Friday at $31.91, down 16 percent from its IPO price last week.


There are good reasons for pricing an IPO stock so it's almost assured a small first-day rise of, say, 10 percent or 15 percent. Companies going public tend to be young, small and risky. A "guaranteed" profit helps entice big mutual funds, hedge funds and other big traders to take a chance. Walloping those big first investors with losses on the first day can make them less likely to buy when a company needs to raise cash by selling stock again in a secondary offering.


But for the pop, these funds might not bother to even study newly public companies, much less show up at their roadshows where they talk-up their prospects to potential investors.


Ritter, the University of Florida professor, says "conflicts of interest" by investment bankers play a role, too. The bankers talk to potential IPO buyers to gauge demand for the stock, and then help the company set that all-important IPO price. Lowballing the price allows the investment banks to reward big funds. Those funds often are big customers of the banks, using them to help trade stock, design custom-made derivatives bets and provide other services.


The quid pro quo from the investment banks to the funds is this: We offer you a hot IPO stock on the cheap, you sell it after the pop for instant profits — and you do more business with us.


How this benefits the companies selling the stock in the first place is unclear.


Ritter, who probed the issue a decade ago in a paper titled "Why Don't Issuers Get Upset?," attributes it partly to the psychological thrill that CEOs with big shareholdings feel if their stock surges on the first day. "If you thought you were worth $18 million, and you turn out to be worth $21 million, you're happy," he says.


There also are positive headlines after a big jump on debut day, which can burnish a company's image with customers and, perhaps, help it sell more goods and services to them. However, some have concluded that the benefit was minimal given the extra cash that the company passed up.


Or as Buyer, a consultant at IPO Class V Group, put it, "You can purchase advertising for a lot less."


For our continuing fascination with outsize gains on the first day, you can blame the dot-com bubble. In 1999, the height of dot-com frenzy, stocks rose an average 72 percent on their first days of trading, according to IPO research firm Renaissance Capital.


"A lot of people fondly remember those days, even if they don't remember what happened next," Buyer says.


Dot-com stocks collapsed causing billions of dollars in losses. Banks were sued for allegedly staging IPOs to line insiders' pockets and lead to more business for themselves. In 2003, 10 large banks agreed to pay $1.4 billion and change their practices in order to settle regulatory charges that they rigged IPOs.


In the ensuing years, IPO pops became passe. Between 2007 and 2010, IPO stocks rose by an average 6.6 percent on their debut days. But then came a raft of Internet IPOs last year.


In April 2011, Zipcar Inc., an online car rental firm, rose by more than half on its first day. In July, Zillow Inc., a real estate website, rose 79 percent. And, in December, Angie's List Inc. climbed 25 percent, though the consumer review site had yet to turn a profit.


The madness just might have lasted, but for Facebook.


The downside of the Facebook faceplant is that it could discourage other companies from pursuing IPOs. Companies planning initial public offerings now number just 63, according Ipreo, a research firm. A year ago, there were 108 with debuts in the works.


A successful Facebook debut "would have brought back confidence in the market," says Reena Aggarwal, a finance professor at Georgetown University. Now "companies might say, 'Forget it, I'm not going public."



April 4, 2012

More residential deals not getting done

Nearly one-third of real estate agents nationwide faced contract cancellations last month

March 30, 2012 02:30PM

By Kenneth R. Harney

What’s behind the unusually high rate of contract cancellations and settlement delays in the real estate market? With signs of recovery emerging in many parts of the country, shouldn’t deals be zipping along with minimal complications?
Apparently not.

Nearly one-third of real estate agents in a new national survey reported experiencing contract cancellations — purchases crumbling before going to closing — in February.

That’s up dramatically from a similar poll 12 months earlier, when just 9 percent of agents reported cancellations. Another 18 percent reported delays in scheduled closings in the latest study, which involved approximately 3,000 agents surveyed by the National Association of Realtors.

The high reported cancellation rate (31 percent) doesn’t mean that nearly one of every three of all signed contracts is falling apart, according to the association, but rather that more than triple the number of agents and their clients are running into deal-endangering problems compared with 2011.

If you are a potential buyer or seller in an otherwise improving marketplace, you need to be aware of the issues that are hampering sales, and be prepared in advance to deal with some of the most prominent.

Tops on the list:

Appraisals below contract. You may assume that the true market value of a house is what a seller and buyer agree to in a binding contract, but it’s not. The appraiser hired by the bank may come up with a different opinion of value — significantly below what was agreed between the parties — and this is occurring with far greater frequency today than in previous years.

Part of the problem is the excessive use of price-depressed foreclosure sales chosen as “comparables” to value non-distressed houses under pending contracts. But some appraisers are inexperienced, unfamiliar with local pricing trends, and go far beyond their normal duties.

For example, Risa Bell, an agent for national brokerage Redfin in Boston, recently represented purchasers of a bank-owned property being sold “as is.” An appraiser for the lender not only detailed a long list of needed repairs to the house, but said the deal could only proceed if the prospective buyers spent thousands of dollars fixing up the house before — not after — closing. 

Along the way, frozen pipes in the unheated house broke and a contractor hired to do repairs filed a mechanic’s lien requiring payment before the title could be transferred. All of this combined to kill the financing and torpedo the closing, but the buyers ultimately were approved by a second lender using a different appraiser, who made no such demands for repairs in advance.

