A few items from our wacky world of real estate, and some speculation for your consideration:
The Summit at Grand Sierra Resort now has 2 units in foreclosure. The original room count was 825 - DataGuy, any update on how many have sold?
R & K Homes is in default on their Grand Vistas project in Hidden Valley. The NOD is for $3,565,030. The project was to include 74 homes, and quite a few are already built.
5 PM Friday News Flash - Reynen & Bardis just defaulted on their Regency Park development in Stead. Phases 1A and 1B were scheduled for 157 homes. The whole project looks like closer to 600. I know site work has started, but don’t know the actual construction status. R & B doesn’t show this as one of their active communities on their web site. Anyone up that way want to check it out? Corners of Stead, Echo, and Military.
260 Lakeview in Verdi was the house that went up for auction in January, and "sold" for $338,000. The sale still has not closed, the auction signs are still up, the trees are still fallen over in the front yard. It doesn’t look like the deal took.
The new back door to Somersett is almost complete. The last item of work is the roundabout on Old US 40 / 3rd Street, and the are pouring the curbs for it today. It will be great to have two ways out of Somersett in case of fire, right Diane? Also planned for the roundabout is a Shell gas station with a mini mart and restaurant.
Here’s my bottom call - you will know we are there when the median drops to $235,000. The simplified version of my guess is peak median ($345,000) less 20% (banks write-off 2nd mortgages) less 15% (builder competition, banks needing liquidity, must-sells). I’ll allow you to add 50% of your post purchase upgrades to your basis.
A lot of the A and Alt-A adjustable loans are tied to 6 Month LIBOR +2.25 - 2.75%. LIBOR is currently at 2.616, down from 5.329 a year ago. Many mortgages are actually adjusting DOWN from their initial rates. Even some of the Subprime loans are adjusting down, or at least remaining pretty constant.
Break out the barbecue, dust off the patio furniture, and enjoy your weekend!
66 comments
We will know we are at the bottom when the median drops to $235,000?
I think you’re high Mike. The median’s currently at $262K and I think you’re going to see some major drops once sales activity picks up because the bulk is at the lower price spectrum of the market. But I guess we’ll see.
And BTW, when do you predict the median will drop to $235K?
I’m going to have to agree with Smarten, I think you’re off your rocker with the $235k number. Unless there’s been some sort of wage growth which I’m missing, I don’t see how prices can find support there. With most loans back to full doc, who can qualify?
I don’t know if this has already been mentioned, but Arterra at the corner of Sierra and Liberty downtown is rumored to be changing from condos to hotel without gaming, don’t ask me to reveal my source. Green, I can appreciate your prediction, as you know, most on this blog who dare make a prediction are usually beaten up pretty good. BB and Smarten, what do you predict will be the bottom median and when do you think we will get there? Also, I just communicated with a Wells Fargo mortgage consultant, and the do have a loan that doesn’t require full doc, but is not a “stated” program per se. They want to see 12 mo of bank statements. I also hear that there are brokers out there that are doing stated, but haven’t verified that for sure.
Allen -
I’ve previously gone on record opining that the bottom of the market pricewise [i.e., median] will be December or January of next year [about the same time you’ve predicted, isn’t it?]. I’ve also gone on record [you’ll recall] that long term conventional 15 year interest rates will hit 4.5%.
I really don’t have a prediction as to what the median bottom will be. My point was I believe it’s going to drop pretty quickly and the difference between $262K and $235K isn’t that great. But who knows, I could be wrong.
My interest in the median is not how low it gets but rather, its effect on the higher priced segment of the market; something we’re just now starting to see dropping.
What BB is talking about is affordability. The median household income in Reno-Sparks is about $45-50K. So, what can the market sustain at that household income level?
Prior to the Voodoo nonsense, the standard for decades was that a borrower could not borrow more than about 3.5 times household income. A median of $235K would be 4.5 times household income. Can the market sustain itself with the median price of a house being 4.5 times median household income?
At the height of the bubble, the median price of a house in Reno was around 7 times income. That was clearly not sustainable, no matter all the realtor chatter was about new paradigms and Rich Californians.
4.5 times household income, while still high by traditional standards, is falling back into the realm of the sustainable. Or is it?
I don’t offer this as a rhetorical question. What do you all think?
Also, does anyone (Diane, Guy?) know what the median price was in Reno in 2001?
