Welcome, Diane, to membership in the club of hostile pessimists. It took you a while, but I knew you would get there.

Diane, how appropriate that you post this on the day that the Fed bails out the collapse of Bear Stearns.

In actuality, there is little here that is really new to this blog. RI and Lindie (where is Lindie?)and Bantering Bear have been saying this for well over a year. Yes, they did not say it so eloquently and with such nice charts and graphs. But can anybody say that RI and his constant reference to Voodoo loans and Loans to the Walking Dead and the inevitable unwinding of the Ponzi Scheme are in substance any different than this link?

It is a fabulous credit to this blog that this is really old news to anybody paying attention here. Assuming they were willing to see the truth.

And so, I now await the delusional optimists to post and tell us how it’s really different here, and how this just isn’t going to impact Reno, because Reno is special, and the laws of economics don’t apply to Reno, and even though only 6% of listings are selling, and 42% of listings are vacant, and there are multi-years of inventory, and there are hundreds of millions of dollars in builder defaults, and REO is amassing daily, that really things are looking up, because there is “activity” being reported in the realtor offices.

As a buyer, I need to disagree with you regarding CYAN’s location as a “perk.” It is terrible behind Double Diamond and a looooong drive away from 395, with that industrial park across the street. Their lot plan is also terrible; very few cul de sacs if any, and the lower priced models (townhomes and smaller) border the open space, not the bigger ones.

I still feel they are overpriced at around $115 sq/ft, and the outside of the homes are really plain compared to similar priced new home builders. Their options are also priced slightly higher than the other builders, so that is where they are making up the “haircut” on the base.

All that in mind, I like 2 models. I’m looking for something around 2500 sq ft in South Reno, so I did and continue to do a lot of digging and tracking of the builders there.

CYAN’s main competition for SFR detached is KB Home, Lennar, R&B, Bailey Dutton, and Toll Brothers (although I wouldn’t really put them in the same price category except for comparison in the 3000+ sq ft models, and CYAN’s pricing is definitely better). DiLoretto, DR Horton, and Toll (kinda) are their competitors for attached.

The only thing Lennar has left in S. Reno is the smaller model, still overpriced Derby Run in Curti (more south than Damonte Ranch, and zoned for Brown vs. Double Diamond elementary). They still have standing inventory they haven’t sold off. However, they are still readying the land next to RC Wiley (south of Double Diamond) for a new development. This to be named area is of interest to me, and if we haven’t purchased a home by the end of this year, we’ll be looking at whatever they are building there.

R&B is in a terrible location next to Damonte Ranch HS. We looked at their models a year ago, and I do keep up researching their pricing. But the location alone pretty much nixed them from our search, and their overpriced base contributed to that. I heard they sold off or trying to sell off a patch of the land originally planned for this community.

Bailey Dutton is in a good location, has some standing inventory left, but they are still too overpriced, although they are now including central A/C and granite tile countertops in their base. It always irked me that the A/C wasn’t included. One floor plan around our target sq ft, and I really didn’t like the flow of it.

So that leaves KB Home, and besides CYAN, this is one builder that we are seriously looking at. The fit and finish of CYAN is better, but KB Home’s floor plans and location is better. Ravenna (the smaller development) is almost sold out. They have a few lots next to the models (back facing Veterans) and one cul de sac left to sell/build. There is one foreclosure in this development. Calabria has a ways to go, but the current lots they are offering cannot accommodate the larger 3000 sq ft plans they used to offer.