Ultra-conservative underwriting and documentation requirements. It’s no longer just towering credit score minimums, hefty down payments and mind-bending paperwork submissions that get mortgage applicants turned down. “It’s a lot of other stuff, too,” said Melissa Zavala, broker and owner of Broadpoint Properties in Escondido, Calif. 

Increasingly she’s been running into regulatory hoops and restrictive underwriting rules at FHA, Fannie Mae and Freddie Mac that knock signed contracts off the tracks or at least delay them for months.

For instance, FHA’s toughened rules on condominium associations — limits on the percentage of existing residents in the entire project who are delinquent on their condo dues, plus controversial requirements for “recertifications” of condominium developments that many condo boards find costly and burdensome in terms of legal liability — are rendering individual units in those communities difficult to get financed, no matter how well qualified the purchasers. 

Little-publicized recent changes in FHA rules on loan applicants who have outstanding collection accounts buried away in their credit files “can force you to take three to four months to clean up” through mandatory repayment plans, Zavala said in an interview. 

By that point the contract may well have gone bust.

Poor service by lender staff. Agents in the survey identified “lack of customer service” and “generally bad attitudes” as contributing factors to delays and some contract failures. But Zavala said real estate agents themselves need to be on the ball when loan processing deadlines begin to slip or communication breaks down with lenders. “Agents can be part of the problems” — and the solutions — when it comes to moving the financing along, she said.

Bottom line: If you seriously want to go to closing on a house you’re buying or selling, make sure you know all the key rules and requirements up front, then stay on top of the lending, escrow, title and real estate professionals assigned to your transaction.

And don’t give up if your deal runs into complications. There are more of them out there than usual.



April 30, 2012

WASHINGTON—The Treasury Department on Thursday said it lost about $50 million in the public offering of its preferred stock in six smaller banks this week, though the department garnered a modest profit when counting dividends and interest paid on the investments over the past three years.

In the first auction of preferred stock purchased through the Troubled Asset Relief Program, the bailout vehicle launched during the financial crisis, the Treasury recouped about $362 million of the $410.8 million it invested in the six smaller banks, the Treasury said, a loss of about $50 million.



May 29, 2012

NEW YORK (CNNMoney) -- The housing market started the new year with a thud. Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.

The average home sold in that month lost 0.8% of its value, compared with a month earlier, and prices were down 3.8% from 12 months earlier, according to the S&P/Case-Shiller home price index of 20 major markets.

Home prices have fallen a whopping 34.4% from the peak set in July 2006.
"Despite some positive economic signs, home prices continued to drop," said David Blitzer, spokesman for S&P. "Eight cities -- Atlanta,Chicago, Cleveland, Las Vegas,New York, Portland, Seattle andTampa -- made new lows."

Only three of the 20 index cities registered gains in January, led by Phoenix, which climbed 0.9% month-over-month, Washington, up 0.7%, and Miami, which edged 0.6% higher.

Home buying much cheaper than renting

Housing market indicators have sent confusing signals so far this year, with existing home sales and new home sales down month-over-month in February, but up year-over-year.

Potential homebuyers lack confidence in the market, according to Michael Feder, CEO of Radar Logic, an analytics company that produces daily spot prices for real estate. A big problem looming is a massive number of potential foreclosures.
"People see that there are millions of homes underwater, and at elevated risk of foreclosure, and conclude that housing values are unlikely to appreciate in any meaningful way for many years," he said.

On the other hand, home builders have turned more bullish and are gearing up for more new construction. Mortgage rates are also still very favorable and the economy is getting better with hiring on the rise.

Ken H. Johnson, a real estate professor at Florida International University, thinks all these factors are helping the housing market turn around, but the recovery will take time.

Readers on mortgage settlement: 'This stinks'

"The housing market is like a large cruise ship that turns slowly, often temporarily losing ground due to currents and change in momentum," he said. "While the ship is turning, drags on the housing market are also present and must be addressed before a full recovery is accomplished."

Feder said there is some evidence that the housing market recovery is approaching. One clue is that regular sales, as opposed to bank sales of foreclosed homes, increased dramatically over the past few months.

That indicates that sellers have capitulated to the lower sales prices of foreclosures and have adjusted their expectations of the prices their homes can command in the market.

He called that a good thing, because it means the market bottom is near. Once it does turn, there could be a rapid increase in buying, said Feder, as there is a much pent-up demand for homes.

Despite the market current turmoil, home ownership is still the goal of most Americans, according to a survey released Tuesday by Fannie Mae.
It found that while financial constraints and employment concerns are keeping homebuyers on the sidelines right now, two-thirds of renters say they intend to buy someday.

Bernanke: Fed didn't cause housing bubble
"Some Americans may not be financially positioned to own a home in the near future," said Doug Duncan, chief economist for Fannie Mae.
"But they may begin to revisit that aspiration as employment and household balance sheets improve over the coming years," he said.  



February 10, 2012

MORTGAGE DEAL : What the Critics Say.



NEW YORK (CNNMoney) -- The $26 billion mortgage settlement had a lot of support -- as evidenced by the 49 out of 50 state attorneys general that signed on to it.