Yup, I hear you Smarten. I really think we are close to bottom now in terms of median, $235K seems about right to me. My biggest worry right now is how long we will remain at bottom. It might be a while. As I mentioned months ago, the simple fact that we are now talking about where the bottom is and not talking about the sky falling, we might be close. Again, the question is how long will we be there? As with the boom, by the time the general public (lemmings) realize that we have hit bottom, it will be too late to really take advantage of the buying power that one has near the bottom. My house is still getting shown, and I “almost” had an offer a few weeks ago. I know, “almost” doesn’t mean crap!
If you get an offer Allen, and it’s what agents call “low ball,” will you be so kind as to share the experience?
Allen Murray: Really, a hotel? That would fill that spot out nicely. Not everything downtown has to be condos right? Would be good competition for the Hyatt Summerfield breaking ground this August across from the ball park.
Hey Bear, are you lovin’ this, or what? A year ago you and I and Lindie got torched for suggesting that the market was not done in its descent. We got called “hostile pessimists”.
Now the median is down 25% off its high, and all our detractors are now of the opinion that a median of $235K is likely. In other words, a 32% haircut off the median’s high is now envisioned even by our detractors.
I think about a year ago you said a 40% fall from the high was entirely possible. That would be a median of around $210,000. We clearly are not there yet. But Bear, you haven’t been wrong yet.
Allen Murray posted:
“My biggest worry right now is how long we will remain at bottom. It might be a while. As I mentioned months ago, the simple fact that we are now talking about where the bottom is and not talking about the sky falling, we might be close.”
Personally, I don’t anticipate a V shaped bottom, but rather a U - where prices stay flat for years. The reason for the incessant “bottom” talk has more to do with the wishful thinking of the industry shills (see Sue Lowe) than it does reality.
The idea that things could bottom this quickly while there are still mammoth amounts of REO’s yet to hit the market, and a tsunami of ARM resets in the pipeline through 2010, is delusional. People need to wake up and smell the coffee. The shortsightedness is staggering.
Bantering Bear is right on. The only people who are pressing this bottom talk are the realtors hungry for sales. Realtors just need deals. The difference to a realtor between a $300K deal and a $400k deal really is peanuts. After the commsissionn split and the broker gets paid, it’s about $1500. So the name of the game is deals. As in let’s say anything to get people scared that the prices have bottomed and will start going up now.
Let me ask you. Other than the NAR and the CAR and realtors, who is saying the bottom is near? Is there one reputable independent economist? Remember, these are the exact same folks who told you real estate always goes up.
Hi there RI. Yes, it’s sweet vindication, isn’t it? You’ve been spot on the whole time. It wasn’t all that long ago that we were hearing “what bubble?”. Funny.
We’re really heading into the belly of the beast now, huh? The builder defaults are ramping up, and I’d imagine some bank failures may follow. Honestly, I won’t be a bit surprised to see the median drop below $200k given the state of things, economically speaking. It’s really a rout. Reading that recent article from the Fed, it’s quite eye opening. I’m sure glad I’m not locked into some overpriced behemoth.
Mike,
I see where unit # 1211 at the Palladio came on the MLS today. 1538 sq. ft. for $895,000. $582 a sq. ft. Do you know if this is a resale or part of the builder’s unsold inventory?
Has anybody actually paid $582 a sq. ft.?
Here’s my bottom call - you will know we are there when the median drops to $235,000.
From a pure trendline analysis back to 2000 and forward to 2009, a median of $235K in mid-2009 is just about right.
Let’s suppose that the median drops to $235K.
Do any of the clairvoyants who frequent this blog have an estimate of how many sales will be closing in a month?
Until one of you futurists massage your crystal ball and let me know for sure, let’s say sales will be 300 a month.
That means 150 houses will sell for more than $235K, and 150 for less. I would say that the future of high end sales looks pretty grim. If a house selling for $275K is a house selling for 15% over the median, just how many houses selling for say, $700K, or 300% of median, are going to be flying off the shelves?
