I’ve noticed that we have quite a few Montreux stalkers reading the blog lately, so I thought I’d provide a little historical sales data for your speculative amusement.
Currently we have 33 homes for sale in Montreux according to our
MLS, but with developer inventory there’s probably more. Only nine are
under $1.5 million, and I see no pendings.
From January to September
we’ve sold 22 total, putting the rate of absorption at 2.75 homes per
month. At the current rate of sale, we have a 12-month supply of homes,
not counting the developer unlisteds. Still a buyers market, but not-too-shabby compared to other areas of town.
< $1.5 Million
YEAR SOLD DOM $/SQFT AVG $
2003 8 345 $339 $1,153,620
2004 21 218 $343 $1,045,999
2005 15 190 $379 $1,237,108
2006 10 272 $383 $1,240,033
2007* 8 345 $371 $1,245,678
> $1.5 Million
YEAR SOLD DOM $/SQFT AVG $
2003 5 504 $368 $2,074,402
2004 7 217 $345 $2,007,429
2005 15 200 $410 $1,945,122
2006 12 377 $431 $2,037,565
2007* 14 509 $453 $2,017,362
* Year-to-date sales as of October 16, 2007
Data courtesy of NNMLS.
44 comments
Thank you Diane. I agree this is a subject of particular interest to this board.
345 days on the market [on average] in 2007 for sales under $1.5M, and 509 days on the market for sales over $1.5M. I don’t call this “not-too-shabby compared to other areas of town.” And I certainly don’t agree with Montreux’s September newsletter which proclaims sales are “up;” “we’re right on track;” and don’t listen to the gloom and doom you read in the newspapers about Reno residential real estate sales!
How many of these 33 homes currently listed for sale are vacant or tenant owned? And how many more “choice” fairway home sites are being offered for sale starting at only $375K [ala the outdoor signage on Mt. Rose Highway]?
Assuming for sake of argument the average out-of-pocket cost for each <$1.5M developer[s] home currently for sale is at/over $100K annually [7.5% construction/land acquisition loan(s) carrying cost(s); HOA dues of $350/month; and, secured real property taxes of $22K/year], and you’d better be very well heeled [see, I corrected my spelling] indeed to be stubbornly waiting out this market! And if you’re sitting on more than one of these beasts…
Stated differently, assuming fair market monthly rent of $3K; and what would otherwise be a purchase price of $1.5M or more [remember the $100K annual out-of-pocket cost I hypothecated is based upon $1M (rather than $1.5M) in cost]; and the cost to rent is actually less than 20% of the cost to own.
Incredible!
And I’m just curious. Since you now have a couple of $2M plus listings in Montreux, what are you telling your sellers concerning their pricing and the likelihood of a sale within the next 1-1/2 years?
Smarten – my stalking of Montreux shows that you are only slightly wrong here. The fair market monthly rent for one of these beasts is probably higher as long as someone will pay it. A home almost identical to the current $3500 “Cottage” rental on Craigs List that you referred me to a couple weeks ago can be purchased for 999k. It’s MLS# 70007224. I agree with you that this could probably be rented for 3k with a little negotiation. However, I would expect that these higher end homes such as the ones Diane has listed would fetch more since they are much larger and have much nicer amenities. However, if the builder wants to rent one for $3000-$3500 I would gladly move in since I rent in the Bay Area and pay close to that for much less, and want to move to Reno anyway. The question remains though, is there a market for $3500 and up rentals in the Reno market. I would guess it’s a small market and a handful of people at best, but it may be larger than the market for 2.5 mil homes. We shall see.
There is a maximum rent that people will pay anywhere. In San Francisco, it is around 12,000 per month, while a typical 2 bedroom apartment rents for 2,500 to 3,000. There are also houses on the market for tens of millions of dollars. Clearly these cannot be rented out and the owner would not want to since the property is worth so much that the risk is too great.
I would expect a similar situation in Reno. The maximum rent may be 3,000-4,000 which means that the homes in the 2 million class will not be rented.
John asks “is there a market for $3500 and up rentals in the Reno market?”
