A few weeks ago I received an email about an auction of fractional ownership condos on the Gulf Coast of Florida. These units are to be sold in two days regardless of price by leading real estate auctioneer, Sheldon Good. Alleged market value? $229K. Suggested opening bid? $65K. more
While on vacation a couple of weeks ago in Jackson Hole, WY, I learned of a another absolute auction of fractional condos at the Teton Club. Again conducted by Sheldon Good, these condos will be sold regardless of price on September 10. Previously priced from $72K-$192K, opening bids start at $15K. more
Meanwhile, Intrawest is peddling whole ownership units at a Westin branded luxury development in downtown Napa, but will they succeed so wildly as they did with Squaw Valley, Mammoth and others? They certainly don’t seem to have waiting lists this time, as I regularly receive updates encouraging me to bring my clients to the project. more
Last year, a property sold in South Reno at an auction conducted by JJ Manning. Originally listed on April 13, 2004 for $2.9 million due to a corporate relocation, the home didn’t sell. 91 days later they switched agents and repriced at $2.7 million. At some point I understand that either the employer or relocation company took possession of the house, which probably led to the decision to get it off the books via the auction. 458 additional days and several price reductions later, the home was auctioned for $1,622,500, closing escrow on October 21, 2005. more
Now these owners in Sparks are doing themselves on Craigslist. more
That short sale in my neighborhood? Who knows… maybe it will end up at auction, too. see
Ebay has done a marvelous job creating comfort with the idea of online auctions. But in the world of real estate, so far only land and timeshares have had much in the way of success on that site. But as companies like Redfin make buying a home online easier, and as the market copes with more distress sales, online auctions become a compelling option for those who simply must get out. And for those seeking true bargains.
I think online auction companies specializing in real estate are poised for serious growth.
9 comments
“Getting Real About the Real Estate Bubble”
“For the past five years, the housing bulls have been trotting out one rational sounding argument after another to explain why the boom made perfect economic sense.”
“Forget about a crash, they assured homeowners. Expect a ’soft landing’ where your three-bedroom colonial…not only holds onto its huge price gains, but keeps appreciating at a ‘normal’, ’sensible’ rate of 6% or so into the sunset.”
“Americans wanted to believe, and they did. Now, that giant popping noise you’re hearing is the sound of yesterday’s myths exploding like balloons pumped up with too much hot air.”
Fortune Magazine
August 25, 2006
Back in January of this year, shortly after the first of the year, a certain very large real estate company in Reno ran a full page advertisement in the Sunday RGJ. This ad was not in the real estate insert, but appeared in the regular part of the paper.
The realtors at this certain very large real estate company assured the citizens of Reno that:
1. There was no housing bubble in Reno. There never was, and there never would be because Reno has such a fundamentally sound economic climate.
2. While housing prices would not continue their 15-20% annual gains as in the past, prices would indeed continue to rise in Reno, albeit at a more sustainable level. Perhaps as much as 9% in 2006.
As of today, it appears that the realtors at this certain very large real estate company, the self-described leaders in Reno real estate, are about 19% off in their projections. In the wrong direction.
If I may paraphrase the article from Fortune Magazine:
“Renoites wanted to believe,and they did. Now, the giant popping noise you’re hearing is the sound of these Reno realtors’ myths exploding like balloons pumped up with too much hot air.”
It’s a Great Time to Buy! (Version 1)
The power of real estate depreciation is tremendous. You can create significant debt with just a few dumb choices and the patience to see them through.
Consider this. Say you buy a $500K house with only 10% down, $50,000. The first year, your neighborhood depreciates 10%. Your home is worth $450K, and your equity, the amount above and beyond what you owe the bank, is zilch.
You put $50,000 into your home, and one year later it is worth $50,000 less than you paid for it. That’s a 100% loss. Your $50,000 down has evaporated. Try getting that in the stock market. The point is, you have to live somewhere. Why not lose money while you do it?
It’s a Great Time to Buy! (version 2)
The power of real estate depreciation is tremendous. You can create significant debt with just a few dumb choices and the patience to see them through.