Market Observation:
Speaking of Wells Fargo, I got a WF mortgage this week. Much to my amazement, I effectively got a stated income mortgage, which I did not ask for, request, or need, cause when the chips hit the table, WF did NOT require any income documentation. NONE. My fiance and I did put down 35%, and we each have FICOs over 800 (causing some considerable amazement with lenders as we priced mortgages, as our fellow citizens seem to be mostly profligate spenders somewhat in debt and somewhat late in paying their debts), but I was still pretty surprised to not be required to submit any income documentation at all, even after all the noise we’ve heard about poor lending practices. Poor lending practices are still out there, I would still say that lenders are still not performing due diligence and the voodoo loans are harder to find, but not extinct. I simply think its going to take a larger shock to the lending system than what has happened so far to really get any rigor into the lending process, cause its still not there yet.
As for buying now, financially dumb, yes. We fully expect to lose money for several years (I expect we are a solid 1-2 years from bottom, and that bottom will last for years longer), but I guess we like the place and affording it is no problem. We decided we were in it for the long haul, and we might as well jump if we found the right place, which I think we might have. I consider myself very well informed about the local market (reading Dianes blog for 20+ months now, and watched my target area for over 2 years before we found one we liked and wasn’t priced at an absolutely stupid number), but at some point, you make the decision to jump, though financially its not the optimal decision. Such is life.
I think that Wells was happy with your 35% down. And your 800 FICOs. Wells is betting that your house won’t fall 35% from here, which is probably a safe bet. I would not regard a loan with a 35% down payment made to folks with 800 FICOs as a Voodoo loan.
Voodoo was 105% financing on a 3/28 ARM to somebody with a 450 FICO who claimed on his under penalty of perjury loan app that he was making $150K a year driving a bus for the cement company.
With regard to Regency Park. There are three houses out there. If I remember correctly there is on single level and the other are two. They are framed. None have stucco. One has foam and chicken wire the others are sided with wood. The windows are in for now. I was surprised that they all weren’t broken out. They back right up to the main road and face the military houses.
Pricing at the Palladio is getting very, very interesting. There seem to be more resales hitting the market while there are still plenty of new units available at reduced prices. #1211 @ 895K for 1538 sq/ft has to somehow compete with #1010 @ $575K for 1510 sq/ft. There are one bedrooms, albeit quite small, for much less than $300K now - 761 sq/ft for $237K. Pricing has really dropped in that project, and it is still a long ways from being full.
When the Montage is fully built and ready for occupancy there will probably additional price reductions at both properties - the market will simply be unable to absorb all those Montage units.
RI,
I was not implying that my loan was a voodoo loan, I just think there may still be more of them out there than you might think. Yes, I am a safe bet for WF, I would not personally buy a house if I wasn’t. But call around and price some mortgages, and before they ever know about the down payment and high FICO, lenders are sketchy, they are telling you what to tell them and they are making it easy and convienent to borrow, easy for you to tell them what they need to hear. Still, even today. So I guess I would contend that the conditions that led to the fraud and excess are still there to some degree, I think there is still too much money to be made by lenders for them to truly tighten the belt. They pretend to be tighter than they really are, and I don’t think the lending lesson has been learned yet. 20% price declines and 4-8% default rates are still not high enough to close the lending spigot, I’d say that has all been priced in long ago. Could it be that there is simply too much financial incentive for easy lending out there, despite the billions in losses, we do not have a lending system that is designed to fully insure that borrowers are truly capable of repayment. Financially, we might have a system going where intentionally allowing borrowers to get in over their heads is part of the plan, because that maximizes profits in the financial sector. And if high house prices are the primary mechanism by which that system works, then there is a strong vested interest to keep those prices high. Whatever the cost. So I think that there’s a pretty solid chance of the bailout in some form, and I truly don’t believe we will fully return to historical lending standards, because the banker behind that desk today knows there is more money to be made when you are in over your head, damn the consequences to you. He’s not your neighbor, he doesn’t give a s### about you, but you are his car payment. So the default today is that you will be led in and kept in over your head, unless you figure out on your own that only you are in charge of your financial well being. In past years, you had to actively try to get a loan of the right size for you, today you actively have to work to make sure you are not given more than you can really afford.
Lenders need to lend to live. Builders need to build to keep business going. Tallguy, these are interesting points.
BB, I think Reno’s high-end is headed for a price collapse, given what the numbers are doing. So many REOs yet to hit the market, trickling up the food chain. Fall should be interesting. Oooo, did I just say that out loud?
median of 235k? hahaha you guys are all smoking!