I don’t know if this is of any interest to anyone, but here is a copy of my base price tracking of KB using a 2566 sq ft plan:

Date Price Change
06/30/07 346,900 N/A
12/15/07 299,900 -47,000
02/15/08 301,900 +2,000
03/01/08 301,900 N/C
03/15/08 304,400 +2,500

Their smallest plan at 1840 sq ft:

Date Price Change
06/30/07 299,900 N/A
12/15/07 244,900 -55,000
02/15/08 261,900 +17,000
03/01/08 261,900 N/C
03/15/08 265,400 +3,500

Their largest currently available plan at 2786 sq ft:

Date Price Change
06/30/07 373,900 N/A
12/15/07 306,900 -67,000
02/15/08 321,900 +15,000
03/01/08 321,900 N/C
03/15/08 325,400 +3,500

The sweet spot where they got a bunch of their current contracts appears to be the Dec/Jan firesale, which was accompanied by low interest rates. Since then, they appear to be testing the market on pricing by raising pricing on popular plans in small increments. They don’t have any standing inventory, and probably won’t until August, assuming a 6 month build time frame.

Anyway, my gut says to wait until Dec/Jan of this year for better pricing because people were contracting during that timeframe and I think contracts are falling off with the increase in base price, or maybe waiting for the fall for inventory.

If they slashed their pricing back to the Dec/Jan lows, I’d probably buy given the current 30 yr fixed rates. I’m kind of kicking myself for not contracting back then, as it delays our buying by about a year. They’d have to give price drop rebates to anyone who contracted after 2/15, but that only applies to closing date. So it appears they can’t lower prices until August unless they really haven’t sold much after 2/15 and the reward is greater than the risk.

Diane-good thread.

What are the odds of mandating a seller to read the above link (as to current state of housing) the night before an offer is presented? A brief quiz at the end to verify that
they “get it.” If they fail, then a complementary visit to the Five Minute University with
Guido Sarducci. If this doesn’t work, then they are banned to a isolated outpost with
only Alan Greenspan to talk with….

“Personality” is not worth paying an extra $200k+ for — unless you are volunteering to do all the renovations and pay my mortgage?

Hey if you can’t decide on a house let me know!.. You could always rent my casoleil condo from me!! /That is.. After the current 6 month lease I have in place for the current renters is up.

What did KB “screw” you on? I’m not defending them by a long shot (and I know about the Texas litigation). But they are one of two builders building in South Reno with somewhat decent pricing at the moment.

CYAN’s and KB’s *structural* option pricing is relatively the same. I have both builders’ 30 page option price lists in front of me. The only difference between them is the location.

We’re looking for something at the price point we can afford; if I can save $30k going to CYAN, then we’ll buy there because I can live with the lesser location if I’m getting more peace of mind that I won’t be underwater a few years from now. But I don’t see the two builders being that off on base pricing from one another, and both builders have a ways to go on cutting their base pricing.

Anyone who thinks they are getting a discount or “less headache” on cosmetic options from a builder like upgraded carpet or granite countertops really needs a good talking to. You would pay the builder at least a $20k premium over hiring a subcontractor to rip the standard stuff out (or do it yourself) and replace with what you want.

The point is, that is STILL cheaper by a large margin than a resale in the same area. My only other alternative is to buy a foreclosure where the prior owner decided to take out his/her revenge on the place and the bank refuses to budge on pricing.

Sorry DERRICK, I’m content to continue to rent the SFR where I am at below market rate until this stabilizes somewhat. Our LL knows he’ll have a hard time renting the place when our lease is up, so he is doing what he can to keep us here as long as possible. But thank you for the offer.

Yes, but that is the same thing Centex does. ALL builders — unless they are an “everything is included” builder, which puts the base price up another $40-60k — do the same thing. My parents bought new construction in the early 70s, and the builder did the same to them, charging $15 per additional electrical outlet.

All we care about is structural and wiring; we’re ripping everything out and doing all the upgrades ourselves and with subs. If we did all the upgrades through the builder, it would add another $60k. We’d rather save at least $30k and do it ourselves. That is why the base price is so important to us.

I’d have to do the same for a resale or a foreclosure (at least the demo is already done on the foreclosure ha ha), and looking at the current listings for the sq footage we want in the same area –even assuming 80% of list — we’d still pay at least $20-100k more than new construction.

So to answer Diane’s question, we aren’t anywhere near a bottom, and we’ll probably sit on our cash for some time until something forces our hands.