The answer is essentially NO. For nearly a year I monitored the residential rental market in Reno and but for two outrageous exceptions I know of, I’m aware of only one rental that had an asking rent of more than $3,500/month. Coinicidentally, it too was in Montreux and the asking rent was $4K/month.
This property was being offered by an agent and without much negotiation at all, she offered the home to me [after being on the rental market for two months or more] over the telephone at $3,500/month. Therefore in my book, it really wasn’t offered for more than $3,500/month.
I didn’t pursue this rental because there was something about it displeasing to my wife but I’m sure I could have negotiated an even lower rent.
So my point is: no, there’s essentially no market in Reno for residential rents in excess of $3,500/month. Thus although some of Diane’s Montreux listings might be asking more to purchase a “Stonehaven” rather than a Montreux “Cottage” or “Renaissance” model, that doesn’t mean their owners/developers can secure more than $3,500/month in rent because the market simply won’t bear it.
So just like Bay Area expatriates flocked to Reno to purchase at a fraction of the comparable cost to own in the Bay Area, expatriates like you [and me] will flock to Reno to rent Montreux/similar homes at a fraction of the comparable [rental] cost in the Bay Area.
So since there essentially isn’t a rental market for Diane’s Montreux listings in excess of $3,500/month; and their days on the market are destined to be in excess of 509; what exactly do their owners intend to do, if anything, to stop the flow of negative debt service?
Now they could drop their prices by $500K-%750K and generate some immediate interest but chances are, they’d rather cut their noses to spite their faces because they’re proud [or in denial, or for heaven’s sake, it’s Montreux]. But we’ll see.
As your basic white trash homeowner, I have to admit that I just don’t get the appeal of Montreux. What is the cache’ of owning a garish 2.5 mil chateau when there is an even more garish 2.6 mil monstrousity next door? If you want to stand out, maybe your 2.5 mil is better spent somewhere where you will be king or queen of the hill. Eaglesnest, Juniper Trails, Street of Dreams, custom in a real cool location?
That said, I found some of the $/SF data interesting. The $/SF spread between the “low” and high end sales in Montreux is escalating. Probably a combination of both, but I would guess that:
1 - The uber end is apprieciating faster than the mere ridiculous end of the spectrum.
2. The construction costs are going up as even more “amenities” are being built into the spec/custom houses. Note that I can’t bring myself to use the term “homes” here.
It won’t really matter that us plebes simply don’t recognize a Montreux address as an asset, but more of a negative. Let them eat cake there, and play out this microcosm of the market. They may have to end up scraping the icing off before it is all over.
Alright… I can’t help but ask.
For those of you from CA that are willing to shell out a mere $3500/mo in rent for these “houses”. Where do you plan on working in Reno to comfortably afford that payment, and most importantly, are you hiring?
So Ca has many homes renting in this price range and depending on the locale, $3,500 will get you a nice place. How about an ocean view and walking distance to coffee? Keep in mind, my area is dense with incomes derived from Aerospace Industry, Tech companies, medical research, and a thriving entertainment industry, just to mention a few. Move to Reno and rent at $3,500? Not a chance.
Miller wrote, “For those of you from CA…willing to shell out a mere $3500/mo in rent…where do you plan on working in Reno to comfortably afford that payment?”
This is a subject I attempted to broach in the past; it’s called the transformation in demographics. And the answer is…
We don’t plan on working! We’re those “rich” [although not according to Derrick] retirees from California who sold our homes with hundreds of thousands in equity and if we put that equity in the bank, the interest we earn is more than $3,500/month.
This blog has identified a number of us who’ve been sitting on the sidelines watching. Some of us have actually made the move and decided to become renters versus owners because of the disparity in the cost to rent versus own. Others are toying with the idea.
Besides, if you asked your same question directed to buying [versus renting] a home with a $3,500/month mortgage payment, I would ask where does this homeowner work in Reno that allows him/her to comfortably afford a $3,500/month mortgage payment?
But in Montreux, that payment [including taxes, insurance, homeowners’ association dues and loss of income on a deposit] is likely $12K/month or more [possibly $20K/month for one of Diane’s mega-listings]. So I ask you: where is this hypothetical purchaser going to work in Reno where he/she can comfortably generate this income?
