Lenders across the country stung by the housing bust are slashing prices on homes dramatically to rid themselves of an unprecedented number of foreclosed properties.
In some parts of the nation, that has resulted in bidding wars that harken back to the market's go-go years - and perhaps a signal that the bottom for the housing market is near.
The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously. Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, such as a job in a new city.
In the Philadelphia area, economists and industry officials say the inventory of foreclosed homes is not having an effect on the market at the moment. That's mostly because median prices remain stable or have declined slightly in the region. If foreclosures were affecting the market, the price drops would be more substantial.
Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumped to more than 50 percent in the hardest-hit areas - including Las Vegas, Detroit and distant suburbs of Los Angeles - said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pa. The number is as high as 90 percent in some newly built subdivisions, where loose lending standards and speculation ran rampant, real estate agents said.
By setting prices at extraordinarily low levels - say, $175,000 for a house that sold for $350,000 three years ago - banks can spark multiple offers.
"It's not uncommon to have 10 to 20 offers on one house, and for the house to end up selling for more than its market price," said Erin Attardi, a Realtor in Sacramento. The strategy, she said, allows the bank to be selective, picking buyers with solid financing or those able to pay in cash.
Over the last year, as the housing crisis accelerated, the number of properties turned over to bank ownership has more than doubled. As of April, there were more than 660,000 such properties in the country compared with 254,000 a year earlier, according to the real estate information company First American CoreLogic.
While this could reflect the end of the housing crisis, there is a risk that it isn't the bottom.
Investor demand could be swamped by the foreclosures expected to hit the market during the next year. In other words, there could be more supply than demand.
Wherever the turning point, buyers are finding that the deep discounts on bank-owned homes can be an opportunity, but also a source of anguish. Sally Zuniga, 29, and her husband have been looking to buy their first home outside Sacramento, Calif., and have been unsuccessful so far because of the intense competition.
"It's been aggravating, frustrating and emotionally straining," said Zuniga, a media buyer for an advertising agency.
This week, the couple put an offer on a three-bedroom house with a pool that was listed as a "short sale," where the home is sold for less than the amount owed on the mortgage.
They have given the property owner until July 18 to respond - an indication of the longer period it commonly takes for such arrangements to be worked out. Their offer of $195,000 was $6,000 over the asking price, in an effort to make it stand out from competitors.
Some in the real estate industry see such competition as a sign that the housing market's gloom is lifting.
"It's actually stimulated the market," said Janice Ziesig, owner of Z House Realty Group in Orlando, Fla. "Things are moving now - more so than they were."
For real estate agents, helping banks sell off properties is one of the only flourishing businesses these days. But it's not for everybody.
Agents can easily pay hundreds of dollars a month for upkeep - including utility bills, cleaning and lawn care - and must go through the hassle of getting reimbursed by the bank.
They sometimes have to evict homeowners, tenants or squatters. And in many cases, they have to deal with vandalism or theft of items ranging from copper pipes to appliances and air conditioners.