Open Season
For Bargain Hunters

Intrepid home shoppers are venturing back into some of the nation's hardest-hit real-estate markets, convinced they can cherry-pick good deals amid broad price declines.

Among these bargain buyers are affluent baby boomers eager to lock in low interest rates on retirement homes, high-end shoppers who had been waiting for prices to soften and serial investors determined not to miss the boat on a perceived opportunity.

John Brady, a retired publisher of Web sites and newsletters, was planning to buy a retirement home three years from now. But while vacationing in Key West, Fla., in January, he and his wife were stunned to see how far prices had fallen since their previous visit a year earlier. "Places were hundreds of thousands of dollars less," he says. The Connecticut couple paid $800,000 for a furnished two-bedroom condo that had been asking $1.75 million a year ago and was most recently listed at $850,000. "I think we got an incredible bargain," Mr. Brady says.

Down 17%: A beach house in Hatteras, N.C., that sold for $1.1 million in 2005 sold in January for $910,000. The lender bought it at a foreclosure auction for $945,000 but couldn't get its asking price of $975,000. Prices in the Outer Banks have fallen 10% to 20% from 2006, says Bob Barris of Hatteras Realty.

Prices already have come down steeply in much of Florida, southern California, Phoenix and Las Vegas. With fourth-quarter mortgage foreclosures hitting a record high and delinquencies rising to a 23-year peak, according to a Mortgage Bankers Association report yesterday, there are few signs of a turnaround. Many housing-market economists don't expect U.S. home prices to stabilize until sometime next year.

Many home shoppers say that's why they are taking their time. Last fall, Matthew Wilson, a private-equity executive, looked at two dozen Manhattan Beach homes in Los Angeles at prices ranging from $2 million to $3 million. "I saw so much inventory building up," Mr. Wilson says. One seller offered to throw in a Mercedes-Benz 500 along with a house priced at $2.4 million. In the end, Mr. Wilson came away thinking the properties he saw still were overpriced despite recent cuts.

14% Price Cut: In Santa Barbara, Calif., a two-bedroom cottage sold for $765,000 in 2005. After about a year on the market, it's now in contract for less than $739,000, despite $15,000 in upgrades, including a kitchen remodeling and a backyard hot tub. The median price of a single-family Santa Barbara home fell 30.5% in January from a year earlier to $380,000 DataQuick says.

Most deal hunters are avoiding markets with weak economies, such as Cleveland and Detroit, instead scouring places where the underlying economics are stronger. In Las Vegas and Miami, for example, real-estate problems are rooted in overbuilding; in California, tighter lending after the subprime mess has eliminated much of the potential buyer pool.

And home prices haven't given up all the ground they gained in the decade-long boom. Despite huge recent declines, prices in Miami remain about 64% higher than they were in December 2002, according to Radar Logic, while in Los Angeles prices are 57% ahead.

Down 33%: An 1,900-square-foot home in the Summerlin community of Las Vegas sold for $420,000 in 2005. It was listed at $323,000 last year in 2007; after a foreclosure, the bank sold it earlier this year for $280,900. Median existing-home prices in Las Vegas fell 14.4% in January from a year ago, according to Home Builders Research.

Jai Kreyl recently agreed to buy an 1,900-square-foot house in Summerlin, a master-planned community in Las Vegas. Ms. Kreyl, an executive assistant at a time-share company, was assisted by Joanne Stucky, an agent with Realty Executives of Nevada who has made a business out of finding cut-price properties. Similar houses were going for over $400,000 in 2005, the rough market peak in Vegas, but Ms. Kreyl is paying $270,000. "For 20 months I've been telling my friends I wanted to buy a $400,000 house for $250,000," she says. She acknowledges that prices may fall further but adds, "I'm still buying at a price I can afford. And I do believe that in three years' time, the market will just roll around."Real-estate brokers say the top sliver of the market nationwide -- houses priced at roughly $3 million or more -- remains firm. Still, some wealthy buyers are holding out for discounts. Bharat Desai and his wife, Neerja Sethi, co-founders of the technology-outsourcing firm Syntel, shopped for a year before buying last month an 8,900-square-foot oceanfront condo on Fisher Island, in Miami Beach, for $12.36 million. That was down from the $17.5 million the seller started out asking in January 2007, and below a $14 million offer the seller rejected in April, says Chris Bluntzer, a broker who handled the transaction with his wife, Elena. "My feeling," he says, "is that the smart money is stepping in."

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