Possibly 245-250.. but 235k? t
thanks for the chuckle
Mike Van H, I agree that a hotel in the Arterra spot is a great idea. I think they want to cater to the higher end business traveler. I know there is a demand for nice rooms here in Reno, that aren’t attached to a casino, can you think of another one in town? Smarten, yes, I will keep you all posted on the sale of my house. BB and RI, just to be clear, I was never one that said prices weren’t going to fall dramatically here in Reno, it was inevitable, remember, I haven’t purchased anything here since ‘04. My dad has been a builder in Northern Nevada for over 30 years and we have seen this cycle before, although not to this magnitude. You guys have by far been the most vocal, but don’t give yourselves too much credit predicting the inevitable. How about a prediction on when we will hit bottom?
Allen,
You have asked that question before, and I have answered it before. I have on at least two previous ocassions described in detail the citeria by which I will judge the bottom to have occured. Since those two previous replies were quite detailed, and took a long time to write, I will simply refer you to my previous answers. I see no need to keep repeating them over and over again.
As in every market, we can only recognize the tops and bottoms in hindsight. I do not believe there was one person who in advance called the top of the market, in terms of median price, as July of ‘05. Or in terms of sales as May of ‘05.
Oh, there were lots of folks who, in 2006 and 2007 SAID they predicted the top in July of ‘05, but we all know that’s just nonsense. If we could predict market tops and bottoms (in any market)with any precision, we would all be billionaires.
Unlike others here, I do not claim to be clairvoyant. So I find it amusing that some here are calling the bottom to occur in January of ‘09. I am wondering: do you all have a specific day in January?
“I think Reno’s high-end is headed for a price collapse, given what the numbers are doing”.
Reno Ignoramus said that, right?
Bantering Bear said that, right?
Add Ms. Cohn to the hostile pessimists.
And to stay on this rather silly subject of predicting with precision the market’s eventual bottom, Diane, do you pick January 14, 2009, at 10:15 am, or some other date and time?
Allen, I’m looking at a chart titled “Homebuilders bottom before home prices”
It shows in 1981ish Homebuilders bottoming and the prices turned up two years later, again in 1991ish they bottomed and started back up two years later. This is for new homes, so I guess you have to read between the lines for the entire market.
It appears Homebuilders have hit bottom this Jan, so if it takes two years then we have a bottom in Jan 2010.
Additionally, the last two downturns came in “normal times” as opposed the the current one, that was created by the Greed Barons of wall street (et al).
RI stated, “I find it amusing that some here are calling the bottom to occur in January of ‘09. I am wondering: do you all have a specific day in January?”
I’ll give you a date RI - January 11 [not the 14th]; my birthday [although remember I opined the bottom could very easily be December of this year]! But remember, you won’t know I’m right until maybe April or May of 2009 because as you point out, we only know in hindsight.
BTW, I heard on the news this morning that Congress is considering a foreclosure bail out package that rewards EVERYONE who purchases a residential foreclosure with a $7K tax CREDIT [not a tax deduction, but an actual credit]. One commentator on one of this morning’s financial news programs even threw out the idea of a limited partnership that purchases these types of REOs with the idea of passing through the tax credits to its partners.
I’m going to have to follow this story more closely but if accurate, this kind of incentive would certainly motivate me to purchase a low end [or two] Reno SFR REO!
Thanks Smarten for the clarification. January 11, 2009, marks the bottom of the real estate market in Reno according to Smarten. I appreciate a guy who can be clear. Do you happen have a time of day on January 11, 2009?
Also, after the bottom arrives on January 11, 2009, what happens then? Please let me know if prices will languish and, if so, for how long? Or, will they immediately start an ascent, and if so, at what rate of appreciation? In other words, will bottom look like a V or a U, as BB puts it?
Thanks in advance, Smarten. You are a good man!
Ah, all you Nostradamus’ of the West. The alchemists of Finance.
All hail to the Chiefs and the Kings of the sage brush and pool tables.
If I’m out of town in January, will you set torch to the fire and beat the drums?
Wow. So now I can plan my financial future. Thanks to the mystical powers of Smarten, I can buy anytime after January 11, 2009, and be assured that prices will not decline from that date on. I do have one question though. If you can time the market, how come you spend so much time here? I mean, I would think you would own your own island somewhere, complete with mansions and servants.
Grand Wazoo,
Prices are dropping right now at all the downtown condos. That’s why I was curious about that unit at the Palladio that is listed at $583 sq. ft. and wondered if anybody has ever paid that much. I agree with you, once the Montage dumps a few hundred units on the market, how can supply and demand not dictate that prices will drop further?
