Auctions of 216 Homes Pack’em In : Real estate: But one of the largest sales ever of foreclosed Southern California houses produces few bargains.
Some professional real estate investors complained that “auction fever” drove prices too high, but they were just right for most of the aspiring homeowners who created standing-room-only crowds this weekend at one of the largest auctions ever of foreclosed residential properties in Southern California.
The Federal Home Loan Mortgage Corp.’s huge auction of 158 homes Saturday at the Los Angeles Convention Center and 58 homes Sunday at the Westin South Coast Plaza underscored the depth of the housing slump in the six-county Southern California region, where the median home price fell 5.1% in June to $186,000.
The congressionally chartered corporation known as Freddie Mac normally hires real estate brokers to sell foreclosed property. It decided to hold a big auction because of a reorganization that will eliminate foreclosure operations in three of its five regional offices and consolidate them in Dallas and in its suburban Washington headquarters.
Lenders, mortgage holders and even home builders have increasingly turned to auctions as the nation’s real estate slump pummels the value of everything from office buildings to single-family homes.
Eric Piccinini, national director of real estate-owned operations for Freddie Mac, insisted that the auction was not a real estate giveaway that would further depress prices in Southern California.
He noted that the homes were spread over a wide area and that the auction was generating near full-market value for the foreclosed homes. “There are no steals to be had here,” he said.
Some experts said that the sale of so many foreclosed properties to new owners may eventually help the Southland’s troubled real estate market bottom out and shore up falling prices.
“It’s just great to get homes, that in many cases are abandoned and unoccupied, into the hands of new homeowners, many of whom are first-time buyers,” said William J. McMorrow, chairman and chief executive of Kennedy-Wilson Inc., a Santa Monica firm that conducted the two-day auction on behalf of Freddie Mac.
The 158 homes up for sale Saturday generated $19.5 million--an average of $123,100 each. No sales totals were immediately available on Sunday’s action.
Although there were a number of cellular phone-wielding professional real estate investors at both auctions, the weekend event attracted mostly young first-time home buyers such as Eugene Frenkel.
The 35-year-old computer technician, who was among 2,000 people at Saturday’s session, said he never thought about buying before the auction because he felt that homes in California were out of his financial reach. He said he “got a good deal” on a three-bedroom Canoga Park home he purchased for $150,000.
Some bidders, however, said they were discouraged that so few homes sold for a discount to their market value.
“These prices are too high,” complained Gerry Willier, a 46-year-old real estate investor. “The problem is that . . . people get in here and have an anxiety attack. They get to feeling the hype and starting thinking, ‘I’ve got to have this house.’ ”
One first-time home buyer, Tom Weise, acknowledged that he exceeded his self-imposed limit of $100,000 when he successfully bid $112,000 for a three-bedroom Palmdale home. And he groused that he will face a two-hour commute from his job as manager of an El Monte sporting goods store.
Nevertheless, he said, “I think it’s worth it. Housing (closer in) in the Los Angeles basin is astronomical, and it’s pretty much impossible for any young couple to afford a home.” As for the commuting distance, Weise said he thinks that he can persuade his employer to transfer him to a store in nearby Lancaster.