The deal, which was announced Thursday, also won praise from groups as diverse as the Mortgage Bankers Association, the industry trade group for lenders, and the Center for Responsible Lending, a public interest group advocating for borrowers.

But it also has its share of critics on both the left and the right. Conservatives called it overreaching on the part of the Obama administration, and say it rewards homeowners who haven't been paying their home loans.

What the foreclosure settlement means for you

Some liberal groups say it falls far short of providing the needed level of help to troubled homeowners hurt by the housing bubble, problems they blame on Wall Street banks and investors. They want more relief for homeowners who owe more than their home is now worth, also known as being underwater on a mortgage.    

The settlement was reached with the five largest mortgage servicers -- Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM,Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC,Fortune 500) and Ally Financial.           

The conservative case against the deal was voiced most clearly by Oklahoma Attorney General Scott Pruitt, the only state attorney general who didn't sign onto the deal. He blamed President Obama for using the settlement to try to "fundamentally restructure the mortgage industry."


Pruitt argues that it's unfair that those who are both underwater and delinquent on their loans can apply to reduce the amount they owe. Meanwhile, underwater homeowners who are current in their payments can only refinance their existing loan at a lower interest rate.

He said that could encourage more homeowners to default on their loans so they could benefit from the settlement.


Other critics of the Obama administration said the fact that the settlement will be able to help only a small percentage of troubled homeowners raises other questions about fairness.

"Certain favored borrowers will be receiving a bailout while everyone else's home values will stay underwater," said Bill Wilson, president of Americans for Limited Government. "The impact will be minimal, so the question becomes, who's getting a bailout and what makes them so special?"


There are an estimated 11 million underwater homeowners, according to CoreLogic, and nearly 3.5 million homeowners who are either 90 days or more late in making payments or are in foreclosure, according to the Mortgage Bankers. 

According to the settlement, up to 1 million homeowners could see their principle reduced, while another 750,000 could refinance.  Many on the left are also dismayed by the fact that relatively few troubled homeowners will get help. One liberal public interest group, The New Bottom Line, said it wanted a $300 billion settlement that significantly reduced what homeowners owed. It called Thursday's deal a "paltry down payment."

Have bank stocks turned the corner?

It also criticized the payments of up to $2,000 that will be made to many who lost their homes in the foreclosure process in the last three years. "For homeowners who were defrauded and lost their homes, $2,000 is too little, too late," said the group's statement.


Still, the settlement is a step in the right direction, said Tim Lilienthal, the lead organizer for PICO National Network, one of the groups that makes up The New Bottom Line. "The true measure of this deal is what happens next," he said. "We need to keep the pressure on." The federal and state officials that announced the deal Thursday vowed this will not be the end of the process.


Iowa Attorney General Tom Miller, who helped lead negotiations with the banks, said he believes once this program is up and running, it will prompt banks to start making principal reductions on their own beyond the terms of the settlement. He says banks will discover that they can recoup more money this way than they have through the foreclosure process.


"All the things they're worried about -- the sky is falling arguments about principal reduction -- guess what, it won't happen. At that point, principal reduction will become a regular, common tool," he said. "Principal reduction is an effective way for everybody to win."  



January 31, 2012

Foreclosures discounts over 50%

Foreclosure Chart

Properties in some stage of foreclosure accounted for one-fifth of all residential home sales in the U.S. during last year’s third quarter, according to a report released today by RealtyTrac. That’s down from 22 percent of all sales during the second quarter, and 30 percent of all sales during the prior-year quarter. RealtyTrac attributes the declining number to the robo-signing scandal, but notes it’s still at a historically high level compared to the pre-recession norm of less than 5 percent.

“That trend is not too surprising given the continued ambiguity surrounding proper foreclosure procedures — and the ripple effect that has on sales of foreclosed properties that might have been improperly foreclosed,” said RealtyTrac CEO Brandon Moore.

The average priced of those properties increased 1 percent from the second quarter of 2011 to $165,322, which is 3 percent less than the average price during the same three months of 2010. It’s a 34 percent discount from the average sales price of homes not in distress.

In New York state just 4.6 percent of all sales were foreclosures, the third lowest rate in the nation. Those homes sold for an average price of $298,890, the second highest in the country, or a 33.1 percent discount on non-distressed sales.

In Nevada, 75 percent of all homes sold during the third quarter were in foreclosure, by far the tops in the nation, followed by California and Arizona, where foreclosures comprised 44 percent and 43 percent of sales, respectively. — Adam Fusfeld



January 30, 2012

Not Certain about the Real Estate Market? WSJ reports Caterpillar fungus as an alternative!

Caterpillar fungus used to boost sexual virility is just one of the latest alternative assets for Chinese investors. The WSJ's Deborah Kan talks to Dinny McMahon.

BEIJING—For generations, Chinese men looking for a dose of vigor have sworn by a traditional remedy: fungus harvested from dead caterpillars, known in some quarters these days as Himalayan Viagra.

Now Chinese investors are using the rare fungus to try to boost something else—their investment returns. The fungus has doubled in price over the past two years and the top grade now fetches more than $11,500 a pound, according to Fuzhou-based brokerage firm Industrial Securities. 

Beijing Googut Auction House

Baijiu liquor of uncertain vintage sold for $8,300 at a December auction.