I think the “bottom” is closer than everyone thinks. It is probably really close in the stock market, and not far bnehind in housing. Once mortgage interest rates drop a little, people willl start buying again.

The “bottom” is going to come and go like a thief in the night. Then everyone will look back and say “that was the bottom”.

Don’t despair it is almost over.

Well, I agree that I do not think that you will ever have the wild buying that we have seen. However, the market will rebound somewhat.

Maybe I am too optimistic, but I do not think so. Things change quickly and in ways that most do not see or could not fathome.

I have faith.

I agree with Sully..Lots of bad loans and foreclosures and REO’s to work thru the system. Does anyone remember the Savings & Loan crisis of the 80’s. Go back and read up..

We had markets go up 100% in the last 4-5 years..

Just like during the S&L mess the gov’t came in too late and spent 165 billion to clean that mess up..2 days last week they pumped 200 billion into the banking system

Bear Stearns got taken down in this mess..We wiped an industry off the map the Savings & Loan, now the subprime lenders and alt a lenders are all gone..More Bond companies and Wall Street companies are going down also..

Wamu might not make it thru this without a merger..

Some east coast bank would love to the have the west coast branches.

Mike, renters DO get more than 5 days notice of a pending foreclosure.

I can’t tell you for absolute certain in Nevada, but I think it’s very similar to California.

The first step is recordation of a notice of default [”NOD”]. Delivery to/posting upon the mortgaged property is one of the notice provisions that must take place.

The next step [at least 90/more days after recordation of a NOD] is recordation of a notice of sale. That too must be delivered to/posted upon the mortgaged property.

So a tenant in possession, if he’s/she’s observant, should have at least 4 months’ advance notice of any foreclosure sale.

My question would be why a tenant would continue paying rent to his/her landlord after being informed of foreclosure proceedings against his/her rental? I know what you’re going to answer but deeds of trust usually have provisions that permit the mortgagee to collect rental income from a mortgaged property once it is in default.

Me being a renter, if I saw a NOD posted to my rental home I’d initiate contact with the mortgagee and cut some sort of deal whereby I could remain in the property, even after a foreclosure sale, in consideration of my cooperating with the mortgagee by making my rental payments to he/she/it rather than my landlord [presumably, the mortgagor].

Its also not a good idea to assume that California laws are similar to Nevada laws. Nothing makes a lifelong Nevadan more irritated than hearing a California transplant tell us how they do it in California. I know for a fact that landlord tenant laws are vastly different.

Sully, my response was very calm, you should have heard what I was really thinking. You are correct in that a lot of you move here to get away from the socialistic thinking of California, but some have a hard time leaving that mentality behind. Vegas has always been considered eastern California in my opinion, but Reno is not far behind. Maybe I should move to Elko??=)

Hi all! I have been watching this blog for a while now but never commented before. However, the issue of rights of tenants is one that is of interest to me. As a legal aid attorney in Reno, nearly 50% of my work is representing tenants in eviction actions.

As discussed above, NV law does not require notice to a tenant if the owner if in default. Unfortunately, the first notice the tenant receives is usually a 3-day notice to quit pursuant to NRS 40.255. The notice period may be longer, at the discretion of the new owner, but 3 days is the minimum.

There is a “positive” side, so to speak, in that the new owner cannot use the summary eviction procedures provided for in NRS 40.254 to obtain a quickie eviction. Rather, the new owner must pursue a formal eviction action by filing a complaint and serving the tenant with the complaint and a summons. Regardless of whether the tenant files an answer to the complaint, a hearing to show cause for a writ of restitution must be held before the court will issue such a writ (the eviction order). Depending on the township, this may take 30 days to 6 months after the complaint is served on the tenant. Since banks are reluctant to endure the time and expense of pursing a formal eviction action, they instead may offer the tenant cash to vacate within an agreed upon time frame (a variety of “cash for keys”). We have had clients who have received nearly $3000 to “encourage” them to vacate within 30 days.