I was just thinking about the potential impact of the $7k tax credit. Wouldn’t that just make traditional sellers have to lower their prices accordingly to compete? Then foreclosures would be selling at a $7k premium. This would basically be another free $7k for the banks (at taxpayer expense) in the end.
This is a pretty good video on past housing cycles. After watching the video, I am thinking it could be quite a while before we start to see decent appreciation again in real estate http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=7333181
With a median price of $235K and a $7k tax credit, an all cash investor seeking a 10% return can rent one of these houses at $1375 a month. Not a bad deal!
Tallguy:
I think you’re overlooking a crucial point. Lenders were lending regardless of a borrowers ability to repay because they had no intention of holding the loans long term. They were merely collecting their fees, then selling them off to the Wall St. shysters who packaged them into “strategic investment vehicles”. Then, with the help of phony baloney Moody’s rating agency (et al), they were rated AAA and sold to unwitting investors. Needless to say the returns were NOT as advertised, and the investors no longer want this garbage. The chain is now broken.
The only reason you got your no doc loan was because you had a substantial down payment and good credit. Kudos to you, but you’re the exception and not the rule. Most people cannot come up with 35% down, or an 800 FICO, let alone both. Your experience is interesting, but not relevant as it pertains to the overall lending environment. It’s more an anomaly.
Diane:
I can only hope that Sue Lowe is lurking around here. She could stand to learn quite a bit, especially when it comes to straight talk. I’ve always appreciated your candid approach, which is why I continue to frequent your blog. If your intention is to stay in the industry, I think you’d do well to open your own brokerage. You don’t need Chase, and could instill the honesty and integrity which is so painfully lacking. Cohn & Co.?
BB, I hope some Chasers will be lurking here. I just reposted this article on ChasteNation (retitled “Bogging is a Contact Sport”) and invited them to visit here to view the comments and see how informative (and entertaining) a REAL blog can be. My opinions have truly be changed by the interplay of ideas here.
smarten, did you mean that you think I’m high median wise or just “high”? Giggle. Where ARE those nachos?
Thanks for the heads-up on Regency Park, Perry. It seems like it has been a slow death for the project, just no one is talking about it.
The red herring nobody has touched was the item about rate resets. It actually may bode well for some folks, allowing them to hang on longer. On the other hand in my personal opinion, it may just prolong the anguish. I just want to control/alt/delete the last 5 years and get on with it again. And that’s just what the under $300,000 market is doing, for a variety of reasons.
Back to BB’s lasted comment, does Diane need Chase, does Chase need Diane, or are they codependent? We’ve had a lot of discussions on the future of the real estate industry here, and lots of pretty fascinating comments. But I wonder, in the age of $500 MLS postings reaching just about all the buyer’s initial data search locations, is the traditional brokerage arrangement a dinosaur? Would Diane be more successful sitting at her (no doubt slab granite surrounded by custom paint) breakfast bar as Diane and Ted’s Excellent Real Estate Bar and Grille? Has the market and technology made “mom and pop shops” the wave of the future?
To all of you, great comments on this post. You make it worth the effort that goes into posting. I can’t begin to tell you all how much I’ve learned and changed based on your input and comments.
PS - got a tip that D is in the RGJ tomorrow with her monthly column, and it will provide a link back here. Should be a lot of traffic Sunday, so this is a good chance to go off the wall and get some outrageous comments up for the masses. You Gotta’ Be Cruel to Be Kind!
Ok, Mike, I’ll bite on the rate resets. I’m not sure how much it will matter. Because up to now, the avalanche of foreclosures has not been the result of rates resetting. The foreclosures have been the result of the proverbial chickens coming home to roost.
By the end of 2005, the industry had pretty much run out of qualified buyers. Or at least semi-qualified. But Wall Street had become addicted to the fees, and realtors and mortgage brokers had become addicted to the commissions, and builders had become addicted to the profits. And nobody wanted the party to end. So, they all did the only sensible thing, right? They just started making Voodoo loans to anybody who demonstrated respiration activity. Who cares if the borrower can’t ever repay. By the time the crap loans got sliced and diced and sent off to who knows where, our fat commissions and profits will have been long spent. Don’t you just love my new Escalade?