And the answer is…
The same answer as the renter! He/she doesn’t plan on working [or at least working in Reno]! He/she comes to Reno having already created his/her nest egg.
Sooooo….
The market for $2.5M Montreux mansions really isn’t Reno; it’s California. But the problem is some Californians aren’t dumb and if they can get the same thing as a renter for a small fraction of the cost to own, they’ll come up with $3,500/month all day long.
Make sense?
But Smarten, don’t you know that you can’t lose money buying a house in Reno? That the value of houses in Reno always goes up? That you better buy now or get priced out forever? So no matter what it may cost you to buy in Montreux, or anywhere in Reno, doesn’t matter. Because somebody will always come along and be willing to pay more for it than you did. And please don’t think that I am just making this all up. I have in my possession a collection of fliers and mailers and newspaper interviews with many of the most prominent realtors and brokers in Reno as recently as 2005 saying all these things. Why I even have an archived version of this very blog wherein it suggests that 10% annual appreciation on a house in Reno is virtually guaranteed. “Try getting that in the stock market” it says. I understand that these prominent members of the local REIC would really prefer that they never said these things, because it causes them to look rather foolish now. But they did say these things, over and over and over again, and now they complain about “unrealistic” sellers who won’t lower their prices, because those sellers believed them.
So, Smarten, jump in and buy one of those $2 million plus Montreux monuments. By 2009, it will be worth $500,000 more than it is today. Everybody knows they aren’t making anymore land in Montreux.
WOW Lindie! I had no idea! And you’re right about they’re not making any more Montreux land…
EXCEPT in the real Montreux…That’s as in Switzerland of course!
And with the $500K I stand to make on my Montreux purchase in just two short years, I’ll have plenty of money to visit the real McCoy [or McMontreux]!
BTW, you don’t have to have hundreds of thousands in equity from your sale of a California residence in order to afford $3,500/month in Reno rent. You can keep your home; rent it out at San Francisco Bay pricing; use the positive cash flow for your Reno home; and voila - you don’t have to get a job in Reno, and it still doesn’t cost you anything out-of-pocket.
What a country!
WOW Lindie! I had no idea! And you’re right about they’re not making any more Montreux land…
EXCEPT in the real Montreux…That’s as in Switzerland of course!
And with the $500K I stand to make on my Montreux purchase in just two short years, I’ll have plenty of money to visit the real McCoy [or McMontreux]!
BTW, you don’t have to have hundreds of thousands in equity from your sale of a California residence in order to afford $3,500/month in Reno rent. You can keep your home; rent it out at San Francisco Bay pricing; use the positive cash flow for your Reno home; and voila - you don’t have to get a job in Reno, and it still doesn’t cost you anything out-of-pocket.
What a country!
Regarding who pays these prices and how, a common explanation seems to be well-heeled (I noticed, Smarten!) Californians who commute or telecommute to California after they move here. In other words, jobs that pay well enough to afford these homes don’t exist in Nevada; these buyers and renters secured the jobs in California before they moved here and held on to them. It’s hard not to be jealous, but I’d do the same thing if I had the chance.
Lotta trash-talkin here. Here’s an outsider’s view of Montreux which is based on some reliable info.
About 30% of the owners are extremely wealthy people who want a Nevada address as a tax haven. Many but not all are California expatriates. They see Reno as a closer version of Monaco. The same phenomenon exists in Incline Village where you have “Billionaire”s row along the lakeshore. Anybody remember Michael Milkin? Some of them have decided they don’t like full-time snow and have moved downhill. In any event, the price of any Montreux home is chump change for these folks, they want the amenities, and they want to be behind a gate. They are immune to market influences and will upweight any Montreux “averages.”
Then there are California retirees, another 30%. Sorry to say it, but many Bay area homes which are mothing special are going for $2M and up. A lot of these people have >$1.5M in home equity. The can buy a “lower end” Montreux home for cash with no mortgage or collect a minimum of $75K a year interest and rent one for half that. And that doesn’t involve any retirement savings they might have. These people don’t have to work to support a Montreux home–and there are an awful lot of them.
So who is potentially pressed to sell a Montreux home? The remaining 30-40% who are Reno locals who may have lost/changed jobs and need to move, Californians whose Montreux home is a second residence and whose finances have fallen on hard times, or the developers who need to peddle their slightly declasse Renaissance homes on their fringe land.
