Home speculators strike gold in California

By Rajesh Mirchandani
BBC News, Los Angeles, California

In a large, featureless convention centre 40 miles east of Los Angeles, more than 1,000 people have gathered early on a Sunday morning.

From the stage, they are addressed in earnest by a man in tuxedo and bow tie, and they can watch the proceedings on giant video screens on either side of him.

He is preaching property, and although this auctioneer's high-speed patter sounds more like a cattle auction, here they are bidding for homes.

More than 100 houses are up for sale here and every two to three minutes a property goes under the hammer.

Similar auctions of repossessed houses are taking place nearly every weekend in California, where banks are cutting their losses from millions of dollars of bad debt.

Care required

There are bargains to be had. One man says he paid $375,000 for a house valued at $616,000.

Estate agent Julie Bruckner says homes need love

Lot 132 was a five-bedroom family home with a pool and three-car garage on La Salle Circle, Corona, a pleasant middle-class suburban community east of Los Angeles.

It was expected to fetch some $400,000. In the end Cornelius Foster and Debra Moore paid $500,000 for it; still less than the $700,000 it was originally valued at.

"We're very excited," Cornelius says. "It's got a pool and we're looking forward to getting in and fixing it up.

"I'm smiling today."

Yet they are also aware of the house's history.

"We feel bad for the people that were there before," Ms Moore says.

It was a reminder of how, behind many a good deal, there often lies a tale of personal distress.

Jeannette Lovell says prices have fallen fast

In one house on La Salle Circle, two days before its auction, an estate agent's sign outside proudly proclaims "selling the American Dream since 1969".

But, as estate agent Julie Bruckner tours the property with its chandelier in the living room and a huge walk-in closet upstairs, she is well aware of a poignant irony.

"There are so many in this area that are vacant.

"This home definitely needs some love, and a family that can give it the TLC [tender loving care] it needs."

Graffiti and crime

In fact the Corona area has the third highest rate of foreclosures, or repossessions, in the United States.

"Selling the American Dream"

On La Salle Circle at least three properties were empty, awaiting sale.

One local resident is Jeanette Lovell, a British expat.

She and her husband are not in mortgage difficulties, yet she was still worried about her own home's value.

"We may have to relocate for my husband's job," Ms Lovell says.

"And I know that our house has lost $150,000 in value in 18 months - if we can sell it at all."

These are the ripples of the housing crisis: just 2% of America's mortgages are actually in foreclosure; just under 6% are said to be "delinquent", meaning payments are late by 30 days or more.

Yet Cindy Robinson, another resident of La Salle Circle, predicts more problems:

"You get graffiti," she says. "And then white collar crime."

Duty of care

Two doors down, another repossessed house has just been vacated.

Auctioned houses are seen as bargains by investors

Whoever had lived there had clearly left in a hurry: the floors littered with unwanted documents, clothes and children's' toys; a door is hanging from one hinge in the kitchen.

There are cockroaches and mouse droppings and part of the ceiling has caved in through water damage.

A local politician in the Corona area has proposed laws requiring banks and other companies that repossess properties to be responsible for their upkeep.

The measure would give county authorities the power to levy fines on lenders that fail to maintain empty homes in keeping with the properties around them.

It has yet to be voted upon, although similar laws are in place in other parts of the country.

Lucrative auctions

Back at the auction, most of the buyers seem to be amateur investors, with a varying degree of sympathy for those whose homes they have just bought.

Auction winners hope to profit from their bets

Some are critical of those who had overstretched themselves in the housing market, others more focussed on the opportunities for them to make money from repossessed housing stock.

All seem confident they could turn a profit, that auction prices perhaps reflect a truer value, and that the rental market will stay strong while the crisis continues.

Meanwhile some are making money right now.

With experts predicting the number of foreclosures could carry on rising for at least the next six months, the auction companies know that theirs, at least, is a growth industry.