The foreclosures we are witnessing now are just the crap loans made to the Walking Dead in the dying days of the bubble going bad. These are the folks who defaulted after they made one payment, or not payments at all. They were not in the house long enough for the loan to reset. Libor, Shebor.
So maybe the folks who got a 3/27 in 2005 will get some relief as the result of current rates today. But rates move around, and these loans reset every year. I agree with you that all this will do is delay the inevitable and stretch out the end (the much discussed “bottom”)ever longer.
Pay Option ARM resets anyone?
http://calculatedrisk.blogspot.com/2007/10/imf-mortgage-reset-chart.html
At this point in the discussion I’d like to hear what the fabulously educated and extremely professional mortgage brokers have to say about the current market. You know - the ones who surfaced here 1-2 years ago to share their wisdom, only to exit immediately when they got some stick? Whatever happened to The Loan Queen anyway? http://www.theloanqueen.biz seems a little quiet lately …
I have it on good authority that Angie has left the lending industry, and is currently employed as a cocktail waitress in Las Vegas. Seriously.
And Jeff. I believe that Jeff showed up with some mumbo jumbo about how option ARMs were just fabulous for entry level buyers. Then, when he got questioned about those suicide loans having the highest commission structure, he disappeared.
You know, I can think of some similarities between hustling cocktails and hustling no income, no assets, no job mortgage loans.
Hey Derrick, How bout dinner at the Hyatt in Incline village January 2009 for for Diane, Guy, and the first 6 regulars on this blog who care to join us. If the median price of a home in Washoe county is higher then than today, I pay, otherwise you pay. Sound fair? Should be some nice cold winds blowing off the Lake by then….maybe some of us will go easy on you and just order claw chowder. In any case, it would be fun to meet a few people. Thanks everyone for all of your wonderful blogs and comments. All the Best.
Hey bondstevenbond, count me in as one of the first six! And BTW, you are talking about the Lone Eagle Restaurant, on the Lake, correct?
If Congress passes that new bill that gives a $7K tax credit to everyone who purchases a foreclosed SFR, then maybe I’ll even sign an offer to the best Reno [or preferably Incline Village] REO Diane or Guy can come up with that day? I suggest we have our dinner on January 11 [Sunday]; the date I have selected as the “official” bottom [pricewise] of the market [and of course, my birthday]!
Oh, RI, you wanted a time of day. I say 4:00 P.M. The “official” start of happy hour [at least this year the Lone Eagle offered happy hour every Sun-Wed from 4-6 P.M.].
Seriously, have you guys read Diane’s article in today’s RGJ [”In Today’s Housing Market, Some Sellers Must Settle for Lower Prices”]? WOW!
“Nobody wants to admit we’re in a declining market?”
“Most sellers in today’s market are delusional?”
“How do you offer $235K [less than]…asking price and not get rejected?”
“Note to sellers: buyers don’t care how much…you paid…spent on upgrades or…feel you need to net from the deal. They don’t even care if you lose money. They just want to get the best deal?”
I applaud you Diane. You’re the ONLY agent on ChaseNation that gets it!
To Diane:
Do you think it would be possible for you to create a “Smarten Countdown Clock” somewhere on the blog? This would be a clock that will tick down, second by second, to January 11, 2009, at 4:00 pm Pacific Standard Time. This is the day and hour that Smarten has declared the real estate market will hit bottom. I think we all would benefit from having such a visual indicator of this seminal event. And, I think it may bring your blog a readership heretofore unfathomable.
Think about this. The finest economists at the finest universities across the nation say they cannot know when the market will bottom. The highest paid analysts on Wall Street and in private industry say they cannot predict. Warren Buffet says he cannot predict.
But Smarten knows.
One of two things is going to happen. Either it will turn out that Smarten was right, and this blog will be proof he made the call months in advance. Smarten and you can go on the lecture circuit, then offer $5000 weekend seminars in market timing all across the country, and you both can make big bucks on late night tv.
Or, it will turnout Smarten didn’t know what he was talking about. In that case, he can just return to jousting with Bantering Bear, you can take the clock down, and life on the RRB will go on.
Okay, I finally have to ask. Where have all the open houses gone? Are they waiting for good weather or have they decided open houses don’t sell houses…. or are Saturdays and Sundays being taken up by the second job.
