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It might come as a surprise that homes in places like San Bernardino and Riverside, California have become hot commodities. Those areas are, after all, at the epicenter of what you could call Foreclosureland. But these days there are so few houses up for sale that bidding wars have returned. NPR's Yuki Noguchi has the story.

YUKI NOGUCHI, BYLINE: Jennifer Bryant is willing to throw money at just about anyone willing to sell her a house. Since February, she's made 35 offers on homes in Riverside, only to be elbowed out by other bids. With few houses available and so many people chasing them, Bryant feels she has, at most, an hour to consider each house.

JENNIFER BRYANT: Some of these houses that I've offered on, I haven't even actually seen. If my husband can't go by it, I'll just make the offer on it. If I've only seen pictures of it, I'll just make the offer on it.

NOGUCHI: She spends lunch breaks by the fountain in front of the medical center where she works on her phone looking at the day's new listings.

BRYANT: Yeah. This a cute little house. It's got a fence, it's got big trees in front to shade the house, you know. Already - it's already pending sale. I bet you it's for cash.

NOGUCHI: That house went within five hours of listing. Bryant sometimes offers more than listing price, or gets up in the middle of the night to check listings. She says she's desperate to leave her tiny rental, which has no air conditioning and costs more than a mortgage.

BRYANT: And I would like to have another child, but I'm in a two-bedroom right now and I - we don't have room.

(LAUGHTER)

NOGUCHI: Bryant says the cruel irony is that she sees vacant homes everywhere, on her drive to work, even right next door to where she lives now. But vacant does not mean available. The house may still be in the process of foreclosure.

PAUL HERRERA: This is absolutely the case all over the region right now.

NOGUCHI: Paul Herrera is government affairs director for the Inland Valleys Realtors Association in Riverside. He says there are 40 percent fewer homes on the market compared to last year, and sales volume is up. Herrera says homebuyers like Jennifer Bryant are often losing to a growing field of investors, often backed by Wall Street, willing to pay cash.

HERRERA: Cash is always king in this sort of situation.

NOGUCHI: I'm standing in front of the county courthouse in Corona, California, where trustee sales of foreclosed properties are under way. About 80 bidders are sitting on their lawn chairs under the shade. Almost all of them are on their cell phones and all of them have envelopes full of cashier's checks to pay for their winning offers.

UNIDENTIFIED MAN #1: Opening specified bid - $91,674.90. Do I hear a higher bid?

UNIDENTIFIED WOMAN #1: Ninety-five.

UNIDENTIFIED MAN #1: Ninety-five thousand.

UNIDENTIFIED MAN #2: A hundred and ten.

UNIDENTIFIED MAN #1: One hundred and ten thousand. Going once...

UNIDENTIFIED WOMAN #2: One hundred...

UNIDENTIFIED MAN #1: And 100...

NOGUCHI: No one here is bidding on a home to live in it. They are people like Gabriel Anguiano, who's recast himself from golf course manager to minor real estate tycoon. In the last four years he bought and rehabbed 120 houses to rent or flip.

GABRIEL ANGUIANO: I would buy a 30,000 condo, put in another $5,000 in remodels and then sell it for 80, 90. So you make $50,000.

NOGUCHI: Wow. That seems like a very good margin.

ANGUIANO: Oh, yeah. Yeah.

NOGUCHI: Demand for rentals is also high because so many people who lost their homes need a place to stay. Anguiano can rent a property and still make a tidy profit. The only problem is others are catching on.

ANGUIANO: A lot more people are out here.

NOGUCHI: This is happening in several other hard-hit markets, but a low-inventory issue is the opposite of what many housing experts expected to see. After five major banks settled cases with regulators over mismanaged foreclosures earlier this year, analysts expected a flood of new inventory. It didn't come. Experts say banks may be reluctant to foreclose because they don't want to recognize a loss on their books. Or they may be giving homeowners more time to modify loans. Either way, the foreclosure process has, if anything, slowed further.

SEAN O'TOOLE: It's left us in a very, very strange place that I don't think we've seen before.

NOGUCHI: Sean O'Toole founded a site called ForeclosureRadar, which keeps data on foreclosure. He says government officials have misdiagnosed the country's housing problem, focusing policies mostly on foreclosure prevention. But in doing so, O'Toole says, they simply slowed recovery.

O'TOOLE: We worry about the blight from foreclosures, but once a house is foreclosed upon, it's resold to somebody who's going to take care of it and fix it up and pay the property taxes.

NOGUCHI: That's where Mike Strugatz come in. He's bought two dozen distressed properties that have been pillaged by looters or former owners. Today he's surveying a four-bedroom ranch that bears all the marks of abandonment. It smells of dog, there's graffiti on the walls, and then there's the pool.

MIKE STRUGATZ: It's in horrible condition. The pool's empty, it's full of debris, you can see that the vinyl siding has been completely demolished.

NOGUCHI: Strugatz says only cash investors can buy homes like this. It wouldn't appraise for a buyer with a loan.

STRUGATZ: Creating inventory out of a property like this, which doesn't count as inventory in its current condition, is really what I'm doing. So I'm really feeding the market with inventory that wouldn't be there.

NOGUCHI: And that, he says, helps the bank that needs to sell, the family that needs to buy, and the community that needs a healthier housing market. Yuki Noguchi, NPR News.

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