It appears that REDC (US Home Auctions) is going to be quite busy this month and earning some nice commissions (5% “Buyers Premium”). If you visit their site and click on an area, there is a detailed break down on all the homes being offered and an option to download them to an excel file. REDC also lists what the previous REO asking prices were. Adding up that column comes up to about $650 million worth of REO that "MUST BE SOLD" in one month (11 auctions). Lenders are now in liquidation mode as foreclosures continue to climb. (Dataquick: California Foreclosure Activity Still Rising)
While obvious that we still haven't hit the "bottom" yet as far as home prices are concerned, and according to a Merrill Lynch report, home prices will drop another 15 percent this year, and declines will continue in 2009. The unknown is just how serious will the upcoming recession be? The FED is in full battle now in fighting against a monstrous deflationary force caused from the collapse of the housing bubble.
Should I buy yet? It really depends on your area. Real estate is local to a greater extent, just make sure you get a good deal, and by that I mean a very good deal. If you can negotiate a good price and intend to live there, I'm guessing you should be okay (yes, i did say guessing). Mortgage rates are at a 2 year low and expected to come down even further. This will make a difference and will bring in a lot of people who were on the sidelines back into the market. Okay, I'm starting to sound like a Realtor(TM) now. Simply put, I don't believe you should put your life on hold waiting for the absolute bottom and in some areas it may not turn out as you expect.
Be sure to do your homework and figure out what a property would rent for and and compare that to what your monthly mortgage payments would be. Here's a calculator from the New York Times and another one from the Center for Economic and Policy Research (2005). If you are looking to buy and flip a house, then be sure to check out one of my favorite sites on flipping houses. Good Luck to all those attending the auctions and be very careful on how you bid.
Update: (And thanks Bubble Sitter for posting this)
“US Home Auctions allow SHILL BIDDING. The quote below is right out if their brochure (and this is the second time I have posted this quote on your web site):”
“On page 122 paragraph 3, I quote verbatim: ‘Except where prohibited by law, the Auctioneer may open bidding on any property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller, up to the amount of the reserve price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders.’”
“Your advice to be very careful is right on the mark. US Home Auctions wants to get the bidding going and get people invested in time and effort, then PUMP THEM UP!”
“BE CAREFUL INDEED.”