With Chinese stocks falling, real-estate markets flat and bank deposits offering measly returns, Chinese investors have been looking for help in strange places. Besides traditional medicinal products, they are plowing money into art-based stock markets, homegrown liquors, mahogany furniture and jade, among other decidedly non-Western asset classes.

"On a micro level, speculation has appeared," says Long Xingchao, president of the information center of the China Association of Traditional Chinese Medicine. The association says prices of traditional medicines, including red ginseng and false starwort, have surged since 2010, partly because of speculators. Mr. Long insists, however, that a price bubble isn't forming. "There's nothing to pop," he says.

China Real Time

Newfangled exchanges are sprouting across China to take advantage of the excitement. Nanjing Pharmaceutical Co. set up an exchange last year for trading traditional medicines such as deer antler. In November it extended hours so investors could trade when they get home from work. "Expanding the hours gives investors more time to make a profit," the exchange said on its website.

Exchanges have popped up that allow investors to buy and sell shares of individual works of art. In the city of Tianjin last summer, an unnamed seller floated about 30 million shares of a painting called "Eternal Lotus Wind," at an initial price of 1.61 yuan apiece—about 25 cents. Within two days, investors had bid the shares up 52%, valuing the painting at about $11.5 million. Then the shares began sliding; they now trade at 36% below the initial offering price.

Cui Ruzhuo, who painted "Eternal Lotus Wind" but didn't profit from the offering, says the art market still has legs. "We still haven't arrived at the high point," he says.

Investors are taking to drink, as well. Maotai—the most popular variant of a homegrown liquor called baijiu, and once a favorite of Chairman Mao—now sells for more than $300 a bottle, double the price a year ago.

"In the past, baijiu was only for consumption," says Liu Xiaowei, chairman of auction house Beijing Googut Auction Co., which held a baijiu action last month. "But now it's also a collectors' item and for investment."

At the December auction, a businessman from Jiangsu province dropped $8,300 on two dozen bottles of liquor of uncertain vintage—their water-stained cardboard packaging suggested they were old—almost four times the starting price on the auction docket. "If I held these for a while, I could definitely make some money," said the buyer, who didn't provide his full name.

China's banks are getting in on the action. Industrial & Commercial Bank of China Ltd., China's biggest state-owned lender by assets, set up a fund for customers to invest in high-end pu'er tea, marketing it as a low-risk investment. China Merchants Bank Co. is planning to allow some customers to trade diamonds through its website.

Auction house Googut helped three banks set up bank-run investment funds for customers to invest in baijiu and other liquors. Mr. Liu, Googut's chairman, said the funds are eyeing an annual return of about 20%.

The problem for Chinese investors is that returns have evaporated from more traditional markets. Real estate was once China's favorite investment, but government efforts to contain price increases and keep housing affordable have led to price stagnation and even declines in some cities. China's major stock exchange in Shanghai is down almost 20% since the beginning of 2011. Bank deposit rates are lower than the pace of inflation, meaning savers effectively pay banks for the privilege of handling their money.

"There really are very few investment channels," says Ren Jun, a 30-year-old media entrepreneur with investments in contemporary art, antiques, gold and silver. "That's why I'm kind of forcing myself to be brave in trying new options."

China's central government is less than intoxicated by the investment party. It said in November it would tighten oversight of Chinese asset exchanges, warning of "serious speculation and price manipulation" among some and adding that some "managers have run off with clients' funds."

Some of the biggest boom-and-busts have taken place at art exchanges.

"Roaring Yellow River," a traditional landscape painting by the late artist Bai Gengyan, was the first work listed last year by the Tianjin Cultural Artwork Exchange. Within two months of the offering, shares were trading at nearly $3 each, up from about 15 cents, valuing the painting at about $18 million. The previous auction high for the artist's work was a bit more than $600,000.

About two months after the offering, the Tianjin city government suspended trading in "Roaring Yellow River" and another painting, and the exchange imposed limits on daily and monthly price changes. Shares of "Roaring Yellow River" now trade at about 20 cents, down more than 90% from their peak.

Shanghai financial-software designer Jimmy Wang sunk about $790,000 into shares of a pink diamond and a jade pendant traded on the same exchange, putting up his house as collateral to finance the investment. He says he has lost as much as 2.7 million yuan. "So basically I've lost my house to the bank and I am struggling to pay the interest," he says.

Such hard-luck stories haven't slowed the hunt for the next great investment.

Wang Jingbo, chief executive of wealth-management company Noah Holdings Ltd. in Shanghai, said late last year she was considering recommending to clients a fund that invests in high-end watches. Googut's Mr. Liu believes the next market to watch is white jade.

Mr. Ren, the media entrepreneur, says he is looking at diamonds. "While silver and gold may see fluctuations depending on international markets," he contends, "the price of diamonds never drops."



January 12, 2012

A Breed Apart: 30-acre Horse Farm Estate in North Carolina Up for Absolute Auction Feb. 16


LAKE TAHOE, Nev., Jan. 12, 2012 --


Some high-end properties appeal to golf enthusiasts. Other luxury properties are tailored to the equestrian. And still others are designed for gourmands who enjoy entertaining or those who want seclusion and a nature retreat. Seldom do these attributes come together in one property, yet a sprawling farm estate up for grabs in North Carolina provides all this and more.


