Despite what your crazy uncle or Warren Buffett says about housing prices, the residential real estate market in many areas of the US is still in a lot of trouble. Doug French, an executive vice president of a Nevada bank, spent Derby day at a housing auction in Las Vegas and what he saw wasn't pretty.
Finally it was post time for the action and the first home went up for bid – just short of 2,600 square feet in southwest Las Vegas. A brand new home, a one-year builder warranty, built by a reputable builder with a nearly 99 percent customer satisfaction rating, the auctioneer emphasized. To listen to the auctioneer, the bidding quickly escalated from the $159,000 starting point. The three young men working the crowd were frantically giving signals to the auctioneer, quickly moving from one attendee to another, and the price of home kept rising. It seemed like a real auction. But it was only real like professional wrestling is real. There were no actual bids on the first house, or the second, or the third. No bidding cards were raised.
The auction company kept up the charade for over 2 hours and for all 46 homes. The auctioneer’s rapid-fire delivery never waned. The young ladies who were there to help winning bidders with their sales contracts stood in the corner and clapped in unison until the very end. And the young tuxedoed gentlemen who worked the floor carried on with their elaborate gestures and signaling, as if it was a choreographed Broadway dance routine.
Only a couple dozen people remained by auction end, and only a handful of homes were actually sold. There were few real bids even at the low starting prices that were only a third the price that similar homes fetched during the boom a couple years ago.
No Bids at the Auction [LewRockwell.com]