Of course, as with most things in life, the above is only accurate in so far as the new owner follows the law. We have also seen cases where an individual who has purchased a home at the trustee’s sale tries to intimidate tenants to leave by serving improper notices and/or falsifying affidavits to the court. One problem with Nevada’s summary (quickie) eviction statutes (NRS 40.253 and 40.254) is that a lockout order (eviction) will be granted by the court unless the tenant objects by filing a timely affidavit. So, even if the new owner gives an incorrect notice and files a fraudulent (or at least erroneous) affidavit, then the court may still grant the order if the tenant does not act. And while we have had a modicum of success in having such problematic orders vacated, we only see a fraction of the tenants evicted in Washoe County.

Finally, a comment was made above about the common law. While certainly the common law does apply to landlord/tenant matters in Nevada, Nevada landlord/tenant statutes have many provisions that are contrary to the common law, and the common law leasehold principles should only be applied where Nevada law is silent. For example, at common law a lease typically runs with the land. However, Nevada statutory law provides that a new owner may terminate the tenancy of an existing tenant in most circumstances so long as a tenancy for life has not been established. Yes, it is possible that a new owner may, by agreement, take subject to an existing leasehold, but this is a contractual matter and is the exception, not the rule.

Allen,

At common law the purchaser of real property took the property subject to any existing leaseholds. However, many states, including Nevada, have passed laws contrary to this principle. Specifically, NRS 40.255 provides:

1. …in any of the following cases, a person who holds over and continues in possession of real property or a mobile home after a 3-day written notice to quit has been served upon him, and also upon any subtenant in actual occupation of the premises, pursuant to NRS 40.280, may be removed as prescribed in NRS 40.290 to 40.420, inclusive:

(a) Where the property or mobile home has been sold under an execution against him or a person under whom he claims, and the title under the sale has been perfected;

(b) Where the property or mobile home has been sold upon the foreclosure of a mortgage, or under an express power of sale contained therein, executed by him or a person under whom he claims, and the title under the sale has been perfected;

(c) Where the property or mobile home has been sold under a power of sale granted by NRS 107.080 to the trustee of a deed of trust executed by such person or a person under whom he claims, and the title under such sale has been perfected; or

(d) Where the property or mobile home has been sold by him or a person under whom he claims, and the title under the sale has been perfected.

In the situations enumerated above in 1(a) through 1(d), a lease terminates upon the sale and perfection of title of the real property. Based on our interpretation of NRS 40.255 and on our court room experiences, it does not matter if the lease is within a fixed term or if is month-to-month. When a new owner perfects title, an existing lease terminates. Tenants’ rights groups and legal aid organizations have lobbied the legislature to change this, but without success. However, if enough tenants with term leases are evicted due to foreclosure, maybe the 2009 session will be more receptive.

Allen, if you were in Calif you would have saved $300 an hour.

Now I have a question Allen.

I understand Nevada law is different than in California but you mention that the prevailing party in a Nevada unlawful detainer proceeding can secure attorney’s fees against the unsuccessful party. In California [in fact in the vast majority of states] unless there’s a statute that expressly provides therefore; or parties have expressly agreed by means of contract; attorney’s fees are ordinarily NOT recoverable by either party in a legal proceeding [”the American Rule”].

So my question is in Nevada, is there a statute that expressly provides for attorney’s fees to the prevailing party in an unlawful detainer proceeding? If the answer’s no, then how can the successor owner of property [after foreclosure] subject to his/her predecessor’s lease [which presumably contains an attorney’s fee clause] recover attorney’s fees against his/her predecessor’s tenant, when the successor is not a party to his/her predecessor’s lease and is repudiating his/her predecessor’s lease?

Thanks.

new to reno- if i were you i would choose a new realtor as the one you have is out of sync with the current market.(Diane and Guy come to mind as replacements )

Smarten, I think you are addressing your question to John as I never said that the prevailing party can recover attorney’s fees. I can tell you that all of my rental agreements have a clause saying that I may recover my attorney’s fees, but like John says, once ownership changes, the preexisting lease doesn’t seem to be enforceable so I’m not sure if my attorney’s fees clause isn’t enforceable in that situation. I have been under the impression that preexisting leases were enforceable, but John is the expert, not me. John, thanks for the information and non advice.