The property, encompassing 30 acres and valued at $4 million-plus, goes up for auction on Feb. 16 by Exclusively Auctions. The farm complex contains two parcels: an 11-acre farm that is contiguous to a 20-acre property inside the acreage. These properties have separate parcel numbers and will be offered both separately and combined at auction. The highest aggregate price will determine the selling price on the day of the live auction.


"This property is free and clear, with no debt whatsoever," said Nicholas Varzos, president of Exclusively Auctions. "It's a rare occurrence in the real estate industry."


What makes this sale even more unique, said Varzos, is that the transaction is an absolute auction, not a reserve auction. This means there is no safety net for the seller. The property will be sold to the highest bidder, period. "If our property sells for $1, it goes for $1," he said.


Varzos noted that whether the property sells for dollars or millions of dollars, "in today’s market, the owner will undoubtedly sell at a loss. Everything is of the highest caliber here. The owner spared no expense."


A rundown of the property's highlights illustrates the owner's extraordinary attention to detail. A 5,000-square-foot principal residence features:


  • Solid copper bath tub
  • Cuppolas and triple crown molding
  • Slate roofs and outdoor decking
  • 8' elevator shaft
  • 1100-sq-ft master suite
  • Four-car oversized garage

The property also houses a two-bedroom, two-bath guest cottage with private gated property entrance with electric gate; an eight-stall barn with heaters, fans, rubber mat flooring and cross ventilation in each stall; 11 barn rooms; a barn trainer's apartment; a world-class riding and training area with 8" clay base; and a wealth of outdoor aesthetics and amenities, including 10 grass pastures, five sand paddocks and two spring-fed ponds.


"Did I mention that the farm is a five-minute drive to Pinehurst?" Varzos concluded. "It's a golfer's paradise. Pinehurst is home to 43 of the finest North Carolina golf courses and will host the U.S. Open in 2014."


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January 5, 2012

Miami Heat player Mike Miller has a house for sale.

Waterfront, with all the amenities, even a place for your 100-foot yacht.

Just bring a $250,000 deposit – and be ready to bid at auction.

In a move that’s gaining steam, Miller is joining several other luxury homeowners in selling their properties at auction.

“It gives me an opportunity to sell the home in a quick time frame,” said Miller, who bought the home out of foreclosure about a year ago. As if a harbinger of a turnaround, auctions are gaining favor.

Miller’s home joins the Coral Gables condo of real estate developer P.R. Steinfurth. Steinfurth’s listing was less than a year old and he’s moved to an $20 million oceanfront compound on the Treasure Coast, said one Miami-based auctioneer, who partnered with the owners and their respective Realtors to handle the auctions.

"He simply wants to get the condo off of his books.” Steinfurth’s auction will be held Jan. 27. Miller’s auction is scheduled for Feb. 25. “Historically, and contrary to what many people think, healthier markets often mean more robust high-priced auction activity,” Lesnock said. “People generally feel there’s a bit of buyer confidence coming back, the worst of it is over, and so sellers are getting that confidence again, as well.”



December 28, 2011

Number of the day 6 Million 

That’s how many homes will be repossessed by banks or sold at distressed prices by 2016, according to Oliver Chang, a Morgan Stanley analyst in San Francisco. The dismal environment has prompted
 Fannie Mae and Freddie Mac
 to rethink their strategy.

The mortgage companies, which were seized by the government in 2008, are turning some of their inventory of repossessed homes into rentals — part of a bid to cut losses, stabilize neighborhoods and support housing values.



December 27, 2011


New gold: Nothing seems to be slowing the real estate rush along San Francisco’s swank Gold Coast. This past year, Shaklee Corp. Chairman Roger Barnett and his wife, Sloan, dropped $33 million for the 22-room upper Broadway mansion of the late socialites John and Dodie Rosekrans.

The Barnetts sold their nine-bedroom home on the same block for $23.47 million. A block up Broadway, the six-bedroom mansion that once belonged to San Francisco’s King of Torts, Melvin Belli, was snapped up by the German- born New Age rocker and record label mogul Peter Baumann for $29.5 million.

On the 3000 block of Pacific Avenue, venture capitalist Richard Spalding and his wife, Helen, just sold their home for $20 million — $2 million over asking — to young Silicon Valley newlyweds.

And financial giant Charles Schwab’s daughter Katie and her husband, Matt Paige, paid $15.5 million for an estate on the 2600 block of Pacific that belonged to the late philanthropist Nina Ireland.



December 21, 2011

Home sales during housing bust
worse than thought

By Les Christie @CNNMoney December 21, 2011: 12:01 PM ET

NEW YORK (CNNMoney) -- Existing home sales during the housing bust were actually 14.3% worse than previously reported, a revision to Realtors' group numbers shows.

On Wednesday, the National Association of Realtors (NAR) revised home sale counts back to 2007 due to flaws in their original data analysis.


In 2007, there were actually just 5.04 million existing home sales, 11% less than the 5.65 million originally reported. Even worse were 2008 and 2009, when there were 16% fewer sales than originally reported. Sales in 2010 were 15% lower.

"The errors started in 2007 and continued to accumulate over time," said Lawrence Yun, NAR's chief economist.


The accuracy of the data is important. Private companies like residential real estate developers rely on it for planning and policy makers make decisions based on it.


