According to Hagerty’s article in the WSJ, Mortgage Woes Force Banks To Take Hits to Sell Homes,

An auction of nearly 100 foreclosed homes here Saturday showed that mortgage lenders are having to accept huge discounts in some cases to unload such properties.

A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes.

At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.

But Ramsey Su, a San Diego investor and former real-estate broker specializing in foreclosed properties, said prices were surprisingly low on some homes and the auction showed that “demand is not that strong.”

The soaring prices of the first half of the decade priced many people out of the market, and lenders’ recent tightening of standards has made it harder for others to get loans. A glut of condominiums also is weighing on the market. Peter Dennehy, a senior vice president at Sullivan Group Real Estate Advisors, a research firm here, estimates that at the current sales rate there are enough condos on the market to last about 29 months.

Unfortunately I was in El Centro for the weekend so I missed the auction that was held at the San Diego Convention Center. (But I did see premium gas selling for $3.99 in El Centro, sand dunes, and a gas station for sale with an estimated cash on cash return of 38% that my friend was buying).

I’ve been harping on and on for nearly 2 years how the market here is ripe for a correction. Finally, some real validation!