So, in summary, only about 30-40% of Montreux is subject to Reno market forces. The other Montreux owners are above it all, literally as well as figuratively.
California Boomer posted:
“Lotta trash-talkin here… Here’s an outsider’s view of Montreux which is based on some reliable info…in summary, only about 30-40% of Montreux is subject to Reno market forces. The other Montreux owners are above it all, literally as well as figuratively.”
So, in other words, the extremely wealthy folks carry a pay any price attitude and just ante up whatever the fantasy price may be on a property of interest, regardless of current market trends, abandoning all of the savvy financial skills which got them to where they are in the first place. And, in doing so, they prop up all the values in their bubble free gated communities. Mmm hmmmm, riiiight. You sure nailed it…as far as the “trash-talkin” goes, that is. Your post is pure garbage.
As I sit here awaiting for the market open, I cant help but think how NONE of you are rich, nor will EVER be able to afford a home in montreux. Oh and btw Bantering bear rich people DO carry a pay any price attitude more than you obviously know. Do you think buying a $2,000,000 home is a risky investment for someone who spends 200k on a car? This isn’t abandoning the savvy financial skills which have got them to where they are now, it’s called who wants to hassle and haggle on prices. Afterall prices arent that important.. ANYMORE!
Bantering Bear, your inability to comprehend any point of view besides you own narrow minded one, is “pure garbage.”
“So, in other words, the extremely wealthy folks carry a pay any price attitude and just ante up whatever the fantasy price may be on a property of interest, regardless of current market trends…”
Not necessarily so; it depends upon their TWAIFI orientation (”The World As I Find It), as my economics professor used to caution us.
The above blog excerpt has evoked interesting responses, as applied to select Montreux homes. I suggest to you that the key words are “property of interest,” and that if one realizes that, then there should be no problem understanding the `perceived’ attitude of such buyers.
Here is what one Reno-bound and successful client family has shared with me regarding their relocation criteria–husband and wife are professionals, early 60s DINKS (Double Income, No Kids at home):
There are only a few homes of interest to this buyer who wants: a mountain view location in a region of lakes and streams, close to a mid-sized city with restaurants and entertainment venues; close to an airport with frequent California connections; not over about an hour flight commute to San Francisco; a large house, i.e., over 4,200 sq ft; wide side yard spacing with no close neighbors; a suburban location; and a closed gate community. From the start, you could exclude all of the developers’ cookie cutter tract homes on postage stamp sized lots, and that includes all of the area down on the flat land south of downtown Reno, both sides of 395, all the way to the Mount Rose Highway. Then exclude the deeper snow area beyond Montreux. Sparks, the northwest part of Reno, not really attractive to these buyers. Now you have narrowed the field…what does a qualifying property in that target area cost, looking at asking prices just within those parameters? Look just at a few of Montreux candidates because not much else qualifies…Saddlehorn is nice but no closed gate. These are urban expatriates who have been living in California, and they all seem as they age to want that controlled access into their neighborhood. The $2mm+ approx. asking price is not unreal for those CASH buyers. Remember, even if less than just 1/20th of 1% of the California population might have the resources and the interest, that still equates to many thousands of people. Reduce that again by another 1/10th, and you can see that the law of big numbers even when impacted dramatically still explains why there could be legitimate buyers. They are not crazy or wasting their resources, from THEIR viewpoint of life and the world around them.
I personally regard people who pay enormous prices to live in Holmby Hills (near Westwood) in houses much smaller than my own house, as a mystery, but my analysis is based upon my own economics and reference to life, which is not theirs. They may seem crazy only to me. And yes, they do pay big sums for cars.
The truth of the matter is that to those people, almost all of Reno’s housing could be dozed and nothing much would be lost. So all the multi-colored trend sheets, graphs, and interesting statistics are not that helpful to them. This is not a pay-any-price attitude, it is more a highly-qualified and picky buyer sticking to a strictly defined set of purchase parameters, which excludes substantially all of Reno properties as prospects. Those people are out there, not hordes of them but they are there and are watching and waiting for purchase opportunities. They didn’t get to where they are by being stupid or wasteful, they just have different TWAIFI’s than the rest of us.