Home building spikes higher

The data is "key to the economic outlook," said Mark Zandi of Moody's Analytics, "and the revisions help to explain the severity of the housing crash."

David Crowe, chief economist for the National Association of Home Builders, said its members use existing home sales as reported by NAR as a gauge of the overall health of the housing market.

"Sales data and, just as important, an inventory buildup, would make builders less likely to go forward with developments," he said.


Zillow CEO on housing market: 'Not good'

Some industry sources had been critical of the organization's data. In February, Core Logic charged that NAR data was overestimating sales by 15% to 20%.


When NAR investigated, it found a "notable upward drift" in the numbers compared to other measurements such as courthouse deeds records, said Yun. NAR doesn't report actual counts of home sales but estimates them based on the number of transactions reported by local Realtors.

That method worked well into the mid-2000s, but then discrepancies arose during the housing bust as Realtors started to get involved in more deals and some MLSs expanded into new territories, skewing the numbers and leading to double counting of some sales. Still, the revisions, according to Zandi, will have little impact going forward and, looking backward, are of limited importance.


"We all knew it was a crash, now it's a deeper one," he said. For November, the latest month under the re-benchmarked formula, sales of existing homes came in at a seasonally adjusted, annualized rate of 4.42 million. That's up 4% from the revised level of 4.25 million in October and 12.2% higher than a year earlier.


That good news followed recent positive reports on new home sales and home construction activity. These pickups, along with historically low mortgage rates, may indicate that "a modest recovery may be underway," said Paul Dales, a senior economist with Capital Economics.  




December 19, 2011

Fight breaks out over North Las Vegas

By Steve Green

Saturday 17 December 2011

A fight among heavyweight developers erupted in U.S. Bankruptcy Court on Friday over the fate of 1,340 acres of land in the stalled Park Highlands planned community in North Las Vegas.

Four days after a consortium of investment companies won an auction for the land with a bid of $21 million, a Ross Perot Jr. company filed a motion asking the court on Friday to set aside the auction results and let it buy the land.

A Perot company already owns the stalled and bankrupt Park Highlands development.

That company, November 2005 Land Investors, had no hope of covering the community’s $178.9 million in debt because of the recession so it put Park Highlands into bankruptcy this summer with the intention of another Perot company acquiring the land at auction.

But the second Perot company, Hillwood Communities of Dallas, was outbid at Monday’s auction. Hillwood dropped out after deciding against increasing its final bid of $20.2 million.

Hillwood Communities is part of Hillwood Development LLC, which says it is ranked among the top 10 residential land developers in the United States and is known for its high-profile projects like the American Airlines Center sports complex in Dallas.

Losing the auction was likely a disappointment to Hillwood, which had boasted to the Wall Street Journal in September that with its 400 contiguous acres that are not part of the bankruptcy, “No other bidder sits in our unique position.”

The auction was won not by Perot’s Hillwood company, but by a consortium of investors that includes the publicly-traded KBS Strategic Opportunity REIT of Newport Beach, Calif. — part of the KBS group of companies that have done $21 billion in real estate deals since 1992.

On Friday, a third Perot company called BOH Park Highlands asked that the KBS bid be disregarded and that it be awarded the land.

In what has grown to become a convoluted bankruptcy case, BOH Park Highlands claims to be owed $4.98 million for infrastructure work at Park Highlands. Lenders to Park Highlands dispute this.

So as not to disrupt Monday’s auction, BOH Park Highlands and the lenders agreed the $4.98 million would be deducted from the winning auction bid and held in escrow until disputes over the $4.98 million claim are resolved.

This means the lenders, should BOH Park Highlands win the dispute over the infrastructure work, would ultimately receive just $16 million less administrative expenses from Monday’s winning bid of $21 million.

On Friday, BOH Park Highlands said it’s willing to buy the land for $21 million and drop its demand for the $4.98 million for the infrastructure work, meaning the bankruptcy estate and the lenders would definitely receive all of the $21 million less whatever administrative expenses are approved by the court.

BOH Park Highlands attorneys said in their motion the Perot company’s plan to buy the land is a good deal for both the bankrupt company and its creditors.

"It will benefit the debtors’ creditors and estates not only by increasing the value received from the sale of the property by almost $5 million, but also by fully and finally resolving the (infrastructure) litigation, obviating the need for continued, costly litigation relating to the determination of BOH’s rights" under the litigation claim, their filing said.

The filing also charged that problems during the auction harmed BOH and Hillwood. These Perot companies said they were discouraged from including a waiver of BOH’s infrastructure claim during the auction so there would be an apples to apples comparison, otherwise, "Hillwood/BOH would have submitted a higher and better bid at the auction."

BOH is represented in the case by the Fort Worth, Texas, law firm Haynes and Boone LLP and the Las Vegas firm Jolley Urga Wirth Woodbury & Standish.

An attorney for Monday’s winning bidder, KBS and its coinvestors, urged Bankruptcy Judge Mike Nakagawa on Friday to reject the last-minute effort by the Perot company to overturn the auction results.

"KBS believes that the motion is simply BOH’s manufactured basis for delaying the sale of the property to the detriment of debtors, their creditors and KBS," said a court filing by attorney Bob Olson of the Las Vegas office of the law firm Greenberg Traurig LLP.

