Hey, I don’t want to get the rep as Mr. Negativity Man here.  You have to understand my primary information sources.  I track and research new MLS listings which leads me to a lot of "must sells" and troubled properties.  And my public records searches are aimed directly at properties going down the tube.  Negative seems almost normal to me, but my source material is admittedly tainted.

So for a reality check, I wanted to look at a random chunk of property and see what is really going on with the buyer’s financial situations.  Are the assumption I have been making equal to the reality?  Do people have skin in the game?  Are they really refi’ed / HELOC’ed into oblivion?  My only screen was to find a short block (so I don’t go blind on this post) and that the block was new construction that sold out near the peak.  It only took 3 hits on the Reno MapServer to find the winner …. Dancing Aspen  in Damonte Ranch.  22 homes that originally sold between late 2004 and late 2005.  Officially Centex’s Villages at Damonte Ranch 18B, probably Copper Creek.

The street is about 80% owner occupied.  Most folks are move-up buyers from other Reno properties.

The buyers brought an unexpectedly large amount of equity to the table for the market at the time.  4 bought with 100% financing, 3 with 95%, 3 with 90%, 8 with 80%, and 4 with greater than 80%.  The loan types were also more conservative than I expected.  1 subprime 2/28, 2  3/27, 11 5/25 or 7/23, 7 30 year fixed, and 1 15 year fixed.  NO Option ARMs. No NODs have ever been filed on any properties on this block.

And what have these folks done since their original purchases?  10 have done nothing.  2 have refi’ed to reduce their principal balance.  4 have refi’ed to balances under their original purchase price.  6 have refi’ed to balances over their purchase price.  My guess is if they had to sell, 5 or so of these homes would end up as short sales or foreclosures in this market, but it isn’t happening yet.  There are 2 current listings on the block - one of the "no action" home listing at 15% over their purchase in 11/04, and the other basically "no-action" home listing at their 9/05 purchase price.  Both started with 95% financing.

It certainly isn’t the Street Of Dreams, but it might just be the Street Of Reality.  The financials on the properties are much better than my "Jaded" assumptions, and yet about 20% of the houses seem like lost causes if the owners get into "must sell" situations.  It seems like owners with skin in the game are holding on, right or wrong.