It’s just before 11 a.m., and a small group of men in scuffed sneakers and blue jeans have assembled on the courthouse steps in Stockton, Calif. They’re here for what’s become a familiar ritual in U.S. cities hit hard by falling house prices: the foreclosure auction. At the peak of the housing bubble, Stockton was one of the most frenzied real estate markets in the country. Now, with many of those homes in foreclosure, the bidding wars have turned surreal.

An auctioneer steps out of the courthouse, and with little fanfare starts to read out the details of several foreclosed homes. For a while there are no takers. Then he gets to a house in the nearby town of Manteca—opening price: $99,870.08. “Two more pennies,” says one bidder in a muscle shirt. Another man steps forward: “Plus a penny.” It goes on like this, the two bidders anteing up copper Lincolns for a home that, four years ago, might easily have fetched $40,000 above the asking price. “Going once, twice, third and final time. Property is sold at $99,870 and 13 cents.” Continue…