Tom wrote: “There are only a few homes of interest to this buyer who wants: a mountain view location in a region of lakes and streams, close to a mid-sized city with restaurants and entertainment venues; close to an airport with frequent California connections; not over about an hour flight commute to San Francisco; a large house, i.e., over 4,200 sq ft; wide side yard spacing with no close neighbors; a suburban location; and a closed gate community.”
Have your clients considered Vancouver, WA? Just like Nevada, no state income tax. Cross the Columbia River and you’re in Portland - no sales tax. There’s an upscale suburb of Vancouver called Camus [sp?] - not sure if there’s a gate, but the cost of housing is less than Montreux.
And Derrick, would you please stop with your “NONE of you are rich, nor will EVER be able to afford a home in montreux” disdain? Just because you don’t fit into this demographic class doesn’t mean others on this board don’t. I think a number who have posted comments COULD “afford a home in Montreux” if that were their choice. But they’ve elected otherwise for a number of reasons, which is why this thread is relevant and continues.
Thanks, Smarten, they have mentioned Vancouver, WA., however, they tell me you need to drive over to Portland to get to a decent airport, then you have to go to Oakland rather than SFO, if you use Southwest; or if you use Alaska, there are few choices and it is an hour and 45 minutes air time to commute, plus awkward to get to Portland airport. They need frequent and quick air service from their new location to San Fran and that is one of their requirements. Reno airport is a handy in and out and park, Portland airport is a city drive from Vancouver, over a bridge, relatively a nuisance commute for them.
These people have charted out flight choices, looked at shopping malls, you name it, they have studied it… thanks, though.
Hello - Californian here. Not rich in my mind, not retired yet. In searching for the place we would be happy to out-migrate to, we considered Vancouver. The weather there just sucks! A brother-in-law just moved to Seattle a month ago for a job, from sunnier climes. He’s wondering when the dang rain is going to stop, LOL.
Wow; so others have charted out Vancouver! I’m impressed.
Actually, I really liked the place. The commute over the Columbia River to get into Portland is like 10 minutes.
And Portland is a real city with a real airport. And it’s a pretty city with lots of bike trails and walking paths. Very “green.”
And I really like the sales tax thing in Oregon, and low secured property taxes in Washington.
Now the weather thing - I understand. But Vancouver’s not really that far from Spokane and there are a couple of very nice ski areas that I think compare quite favorably with Lake Tahoe. For me when it’s rainy outside, it’s snowing in the mountains.
But to each his/her own.
I think it’s interesting on this little blog that there are so many Californians/California expatriates who are either toying with/or have actually pulled the trigger on the idea of relocating to the Reno/Lake Tahoe Area.
This just demonstrates the pent up demand for reasonably priced upscale housing in Reno; demand that is not dependent upon the local population nor local wages.
Oh BTW, I don’t know if anyone heard the news yesterday but current rental surveys are out and average 2 BD. apartments apparently rent for $800/month in Reno and more than twice this amount in San Jose [which BTW, has seen rents increase nearly 12% in just the last year]. And I just received an e-mail from a financial consultant in the San Jose Area advising that the rental vacancy rate in Silicon Valley now stands at 2% [which is essentially 100% occupancy].
The pendulum has started swinging in the opposite direction. At the height of the dot.com thing, the top end of the rental market in Silicon Valley for an average 2 BD. apartment/condo was $2,100/month. It’s now difficult to find a nice 4 BD. home in a nice west side neighborhood [like Los Gatos or Saratoga] to rent for much less than $4,000/month and if we’re talking Palo Alto or Los Altos, plan on spending more than $5,000/month [remember, for a rental]. This explains why a Montreux rental for $3K/month represents such value to some of us!
We’re heading back to 2000 rental demand and pricing and I can guarantee that if/when we get there [which may be a whole lot quicker than you think (like a year or less)], Reno IS going to experience another migration of Californians willing to pay this kind of rent for something more upscale than your average 2 BD. apartment!
And if they can own for the cost to rent [which they can’t now], watch out.