"BOH, which has a lengthy history with debtor and the property, failed to qualify as a bidder, failed to bid at the auction, did not oppose the sale of the property to KBS at the sale (approval) hearing (Tuesday) and did not reveal this offer to the court at the sale hearing. BOH’s failure to do any of these things before the auction and sale hearing should preclude them from raising objections now after the sale has been approved by this court," Olson's filing said.

"It further strains credulity that BOH suddenly realized that they could bid more only after the auction occurred and the order approving the sale was entered. BOH is a party to the (infrastructure) litigation and presumably had given thought to settlement structures. Moreover, these (bankruptcy) cases were filed because BOH desired to purchase the property,” the filing said.

Nakagawa hasn’t yet scheduled a hearing or indicated when he may rule on the motion to set aside the auction results.



December 7, 2011

Mondavi estate sold at big discount

The Napa Valley Register last week confirmed that the Mondavi estate, which was up for auction, has been sold.

Even at the super high end, luxury homes and palatial estates are facing a tough market.  The Wall Street Journal wrote last month about how home auctions are becoming more common among mansions and multi million dollar properties.  In the past, auctions were a strategy typically employed by banks for foreclosed properties or by sellers looking for a last resort.

Despite the legacy that comes with Mondavi’s estate, his property had a similar fate.  First listed in May of 2010 for $25 million, it received no suitors.  In October, the property entered the auction arena.  Minimum bid price was set at $13.9 million – nearly half off the original asking price – and all bids were due on November 16th. 

In the end, this much talked about property only received 2 bids.  While everyone is mum about the final price and the buyer, one of the agents who represented the Mondavi family, Jane Garassino-Blecksmith of Pacific Union International, told the Napa Valley Register that…

“While they did not meet the minimum price, the bids were “strong,” she said. 

The new owner, who is international and owns homes worldwide, seemed to have snapped up a bargain.  Unlike most of Mondavi’s wines, which get better with time, it appears that his estate was just lucky to eventually find a suitor.



December 7, 2011

2012 residential market predictions: As clear as eggnog

Lack of good product and pricing tensions are top of mind at year’s end, as brokers look ahead toward unclear 2012

December 01, 2011 07:00AM By Leigh Kamping-Carder

As the year draws to a close, the future seems as opaque as a glass of eggnog. Some real estate professionals say pent-up demand in the residential market could foster a busy 2012, while others predict that a sluggish economy will keep prices and activity in check.

Citi Habitats vice president Jay Molishever said the high rents, relatively low sales prices and increasing activity he is seeing in the current market are good signs for the New Year.  "At some point," he said, "the kindling is going to burst into flames again," bringing high prices and high volume.

Michael Signet, executive director of sales at Bond New York, anticipates a "very busy year," with rising prices bringing inventory to market, and buyers feeling "compelled to make a decision faster, as the competition for quality apartments increases."

But there are still a few significant X-factors that could keep the market from taking off in 2012, brokers said. Chief among them is enduring unease about the economy. Without a strong recovery in the New Year, prices will likely remain flat, said Kenneth Scheff, managing director of Stribling & Associates.

Others agreed. "It is precisely the feeling of unease that slows our market down and anesthetizes any new activity," said Joseph Barbaccia, director of brokerage Essential New York Real Estate.

Then there's the lack of new product and the still-difficult mortgage market, which are "the two things holding back the market from being smoking hot," according to Doug Bowen, a senior vice president at Core. "The demand is definitely there."

Brokers said the continuing lack of high-quality, well-priced inventory has been a particular problem in the recent weeks, especially at the upper end of the market.  Simply put, there are more active buyers than there are good apartments, said Scheff, who described a recent eight-way bidding war for a desirable prewar co-op on the Upper East Side.

Hearing about the lack of inventory, sellers are getting bolder with their asking prices, brokers said. But most of today's buyers are still looking for a steal. "Price is very important in making a sale in this market," said Paula Del Nunzio, a senior vice president at Brown Harris Stevens, adding that if a seller wants to put a property on the market at a "vanity price," he or she will "sit on it."

(Del Nunzio is famously handling the most expensive listing in the city, the Upper East Side's Woolworth mansion, priced at $90 million, as well as the nearby Stanford White mansion, priced at $49 million.)

"Sellers, when pricing their apartments correctly, are selling quickly," said Barbara Fox, president of Fox Residential Group. "However, overpriced apartments are not selling well at all. ... Well-priced, renovated properties continue to sell more quickly than overpriced ones, or those that need massive renovation."

For example, a fully renovated townhouse at 87 Cambridge Place in Clinton Hill, Brooklyn, went into contract last month at $2.16 million -- a near-record for the neighborhood -- a week after the owners listed it at $2.05 million. The broker, Jerry Minsky of Elliman, said that he wanted to price it higher, but the sellers were adamant about pricing it lower.

As they wait to see how these factors shake out, sales brokers are sleeping off their post-Thanksgiving, tryptophan-induced hang overs, and settling in to what is, between the chilly weather and the string of holidays, typically the slowest season of the year.

"Once the weather cools down, only the real estate 'addicts' take advantage of what's on the market," said Todd Lewin, managing director of real estate services firm Good Property, which has offices in Miami and London, but recently opened its headquarters in New York City.

