Auctions The New Boom in Real Estate
Driven by falling prices in the housing market, real estate auction companies are doing a booming business, and their futures couldn’t look any brighter in this downward cycle.
After as much as ten years in a booming real estate market depending upon what part of the country, foreclosures have hit an all time high, and stubborn mortgage lenders are aggressively refusing to deal with borrowers financial problems, going out of business as fast as Wall Street can keep up with the news.
The U.S. mortgage crisis has transformed the real estate auction business into a booming business all its own, and is sure to reap the rewards along with hundreds of thousands of home buyers, who are buying real estate for as much as 60% off the property’s former peak prices.
Real estate cycles have historically run in seven to ten year turns in the U.S. But the mania produced by Wall Street hedge funds, improper, unethical and illegal activities by many mortgage brokers, other lenders and fraud combined with a new creative breed of exotic mortgages has led to an unprecedented tsunami of foreclosures that will hit more than 3 million properties through 2009.
The very question of just how long real estate cycles will last in the future is being analyzed and debated by economists, many of whom wonder whether housing prices will ever return to their higher values in the next twenty years. Mortgage companies flew paper mortgages on Wall Street only to run out of funds to fill the mortgages they were under-writing to sell off again and again until as they say, “The Music stopped.”
The tsunami of foreclosures has made it cherry picking time for many investors, some of whom are leery themselves about the nation’s future economic health. There are an estimated 78 million homes in the U.S., which is an all time high. More homes still remain vacant than at any other time in the nation’s history. The surplus of newly constructed homes still awaiting new owners is also at its all time high. Excessive inventory has caused new home builders to slash prices and offer incentives from swimming pools to washers and dryers to sell their homes.
Sheldon Good & Company of Chicago is one of the nation’s older real estate auction companies and it’s a boom time for them. RealtyStore.com is signing up new users as fast as possible in answer to the onslaught of investors for their foreclosure service.
Realty Bid has exploded on the Internet in two short years to become a depot for online real estate auctions. Express Auction is trying to keep up with demands. The business is nearly bursting at the seams and many newcomers are hitting the web almost daily.
Real estate auctions use to be confined mainly to major urban areas in Florida, California and Illinois. But with the inventory of foreclosures swelling online and in person auctions are being held in at least 34 states, according to company officials holding the events, and the excessive inventory is increasing daily.
The massive foreclosure crisis has produced a new series of auction businesses that will boom and then presumably bust their own bubble.