Well, in my humble analyses of the variables involved in all this real estate biz, the last 5 years saw that big drop (by over half) in Californians out-migrating because all the target states’ real estate went up steeply too. It became less of a “gimme” to move to another state.
Tax reasons aside, the draw of the cheap but spacious home spoke volumes. Yes, I can still get a huge home with a pool on a grassy acre in Fort Worth for poco dinero. But I prefer the west with its mountains. Kinda hot and humid there in ole Texas anyways.
Neighbors of mine are moving to Camus - just as soon as their home sells here. They had a bite but her financing didn’t come thru…
btw smarten the definition of being “rich’ was not my understanding, but rather forbe’s understanding outlined in an interesting article.. please dont put words in my mouth.
As to your post that suggest many people on this blog could afford a home in montreux but decide not to.. That has got to be the funniest thing I have heard in a while.
Wow! A lot of the commenters/readers here really take this all very personally. I am beginning to feel like I’m on a sports blog.
BanteringBear seems to miss the point that, unlike Washington, or Oregon, or Vancouver, Reno is a very short flight or a modest drive from a lot of places in California. And it might be even more annoying to know that many of those California retirees who look upon Montreux as a bargain will also be keeping a second place in SF, Palo Alto, or Palm Springs so that they can easily hop back and forth to be with old friends or family while getting the tax benefits of Nevada.
Reno has a university, lots of great entertainment, first-class medical care, a convenient airport, a relatively mild high desert climate, and world-class outdoor recreation.
Montreux has medium to large homes in a very tasteful setting, outstanding construction quality, a beautiful championship golf course, outstanding athletic facilities, and one of the nicest sites in the Reno area. All this trashing of the place sounds like pure jealousy to me.
So some of the folks in Reno may hate/disdain Montreux, but from the expatriate/retired Californian’s point of view: WHAT’S NOT TO LIKE?
Derrick, get your facts straight!
First of all, YOU were the one who defined the term “rich” as being a person having a net worth of $5M>. I don’t care from where you secured your data…these were and are YOUR words. And let’s not forget [for you new bloggers], you readily admit you’re not rich by YOUR definition.
Second of all, I never said “many people on this blog could afford a home in Montreux.” My exact words were “a number who have posted comments [on this blog] COULD afford a home in Montreux if that were their choice.” Past posts have revealed there are several contributors out there who have admittedly been monitoring sales in Montreux with the intent of making a purchase at the right time. In fact, that’s the very reason why Diane decided to post this topic [”I’ve noticed that we have quite a few Montreux stalkers reading the blog lately”]. For your benefit Derrick, I think Diane’s use of the term “stalker” refers to people contributing to this blog who can afford to buy in Montreux, however, are sitting on the sidelines watching and waiting.
Finally, how about that stock market Derrick? Bet you really cleaned up today! That’s what I love about the stock market. You become an owner of a business by making an out of pocket cash investment. The business makes money and how much profit is returned to you, the owner [ZIPPO (O.K., maybe, just maybe, a token 1%-2% dividend)]? Then a company like Exxon makes A LOT of money. We know the CEO gets $400M or so even though if it weren’t for stock options, he wouldn’t be and isn’t an owner. And how much do you get being the CEO’s boss [ZIPPO again Derrick]?
What’s even funnier is that for all intents and purposes, you can’t leverage your cash investment when you buy a stock like you can when you buy real estate. So I just love listening to people like you who tout the benefits of the stock market which purportedly returns twice as much on average as comparable real estate WITHOUT taking into consideration:
1. That the real estate investment is leveraged [thus a 12% annual return on a stock is equivalent to a comparable 120% annual return on a piece of 90% LTV leveraged real estate [located somewhere other than Reno of course]; and,
2. There are tax benefits [like depreciation, 1031 exchanges, $500K capital gains exclusion, etc.] to owning real estate you’ll never realize on your stock purchases!
So who’s laughing now Derrick?
Im laughing now smart money.. Anybody who knows anything about investing in the stock market knows you have stop losses, and options contracts.I have never claimed to be a day trader, which is obviously what you seem to think. Also just as you can put your money into a stock with the hope of it going up ( given you have done your due dillegence) you can also place that same bet on the stock going down. this is referred to as “Shorting” a stock.