Meanwhile, on the rental side, buyers on the sidelines continue to power the market, which is evidence that people still have money to spend, according to Scheff.

In the rental market, "we haven't seen the beginning of the usual slow season as we used to see [at] this time of the year in the last few years," said Dmitry Daniel Kramp, a senior agent at City Connections Realty.

Jason Fien, director of leasing at the brokerage Platinum Properties, said he observed a drastic increase in demand for luxury rentals, as would-be buyers fail to find a "steal" and settle for renting. But he urged discouraged buyers to keep looking.

"If you can afford to buy, buy," he said. "You are only flushing hard-earned money down the really flashy and expensive self-cleaning toilet that your $20,000 rent affords you."



December 1, 2011

Stronger Lure for Prospective Home Buyers

Owning Continues to Become More Affordable Relative to Renting, but Several Obstacles Prevent Many From Biting


Home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting in a growing number of cities.

Where Housing Is Headed

The Wall Street Journal's third-quarter survey of housing-market conditions in 28 of the nation's largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc. Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4%, are the lowest in six decades.

As a result, monthly mortgage payments on the median priced home—including taxes and insurance—are lower than the average rent levels in 12 metro areas, according to data compiled for The Wall Street Journal by Marcus & Millichap, a real-estate brokerage that tracked 27 metro areas. It remains less expensive to rent than to buy in 15 cities. But affordability hasn't done much to lift the sagging housing sector because many would-be buyers are unwilling to purchase a home or unable to qualify for a mortgage.

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"It's one of the most striking developments of the housing downturn," said Paul Dales, an economist at Capital Economics. "The initial building blocks for a recovery are in place, but the legacy of the recession is really preventing households from taking advantage."

In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840, according to the Marcus & Millichap data.

But real estate agents and economists say the trend hasn't boosted demand. That is because affordability alone hasn't been enough to overcome the obstacles in the way of a housing recovery. Some homeowners who would like to move up to larger properties are stuck because they can't sell their homes.

Owner's Advantage

Also, while the monthly carrying costs on a mortgage are lower than average rents in some cities, home ownership carries other costs—including taxes, insurance, homeowner association dues and maintenance—which may dissuade some potential owners.

Other would-be buyers can't qualify for mortgages because lending conditions are tight or because they don't have enough equity in their current homes to use as a down payments. "The reality of coming up with the down payment and the loan-qualification standards makes things much different than the raw numbers suggest," says Hessam Nadji, managing director of Marcus & Millichap. And even those who may qualify remain skittish about buying property in a market where prices could fall amid foreclosures and weak job growth.

Ryan Young illustrates the point. He is under contract to buy a three-bedroom home in Washington Grove, Md., that will have monthly mortgage, tax, and insurance costs for around $150 less than the $1,900 he is paying to rent a slightly smaller house in Bethesda, Md. He qualified for a 30-year mortgage with a 3.95% fixed rate. Still, Mr. Young says he is cautious about owning his first home with the prospect of future price declines. "Buying a house is not a good financial decision, per se, but we needed a bigger place," said the 35-year-old scientist, "and we don't want to move every couple of years into a new rental."

Other cities where owning is now cheaper than renting include Detroit, Minneapolis, Orlando, Las Vegas, Miami, St. Louis, Chicago and Phoenix.

Monthly Costs: Rent vs. Own

View Interactive

Home ownership is also looking more affordable because after several years of declines, apartment rents will rise by around 4% this year, says Mr. Nadji. He says rents are poised "to pick up even more momentum across the country next year."

Even cities where it is still cheaper to rent than own have seen big boosts in affordability. In San Diego, the monthly cost of owning a home has averaged around 83% more than renting over the past two decades. During the third quarter, owning was 22% more expensive than renting, according to John Burns Real Estate Consulting.

Enlarge Image

A new development in Canonsburg, Pa. The inventory of homes on the market has fallen from levels seen a year ago, as prices and mortgage rates continued to decline.

Mortgage rates are a big reason why affordability continues to improve. In 1991, a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage. Today, it gets that homeowner a $350,000 loan, a 77% increase in borrowing power, says Dan Green, a loan officer with Waterstone Mortgage, in Cincinnati. At the same time, low mortgage rates aren't spurring sales because few analysts expect rates to rise anytime soon. The Federal Reserve in August said it would keep rates at ultralow levels for two years. In a normal interest rate cycle, "when they go low, they don't stay for very long, and people jump in," said Mr. Dales. "This time, there is no urgency."

Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of "distressed" sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools. Banks are often much quicker to cut prices to unload properties quickly, which means that the greater the share of "distressed" sales, the more prices tend to fall.

One hopeful sign is that inventories have fallen from their bloated levels of one year ago. All 28 cities in The Wall Street Journal's latest survey saw homes listed for sale fall from one year ago, when markets were reeling with a substantial overhang of properties amid a big drop in demand. Visible inventory was down sharply in several markets, including by almost half in Miami and 40% in Phoenix.

Low inventories have spurred more bidding wars at the low end of the market as investors compete for homes that they can convert into rentals. In Sacramento, it would take just 2.5 months to sell the listed inventory at the current sales pace. Las Vegas has a 4.3 month supply of inventory, according to John Burns Real Estate Consulting. But the potential supply of homes is much bigger because banks have yet to process hundreds of thousands of potential foreclosures.



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