STOCK MARKET WATCH -- Monday, 23 January 2012

[Demeter]

84. Foreclosure Auctions Show Raw Form of Capitalism

http://www.nytimes.com/2012/01/15/us/foreclosure-auctions-in-phoenix-show-capitalism-at-its-rawest.html?_r=1

...they are preparing to bid on the hundreds of foreclosed properties auctioned each week in one of the country’s more colorful public clearinghouses. During the housing boom, when mortgages were being given out with no money down and prices soared, the auctions were a sleepy sideshow. But in the years since, the auctions have grown into a scruffy economic circus where bargain hunters from around the world have scooped up houses often sold for less than half of the value of the mortgage.

The auctions look more like a low-end poker game than the floor of the New York Stock Exchange. The bidders and auctioneers, most of them men in their 20s and 30s, are on a clubby first-name basis, and their banter can border on sophomoric. But their trading serves a critical if somewhat heartless function: to find new buyers for houses so they can be fixed up and sold to more stable owners.

“This is capitalism at its rawest,” said Brad Grannis, a bidder from AZ Property Advisors. “There’s an asset, and people assign a value to it.”

In recent months, the auctions have become more competitive because of an influx of outsiders who are eager for cut-rate houses that they can resell or rent out and because of a decrease in the number of houses available. There were 2,296 trustee sales in Maricopa County last month, 44 percent fewer than in December two years ago during the depths of the market crash, according to The Cromford Report, a real estate newsletter....