Consider this. Say you buy a $500K house with nothing down. The first year, your neighborhood depreciates 10%. You house is now worth $450K, and you now owe the bank $50,000 more than your house is worth.
You put nothing down, and just one year later, you now owe the bank more than 111% of the value of your house. This is the majic of compounding debt! Try getting that in the stock market. The point is, you have to live somewhere. Why not diminish your net worth doing it?
As I have the opportuniy to travel around the U.S., I typically read the local real estate magazines and papers wherever I go. Based upon what I have read in dozens of real estate markets across the U.S., I offer the following to realtors everywhere. This can be employed by realtors in all 50 states, and in all regions and locales within the 50 states:
“It is Different Here”
You may have heard of the real estate market slow-down occuring in other parts of the country. Rest assured it is different here in __________(fill in with name of city or region).
The local real estate market here in ____________remains quite healthy despite the downturn in other States. That is because we here in __________ live so close to _____________ (here fill in the Ocean, or Lake, or Beach, or other Recreational Area). We are so blessed to be able to live in such a special place! Let’s face it. Other people in other places are a bit jealous of us and want to live here.
Also, our local economy remains robust. According to data compiled by _________________ (here fill in the name of the local chamber of commerce or Development Authority), our employment rates are higher than the national average, and our local economy continues to grow. New business, employing local workers, are arriving here in _________ at a rate far in excess of other markets our size.
But there are limits to how much ___________ can grow in the future.Because of_________________(here fill in with “limited land for development” or “restricted water supplies” or “local zoning and development regulations”) it is highly unlikely that there will be many more homes built in ______________ in the future. If you are interested in living in this truly special and wonderful place, it would be wise to contact a realtor now.
With gorgeous views of ____________, a quality of life surpassed by few places in the United States, and a robust and healthy local economy, there has never been more potential for market appreciation than there is now in __________________.
If you want to find out more, call ___________(insert your name here) today.
Let’s close out today with yet another underwater flipper in Somersett. This one at the high end of the market.
Look at MLS #60019631. 1900 Russell Pointe Cr. APN #232-411-01.
Sold for the first and only time on 9/26/05 for $1,065,798.
Listed today at $1,099,000.
Has all the flipper droppings: vacant/granite/stainless/cherry/ and record owner lives in Mill Valley, CA. Backyard landscaping not done yet.
Interesting current pricing. If they get 97% of asking, they are right at what they paid a year ago. That would be $1,066,030. Deduct about 4% for selling costs, they are down to $1,023,389. That puts them $42,400 underwater. Add to that what it has cost them to carry this for 11 months, say another $44,000, ($4000 a month on a $1 million loan) and they are looking at an $85,000 loss. That is if it sells at current asking. It can only get worse from here.
Yes, folks, if you want to lock in declining value, there has never been a better time to buy in Reno.
Here is an opportunity to see if we have not yet run out of greater fools.
Look at MLS #60017507. 661 Caspian Ct. This is a Lennar house sold to current owners on 9/16/05 for $465,217. (Almost perfect top of the market timing).
All the usual flipper droppings: vacant/granite/stainless/non-resident owners. Backyard lansdcaping not done.
On the market for $619,900.
So in a market where prices have dropped 10% in the past year, these sellers think they are entitled to a profit of $154,683. For owning the house, doing nothing to it, for a year.
Let’s watch this one. This is excatly how the market got so out of whack the past 5 years. Two years ago, a greater fool would have already bought it for the asking price. Let’s see how many fools are still around.
Regarding 1900 Russell Court, I heard through the grapevine that health issues are forcing this sale… but who really knows?
Financial health, you mean?
Somersett is the biggest bubble neighborhood in Reno. Every house there was sold during the bubble inflation. This is not a neighborhood with long time homeowners sitting on 10-15-20 years of appreciation. Every owner there is sitting on bubble equity.
There will be no better study of the bubble than Somersett.
Let’s put aside the 30 or so houses in Sierra Canyon that are on the market. That is going to be is own bloodbath once sellers start to break.
There are 65 houses in Somersett between $500K and $1 million. How many have an offer?
ONE
There are 15 houses over $1 million. How many have an offer?
NONE
The only question is: how low will prices fall, and how long will it take?