But if you must know smarten my portfolio is up over 24% in the last 2 years alone. Who’s laughing? not me !
Im not laughing! I’m thinking about montreux myself! hahaha
Derrick, you’re a riot!
You state, “my portfolio is up over 24% in the last 2 years…Who’s laughing? not me!”
I don’t know if you read the newspaper but if you pick up today’s RGJ and take a look at the front page lead article on how your Spanish Springs home’s secured real property tax bill is about to go up notwithstanding the fact its fmv has gone down since 2005-06 when it was last appraised, I’m sorry to inform you that your portfolio is up nothing in the last 2 years. Too bad you can’t sell your home “short.” And good thing you can write off the increased taxes as a deduction on your state income tax return! But wait; being a Nevada resident you don’t pay state income taxes [ah, one of the many advantages of Nevada residency].
Then in an earlier post you state that “the funniest thing [you’ve] heard in a while” is “that…many people on this blog c[an] afford a home in montreux but decide not to.” Now you admit even you are “thinking about montreux [your]self.” Thus you too are a closet Montreux stalker! To quote Derrick, “hahaha” I rest my case.
Now for the others of you who read this blog, I suggest you too read the RGJ article. First, it makes clear that the so called 3% annual cap on annual property tax increases has NOTHING to do with assessed valuation. Consequently, when properties are reassessed to current fmv, there are in essence no caps.
Second, the article makes clear that the Assessor’s intent is to reassess all properties in Washoe County on a yearly basis [rather than the current once every four years] in no later than three years [i.e., no later than 2010].
My concern is that in the next year or so, a whole heck of a lot of Washoe County property owners are about to experience property tax bill sticker shock. At that point in time, it won’t just be properties with sub-prime mortgages going into foreclosure.
California Boomer posted:
“BanteringBear seems to miss the point that, unlike Washington, or Oregon, or Vancouver, Reno is a very short flight or a modest drive from a lot of places in California…Reno has a university, lots of great entertainment, first-class medical care, a convenient airport, a relatively mild high desert climate, and world-class outdoor recreation…All this trashing of the place sounds like pure jealousy to me.”
Uh, excuse me! First off, I don’t need a tutorial on my hometown, and what it has to offer, boomer. Stick to what you know, which is Clownifornia. Secondly, I can’t remember ever trashing Montreux. Can you please remind me of when I did?
My point is, and has always been, that EVERY area in Reno will experience SIGNIFICANT price declines, regardless of the financial standing of the residents. Higher end areas can be quite a bit more volatile, in fact. Talk to Andre Agassi who lost $5m on the recent sale of his SF property which was purchased pre-bubble.
While many folks can certainly afford to pay cash for a Montreux home, it is still quite foolish at todays prices. Unless one has hundreds of millions of dollars (doubtful for many Montreux residents), losing a million plus dollars on a home smarts.
There is no impending property tax bomb. In spite of assessed value, your property tax bill can only go up 3% annually. This example uses an initial assessed value of $200,000, 10% annual appreciation, a 1% tax rate, and our 3% annual limit on property tax bills:
Year Ass.Value Tax@1% Tax 3% Cap
2004 $200,000 $2000
2005 $220,000 +10% $2200 $2060
2006 $242,000 +10% $2420 $2122
2007 $266,200 +10% $2662 $2186
2008 $238,580 -10% $2396 $2251
On sale, the taxes assessed would reset. In this exaple, if you sold in 2008, the new owner’s taxes would be $2420. Then the 3% cap would restart.
Memo to Diane:
I guess just putting the name “Montreux” into any post will increase the comment rate tenfold. Unfortunately, you would probably have to bring along a security guard to show properties to any of these commenters.
Right on, Amused. Until one of these Masters of the Universe actually steps up and BUYS a $2.5 million plus Montreux house, and then offers to host the next blog meet-up at his purchase, this all sounds like “big hat, no cattle”, doesn’t it?
I’m staying out of it, Amused and Lindie. When the elephants fight, the mice tremble, or something like that.
Most recent $/SQFT in Silicon Valley communities of Los Altos, Los Gatos, and Saratoga: $750-819.