Keep a few things in mind here. First, the statute that John refers to that provides that the prevailing party is entitled to recover attorney’s fees applies only to actions in the Justice Court. It does not apply to the District Court. Be careful not to generalize and assume that such is the case in all Nevada courts. It is not. The Justice Court is a court of fairly limited jurisdiction and what is true there is not necessarily true in the general jurisdiction District Court.

Second, before the Justice Court will award anything for an attorney’s fee, there has to be an attorney. An owner landlord representing himself in a Justice Court eviction case is not going to get an “attorney’s fee”.

Third, while the statute mandates the award of an attorney’s fee to the prevailing party, the amount of the fee is in the discretion of the Court. The fee is not necessarily whatever the landlord’s attorney asks for. It is what the court decides is reasonable. Perhaps John can share his experience here. My guess is that the large majority of landlords seeking to evict tenants are in court on their own. In such case, the topic of attorney’ fees is interesting, but irrelevant.

Reno Ignoramus is correct: Nevada District Court is a different animal. However, unlawful detainer actions are almost never filed in District Court. He is also correct that attorney involvement in unlawful detainer actions is not the norm. Most unlawful detainer actions are summary actions (NRS 40.253 and 40.254), and in such actions it is very rare, at least in my experience, for the landlord to use an attorney. The legislature designed the summary eviction statutes so that attorneys would not be necessary. Also, it is all but impossible for a landlord to recover costs in a summary eviction action because the court only has jurisdiction to determine whether a lockout should be issued. If the landlord wants to pursue costs, that usually requires an independent action for damages.

However, if the landlord is forced to pursue a plenary unlawful detainer action (such as after a sale of real property or in mobile home lot evictions) by filing and serving a summons & complaint, then often an attorney is involved because of the more complex process. In such cases, the court will usually award costs, as long as they are reasonable.

My point above was the costs/fees are usually not the main impetus for a bank to pay for the tenant to leave rather than evicting the tenant, it is the time the process takes, at least in the cases we have seen. The bank may be able to recover some of its costs, but it will not be able to recover the time.

John, I would very much like to read a Nevada decision under the above-quoted statutes, as referenced by you, if you or any of you has a citation handy. I am not persuaded that it is necessarily true in all cases that once ownership changes through a foreclosure sale, upon recordation of the trustee’s deed or the court’s order in a judicial foreclosure, that a preexisting lease is automatically extinguished. Suppose a long-term ground lease were in force, that an abstract of lease had been recorded, and hypothetically millions of dollars had been invested in improvements by that lessee. Is it a correct summary of Nevada law that such a lessee may be evicted and a forfeiture of his leasehold would take place, should the record title owner subsequently allow a mortgage to default? What if the defaulted mortgage were junior to the recorded abstract of lease? Seems harsh and unworkable to me. Because if that is the rule, that would seem to make any land unattractive to a ground lease developer, who would always face such risks unless he were prepared to immediately jump in and cure his lessor’s defaults throughout the term of the ground lease. He might end up having to bid against his own improved values at his lessor’s foreclosure sale, or risk becoming a wiped-out lessee. This would be the case even if the fee title owner defaulted on a security instrument, DOT or mortgage, junior to the ground lease, as I read the above summary. Where are the equities here? Thanks for any citation you might have.

Tom -

You raise some interesting questions; thank you.

My experience has been that in California [I understand Nevada may be different], a purchaser at an involuntary foreclosure or execution sale obtains no greater interest in encumbered property than the trustor, mortgagor or debtor had at the time of sale. Thus if the trustor’s interest was subject to his/her tenant’s leasehold AT THE TIME the trustor mortgaged his/her property, any purchaser at a trustee’s sale founded upon that mortgage takes subject to that leasehold [the opposite of what John suggests (although this would not be the case where the mortgage pre-dates the leasehold)]. It is for this very reason that many commercial leases include subordination clauses whereby the tenant explicitly agrees that his/her/its lease is subordinate to any mortgage to thereafter be placed against the leased property. If this provision were not in place [especially insofar as long term leases are concerned], the property owner would in essence be prevented from [re]financing his/her/its property during the term of long term leases.

