OCEANSIDE -- Even as bidding wars start to buoy the cheap end of real estate markets, another kind of auction provides evidence that the upper end may still be falling.

After selling fewer than 10 condominiums in the Oceanside Terraces development three blocks from the Oceanside Pier, the developer is turning to an auction house to off-load the remaining 29.

Starting bids on the condos range from $295,000 to $625,000, or $151 to $244 per square foot. Ken Stevens, the auctioneer, said comparable condos have been selling for 30 to 40 percent more. In San Diego County as a whole, new condominiums sold for a median $362,000 in April, according to the latest report by the California Building Industry Association.

Scheduled for July 19 at the Sheraton Carlsbad, the auction would follow numerous auctions of Southern California homes that banks have seized from delinquent borrowers and a much smaller number of new homes sold from the block.

A dozen newly developed luxury estates in Escondido were auctioned in October. Unable to pay off a construction loan, the developer unloaded them to an investment group. Kennedy Wilson, the auction outfit, reported the sale taking 90 minutes.

"All of these guys are getting pressure from their banks, and this is probably no different," Stevens said of the Oceanside project's owner.

The condos' trip to the auction block is another sign of continuing weakness at the market's upper end. Foreclosures have cropped up even in upscale neighborhoods, and analysts have pointed to rising numbers of luxury homes for sale. The widely watched Case-Shiller index showed the upper third of San Diego County home prices falling at a 17 percent annual rate in the first three months of the year.

The index shows greater declines among the lowest third, but buyers and their real estate agents overwhelmingly report having to compete against 10 or more other buyers for the foreclosed tract homes that had defined the market's bottom end.

Oceanside Terraces may yet spark a similar bidding war, but Stevens said Janez Properties Inc., a lead partner in the development, stands to take a substantial loss. Janez representatives didn't return a call seeking comment.

Two people in the real estate industry said 2007 and 2008 were bigger years for new-home auctions than 2009 has been. Real estate economist Alan Nevin said that's largely because builders have scaled back and are putting fewer new homes on the market than they had been.

In the past, auctions have often failed because starting bids were at or above market values.

Nevin said most new homes being auctioned are condominiums, rather than single-family homes. It can be difficult to build exactly the number of condos that are likely to sell, Nevin said.

The continuing trickle of new-home auctions is evidence of a real estate market still in the healing process, said Stevens, co-chief of Accelerated Marketing Partners.

Even so, Stevens said he considers auctions to be more representative of a free market than the typical process of selling a home, in which clients tend to visit listed houses singly over a period of weeks or months. Traditionally, offers vary in the degree to which they rely on financing, which can be difficult for sellers to weigh against one another. The Oceanside auction will avoid that difficulty because would-be buyers have to be previously approved by their mortgage lenders, Stevens said.

Stevens said real estate of all varieties is commonly auctioned in his native Melbourne, Australia.

Call staff writer Chris Bagley at 760-740-5444. Read his blogs at bizblogs.nctimes.com.

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