More than 300 houses or apartments on sale
In a down real estate market, they came to buy. They came early, they came in numbers and they came with bank checks for $5,000 that were their tickets to bid.
By 10 a.m. Saturday, more than 700 people filled a hall in the Minneapolis Convention Center for what real estate agents say is the largest auction of foreclosed properties ever in Minnesota, with more than 300 houses or apartments for sale in two days.
Opening bids ranged from $1,000 – for a three-bedroom house – to $729,000 for a five-bedroom house on 11.9 acres. The crowd was standing-room only, with more waiting to enter. Some were looking for homes, others for investments.
“It’s a symptom of the foreclosure crisis,” said Democratic-Farmer-Labor state Rep. Jim Davnie of Minneapolis, who sponsored a newly enacted bill to regulate subprime mortgage lending. “And it’s a cause for concern that through this auction, areas that are already hit by the foreclosure crisis will now be hit by investors who are buying up properties to rent them out, which makes neighborhoods less stable than owner-occupied housing.”
But in the loud, overcrowded hall, the misery of subprime loans, exploding adjustable-rate mortgages and slumping real estate sales meant one thing: opportunity.
“Who’s got $150,000?” said the auctioneer, Mark Buleziuk, motor-mouthing the sale of a four-bedroom house that he said was worth $234,000. “It’s a buyer’s market,” Buleziuk urged.
The auction, like others that have proliferated around the country this year, tapped the contradictory forces of the current real estate market, in which mass foreclosures and sinking home values, along with predictions of more pain to come, still stoke the urgency to buy right now, before it is too late.
“The market’s really low right now, so you can get a good price,” said Lori Crook, a food server at Keys Cafe who said she was looking for a place she could fix up and sell.
“Even if you can’t sell it right away, if you just sit on it and sit on it, it will go up. The only sure thing these days is real estate,” she said.
The auction involved a tiny fraction of foreclosures across the state. Julie Gugin, executive director of the nonprofit Minnesota Homeownership Center, projected statewide foreclosures at 20,000 this year, up from 11,000 last year, based on data from sheriffs’ sales.
“This is such a stark and dramatic illustration of how serious the problem is,” said Ron Elwood, a lawyer at the Legal Services Advocacy Project, which lobbies in the interest of low-income residents in the state. “The reality is, half the reason 300 homes are being auctioned off is that speculators tried to make a killing and failed to do so.”
In Minneapolis, 55 percent of foreclosures this year involved houses not occupied by their owners, according to county records.
But instead of alarming buyers about the risks of speculation, the auction of so many foreclosures at once was an invitation to speculators, small and large. Some, including Bryan Kihle and Jim Casha, who bought a four-bedroom house for $145,000, bid without seeing the properties.
“I just looked at the picture and thought if we got it cheap enough, we could rent it for a year, then sell it when the market goes back up,” said Kihle, a building contractor. One public interest housing group bought eight properties to restore for low-cost housing.
Others just saw a chance to enter the housing market. “It won’t always be low,” said Pearl Dobbins, who said she was willing to spend up to $50,000.
“This is our chance to buy a home and start our financial future.”
BY JOHN LELAND, New York Times