As an interesting side note, I had a case where an unrecorded, pre-existing deed of trust was NOT wiped out by a judgment creditor’s execution sale because the purchaser of the mortgaged property at the sale took subject to the debtor’s interest at the time of the sale. Since the debtor’s interest was subject to the unrecorded mortgage, so was the purchaser’s.

But again, this is Nevada [where we’re special].

Credit and foreclosure fall-out examples? Here’s a recent excerpt from The Wall Street Jounal:

“The developer of the Cosmopolitan Resort Casino, a $3.9 billion condo-hotel complex on the Las Vegas Strip, has been notified by its primary lender that it will begin foreclosure proceedings”

John, with your permission I want to go off on a tangent [since you’ve volunteered “to provide information on landlord/tenant issues”].

I am a renter in Incline Village. We have a wonderful Golden Retriever.

For many, many months last year, we attempted without success to find rental housing in a number of local condominium complexes. To a “T,” they all had discriminatory homeowners’ association rules or CCRs which permitted pets if the occupant of the property were an owner; yet prohibited pets if the occupant were a non-owner. Because of these rules, most owners [and their rental agents] attempting to rent their properties were spooked and would not challenge their homeowners’ associations.

We heard there was a case involving a unit in the Crystal Bay Cove Towers in which the owner successfully [at least at the trial court level] challeneged this discriminatory practice since it directly affected his/her ability to alienate his/her property. But as you point out, the case never got to The Supreme Court so it never became precedent.

Word has it that this homeowners’ association subsequently amended its rules/CCRs but it hasn’t spilled over to any other complex we’re aware of.

So the question: can a homeowners’ association enforce such a discriminatory restriction if an owner wants to rent his/her unit to a tenant with a pet?

Thanks in advance and I apologize to the rest of the blog for straying off subject.

Smarten,

That is an interesting question. I do not have an answer off the top of my head. Generally, CC&Rs and home owner’s association rules are very difficult to challenge as purchasers of real property take the property subject to existing restrictions. Let me think on it.

Thanks stjoe. That’s what we ended up doing [renting a SFR (and I’m not being “indignant;” I’m merely raising the question to our resident landlord/tenant expert who has volunteered to answer questions like these)].

But with due respect, my issue goes a bit deeper. HOAs can’t adopt any restrictive provisions. Restrictions must be “reasonable.” When unreasonable, they end up impermissibly restricting an owner’s right to freely alienate his/her property [this represents the other “right” you refer to upon which my issue is based].

A good example is a lender’s right [under a mortgage where the mortgagor has agreed in advance] to accelerate an indebtedness secured by a mortgage where the owner hypothecates his/her property “subject to” that mortgage. You’ll recall that in California [Wellenkamp v. Bank of America] this restriction was deemed to represent an unreasonable restraint on alienation.

Here if CCRs prohibited ALL pets uniformly, I would agree with you. But the fact they pick and choose based upon an occupant’s ownership [versus occupancy] status creates the unreasonable restraint, at least in my view.

Smarten,

My initial reaction was substantially the same as stjoe outlined in his post, and I have not found anything to make me change my mind. The only detail that gave me pause was that owners could have pets but renters could not. However, I found an out of state case that found reasonable an HOA rule that allowed new owner occupants to bring in an existing pet but not to replace that pet. Furthermore, even though Nevada has a statute regarding discriminatory restrictive covenants — NRS 111.237 — that statute only addresses restrictions “based on race, color, religion, ancestry or national origin.” I suspect that courts would find the rule not to be unreasonable, although you indicated a case that might be to the contrary. Was it a 2nd Judicial District Court case?

Greg, its silicone for implants - silicon for semi-conductor chips.