Most recent $/SQFT in Silicon Valley communities of Los Altos, Los Gatos, and Saratoga: $750-819.
Amused posted:
“Most recent $/SQFT in Silicon Valley communities of Los Altos, Los Gatos, and Saratoga: $750-819.”
I hate having to spend time correcting the shills, but readers need the correct information.
Most recent numbers:
Saratoga-$697 SQ FT based on 48 sales
Los Altos-$782 SQ FT based on 47 sales
Los Gatos-$728 SQ FT based on 56 sales
An accurate statement would have read: “Most recent $/SQFT in Silicon Valley communities of Los Altos, Los Gatos, and Saratoga: $697-$782 SQ FT”.
That made alot of sense SMARTEN!! pfheeeww you are good!
Unfortunately You have no idea the size of my portfolio..
Is it 500k?
Is it 750k?
Is it 1mill +
you lack common research to make such a statement..
smarten said “you cant leverage your cash investmens when you buy stock”
Again smarten you are mistaken. do some research you will find that is not true at all..
I can always get extra cash on margin when I need it.
Your age is showing Derrick.
Sure you can get a margin loan on a stock purchase if it’s one of those stocks for which margin loans are available [and as you know, not all stocks qualify]. But how much of your purchase price can you borrow? Is it anywhere near the 90% or until recently 100% you could borrow against real estate?
And is your margin loan at a low fixed rate or a high adjustable rate? How often does it adjust? And what index is your interest rate pegged to [typically the prime rate rather than something more consumer friendly like the 9th District cost of funds]?
And what is the margin added to your prime rate?
And what happens when the value of your portfolio drops [compare the result to what would have happened to your Spanish Springs home had your lender made a margin call (oh, I forgot you don’t have a mortgage - savvy move) and you were given 6 hours or less to cover]?
And do you get an income tax deduction for the margin interest you pay [I forgot again; being a Nevada resident you don’t pay state income taxes]?
So in theory while it is possible [in a vacuum] to leverage your stock purchase, in the real world it makes little sense.
You’d be far better off getting a loan against your home [”I can always get extra cash on margin when I need it”] and using the proceeds to leverage your short sale of what you believe to be some overpriced home builder’s stock. Or better yet, why not simply sell options [that way you can leverage your leverage]?
You’d know the answers to these questions if you were over age 30, and your current portfolio would consist of a heavy dose of real estate - which after all is what this blog is supposed to be about.
Not sure if its any indication of where property values are headed at Montruex, but today they announced a 25% discount on all golf and tennis memberships for new homebuyers, waived the homeownership requirement for all other new memberships meaning anyone can join, whether they own property at Montreux or not, and offered extended payment terms with no payments due until April 08 on all memberships. If they also reduced home prices by at least 25% they’d be in line with reality and would probably be moving some inventory in less than the 400 days it is currently taking.
“…today they announced a 25% discount on all golf and tennis memberships for new homebuyers, waived the homeownership requirement for all other new memberships meaning anyone can join, whether they own property at Montreux or not…”
Oh, the humanity! Now all of the elitist, reclusive, fearful wine snobs will have to rub elbows with the commoners. With the precious gate to their compound now open, their bubble life is in jeopardy. There goes the neighborhood!
Oh-Oh,
I can hear cousin Eddie’s R.V. roundin’ the bend, spewing black exhaust, and squirten chewin tabacco out the back window.
I dont have the time nor desire to answer all of your questions smarten.. My point was that you CAN leverage stock investments.. you said you can NOT~. plain and simple you were wrong .. is it that hard to admit?
Last I checked real estate wasnt up 25% in the last 2 years.
oh and btw smarten.. why would I do a short sale on my house.. I paid cash on 2002 for it.. I dont have a loan nor and debt.. no need to sell my house
Well the owner[s]/agent of our little Montreux “cottage” rental we’ve discussed in the past just reduced their asking rent to $3,200/month [you can see the “price reduced” listing at craigslist.org PostingID: 458466655].
This is further evidence the Reno rental market doesn’t support more than $3,500/month [remember, this rental is a large 2 BD].
To those who might be interested, if it were me I’d wait until the first week in December when I bet this home can be rented for [do I dare suggest?] $2,700/month.