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Real estate agents turning away business in hard hit US market

The most extreme case is in Stockton, California, about 85 miles east of San Francisco where it is estimated that three out of every four homes are in or on their way to foreclosure.

The city's resale market is 'pretty much gone,' said Cameron Pannabecker, owner of Cal-Pro Mortgage Inc. 'I don't know an agent today who would take your listing unless you're a hard-luck case. There is just too much competition,' Pannabecker said.

Properties that at the peak of the market two years ago were selling at $500,000, or appraised at $500,000, are now selling for $200,000, he said.

A big problem is that the glut of foreclosed properties is dragging down the prices of regular property. 'There isn't a huge amount of difference between the price of a foreclosed home and a regular home,' said John Knight, a professor of finance and real estate at Stockton's University of the Pacific Eberhardt School of Business.

'It's a tough market to be a normal seller,' said Stockton real estate agent Michael Blower of Blower Realtors. 'I ask clients if they really need to sell because their competition is banks who want to clean it off their books,' he added.

The only hope is that bargain hunters will start competing with each other. This has happened in other parts of California. 'I've heard yesterday there were 36 offers on one house,' said Terry Hull Sr., owner of property management company W.T. Hull Co Inc.

Hull is considering buying about 50 houses because 'it's an opportunity you rarely see'.

Stockton is typical of what is happening all over the US. House prices surges earlier this decade amid a building boom seizing on skyrocketing prices in the San Francisco Bay area. Middle-class buyers headed to Stockton and nearby towns in a sleepy agricultural area turning them into commuter belt land. Routine home financing, as in many other markets, was in the form of risky adjustable-rate mortgages.

But it is good news for the rental market. Distressed borrowers who manage to sell their houses are in many cases able to rent equivalent properties for about half the cost of their monthly mortgage payments.

Investors have taken notice that rental demand in Stockton is on the upswing while home prices have fallen, providing an opportunity to turn foreclosures into profits. Cesar Dias, a Stockton real estate agent said he sold a two bedroom house for $80,000, which is now fetching rent of $1,000 a month and generating a monthly profit of up to $400.

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