Newspaper Story. Our client Marty Clouser, Senior Vice President of Kennedy Wilson Auction Group was interviewed about an upcoming real estate auction.
Swoon in home sales leads to
auction block
According to DataQuick Information Services, Southern California home sales in April were the second lowest on record since the company began tracking real estate activity in 1988.
San Bernardino County registered one of the steepest declines, with closings down 46.7 percent compared to April of last year; home prices inched higher by 2.8 percent over the same period.
“We are in for some unpleasant market adjustments, including lower prices,” said John Karevoll, a DataQuick analyst based in Running Springs.
“Over the next six to nine months, there will most likely be a drop of about 8 percent from San Bernardino County’s peak price last November,” Karevoll said.
For many residential developers dealing with the marketing and capital costs of unsold homes, waiting for falling prices to re-ignite demand is like Waiting for Godot.“Builders are watching their profits eaten away from the time it takes to sell their inventory,” said Marty Clouser, senior vice president with Kennedy Wilson Auction Group.
“An auction motivates buyers because there is the potential to get a great property at a good price,” Clouser said.
One of the factors behind the housing market slowdown is the decline in flexible mortgage financing.
“There has been a pullback in sub-prime lending, and right now lenders are being extremely cautious,” said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.
The sluggish market has resulted in rising inventories, making auctions an increasingly attractive alternative.
“It would take three to five months to deplete the supply on the market right now, while in 2004, there was only about one month’s supply on the market,” Karevoll said.
With most of its operations in California, Kennedy Wilson usually handles between 100 and 250 auctions per year. But the auctioneer has seen a “dramatic increase” in business since the fall of 2006, according to Clouser.
“While we see a lot of prospective buyers visiting the houses, they are not making any moves in anticipation of a discount in the price,” said Shone Wang, president of National Security Construction, the owner and developer of Wilson Estates.
“We want to let the buyers decide a realistic price by putting them in the driver’s seat and letting them go after the kind of bargain they want,” Wang said.
Analysts see the trend toward auctions as a natural response to the slowing market.
“Two years ago the developers were in heaven; they didn’t need to offer any incentives,” Karevoll said. “Now they are using every tool in the box, including auctions, in order to move their product.”
For more information on the auction in Rancho Cucamonga, visit the Web site http://www.wilsonestatesauction.com or call (800) 522-6664.Mitch Deacon can be reached at 951-6232 or at mdeacon@vvdailypress.com.