It seems like that section in the paper got smaller after the first of the year and just kept shrinking. At first I said it was the holidays and then I told myself it was cold. That excuse got me through Easter, but yesterday and today were great days. What are the Realtors doing with their weekends?
smarten
Can you tell me where to find that article that Diane wrote? I can’t seem to locate it in the online RGJ. Thanks.
Kimo, I couldn’t find it either, I put her name up on search site and then all 4 posts showed up.
Smarten, I was looking at the ChaseNation comments and was wondering if your real name is Rodney Dangerfield?
To Kimo,
Diane’s article is in today Business section of the Reno Gazette Journal.
To Smarten,
Good idea about the official countdown clock! As far as I’m concerned, count yourself in at the Lone Eagle Grill.
Don’t know what the problem was in finding Diane’s article in today’s business section online, but I found it at: http://news.rgj.com/apps/pbcs.dll/article?AID=2008804130328 . Enjoy.
I’ve already posted a blog on ChaseNation which references the article commends Diane for being realistic and proactive [rather than maintaining that positive mental atttitude (”PMA”)] in this difficult market. After reading the article, why doesn’t the group visit my blog [at http://www.chasenation.com/profiles/blog/show?id=2000642%3ABlogPost%3A5026 ] and add your own accolades directed to Diane? If enough of you go, hopefully there will then be sufficient “action” to get the post moved to Chase’s “featured blogs” on ChaseNation’s main page? Then I’d looovvveee to hear Diane’s colleagues put a warm and fuzzy spin on her market outlook!
And Sully, you’ve uncovered my real identity [darn, my anonymity is gone]!
Diane’s article in the RGJ - BB has a convert!
http://news.rgj.com/apps/pbcs.dll/article?AID=2008804130328
Thanks doofus. Great article. Smarten, why don’t you post it on ChaseNation?
I vote for Cohn & Co.
Why not, Diane?
Was Diane’s article ghost written by Bantering Bear or Reno Ignoramus?
It’s amusing to see Diane refer to sellers as “delusional” (echos of BB), and refer to the myth of the “Rich Californians” (echos of RI).
I kept waiting for a reference to voodoo loans. Maybe that’s next month.
A little off topic from Friday’s post, but did you guys see this site? http://www.asynconhome.info/ Apparently this homeowner is raging mad about his 2007 Syncon Home’s neverending series of defects. With builders cutting back serious costs, do you think this is a common problem perhaps under-reported? Or just a fluke lemon house?
Thanks for the vote of confidence, everyone, but for the record I really do like Chase and have absolutely no desire to be the broker–None, zip, nada, now and forever.
I’m totally on board for the Lone Eagle Grill anytime with whomever shows up.
As for the bottom of the market, I’m kind of leaning toward Sully’s observation that historically builders bottom two years before the rest of the market, so January 2010 is sounding kind of reasonable… but have homebuilders really bottomed?
Diane, unfortunately, the ones that are smart enough to NOT want the job are the very ones that should have it.
SkrapGuy, regarding unit 1211 at Palladio…
The unit is a resale. It was purchased on 7/18/07 for $544,740 ($355 per square foot) according to county records. It is one of the corner units that face south and east and have the curved balcony. ALL of the “11″ floor plans have been sold - their average original sales price was $418 per sf. In comparison, the average sales price per sf for all 66 sales to date is $380.
When Palladio first started pricing their units, I think they were offered in the low to mid 300’s per sf - with more desirable units like “11″ priced at the upper end of that range.
I know a buyer who contracted for an “11″ unit the moment they were originally offered for sale. After a series of price increases (but still way before completion) the developer offered $100K to try to “buy back” that early presale. That was probably about the time that they were making the highest priced sales of that floor plan.
Here are the sales of the “11″ units - from lowest to highest. Columns are Unit#, SF, APN, Price, $/SF and close date.
1211 1536 11-532-11 $544,740 $355 7/18/2007
511 1608 11-525-11 $551,399 $343 11/1/2007
1011 1730 11-530-11 $620,400 $359 6/28/2007
1111 1743 11-531-11 $695,000 $399 10/19/2007
811* 1729 11-528-11 $726,437 $420 12/21/2007
911 1730 11-529-11 $810,150 $468 6/27/2007
611 1731 11-526-11 $860,150 $497 7/31/2007
711 1724 11-527-11 $865,000 $502 6/22/2007
* NOTE: A very prominent local real estate developer bought two units (801 and 811) at one price - presumably to combine them. Total cost per square foot for the combined sale was $420 which was then allocated to create individual unit pricing.
As you can see, there were tremendous differences in the selling prices of the various “11″ units. The earliest contracts were written for around $350 per sf. The highest sales escalated to around $500 per sf and I think that all of the “11″ units were sold before the building was completed - even though a couple units did not close until late 2007.
Who knows what an 11 unit would bring today? Certainly not $582/SF. Probably less than the $500/sf highs, but how much less????
The following six units were still “listed for sale” in Oct of last year when the building was completed but have since been sold. With the exception of unit 1204 - a three bedroom corner unit facing north and west just below the penthouses - recent sales have been in the low to mid $300’s, similar to early pre-construction levels.
$/sf - Unit#
$323 - 503
$303 - 607
$342 - 905
$334 - 1106
$336 - 1107
$419 - 1204
By my count, there are 26 developer-owned units, that have yet to close, but most (18) of those are 3 floor plans 4, 6 and 10 out of the original 11 floor plans. Their website currently lists 19 available units - so some of the 26 units may be in escrow or have deposits pending or simply not yet added to the county sales listings.
I am guessing that the developer is back to selling what inventory he still has left at somewhere near his earliest pre-construction levels - and he is making new sales but having a tough time clearing out the slowest selling plans.
The more popular sold-out plans like “11″ will probably carry some premium to developer sales of the less popular plans, but not what this particular owner has in mind
Regarding Mike’s question about Grand Sierra condo sales…
County files show 199 closings. Numbers by month…
26 - Dec-06
60 - Jan-07
28 - Feb-07
22 - Mar-07
16 - Apr-07
5 - May-07
2 - Jun-07
6 - Jul-07
6 - Aug-07
5 - Sep-07
4 - Oct-07
14 - Nov-07
0 - Dec-07
1 - Jan-08
1 - Feb-08
3 - Mar-08
So the guy who has Unit 1211 on the market now is asking $350,000 more than he paid 9 months ago. Is this proof positive that Delusion and Denial still run strong? That’s absolutely amazing.
Thanks DataGuy for your excellent info. Who are you, masked man?
Regarding the Grand Sierra, also amazing. December 06 had 26 sales. December 07 had 0. January 07 had 60 sales, January 08 had 1.
4 total sales in Q1.
If this is not an up close example of the proverbial Dying Vine, what is?
I believe that I read that GSR had to sell about 400 of these condo-hotel units in order to qualify for the additional financing to move forward on the water park phase.
It looks like the GSR, Reno’s “luxury destination resort”, better keep hawking those $49 a night rooms in the Bay Area. Is this what we mean by rich Californians propping up Reno’s real estate market?
Did you see where the Mirage in LV laid off 400 managers? Said the gambling business was down. Good thing it’s different here in Reno.
Maybe it’s time for Miss Trudi to host another Nikki Beach party. It appears that the impact of the last one on sales has worn off.
By the way, regarding the Grand Sierra Resort…not sure if this was said before in the above comments regarding the foreclosures….but foreclosures at the Grand Sierra are a really disasterous scenario for them, more so than a normal condo…since the ‘hotel-condos’ were supposed to generate revenue by being rented out as hotels when not occupied, this obviously did not happen as planned. I wonder how many more will turn up as foreclosures.
Sir,
Please check your facts before you publish slandering material. The loan that you referenced as default by R&K Homes, is not in fact “R&K Homes” at all, and applies to TWO houses out of the 74 that are there (model homes). R&K Homes is NOT in default on that project, is still building that project, and if anyone wants to go out and look, will see it’s one of the most beautiful and upscale subdivisions in the Reno area.
We already have to deal with the rumors about our company and its owners along with the issues of the market. I ask that before you write what YOU think is correct, check the facts first. The NOD clearly shows the APN’s, includes one incorrectly (sold/closed last year), and if you were to have looked them up, you’d have seen they were two parcels, not a final mapped subdivision.
We’re just trying to sell homes, keep the economy moving and allow folks to have a nice house to live in. As long as we have those that work against us, we cannot be successful.
Thank you.
It took some time, but I just noticed 260 Lakeview come up in the Washoe county property sales data, sold for the specified 338K. So I guess the deal did take, though I doubt any of the neighbors are very happy. That is not going to help the comps.