Our friends at First Centennial Title forwarded the following Market Conditions Report (May 2008) for the Reno Area. (Click on the picture to access.)
Some highlights:
- In April’s report, sales per day were 12.9.
- In the current report (May 2008), the market has accelerated to 14.2 sales per day. This is about 47% of the 2005 peak value.
- The rate of closure points to the 2008 rate surpassing the 2007 rate in about 3 months.,
I also have the latest charts sent to me from our friends at Ticor Title. (Click on the pictures below.)
The news here is that Notices of Default finally leveled off for May, and recorded sales (units) continue to climb.
15 comments
2565 Beaumont Pkwy 3166sq’ at $389k. I think this is an example of prices that will push sales up. The street is busy but it’s $122sq’. It’s really starting to show it’s foreclosure status but it could be saved. Any takers on how low this one needs to go?
2565 Beaumont Pkwy 3166sq’ at $389k
That house has quite a sale history:
12/21/2000: $286,000
01/07/2005: $579,000
04/18/2006: $700,000
10/17/2007: $535,500
Want to see what a speculative bubble looks like?
12/00:$286,000
1/05: $579,000
4/06: $700,000
10/07: $535,000
10/08: $350,000 ??
Another example of how you can’t ever lose money buying a house in Reno. 4 sales in 4 years. That 18% “gain in value” in 15 months between 1/05 and 4/06 pretty much says it all.
Guy, I am wondering if there is a way to determine what percentage of houses selling today are selling below the most recent sales price?
So it looks like this house will sell for close to 50% off it’s high in 4/06. Which raises the question: is 50% off absurdity a good deal? Or is 50% off absurdity still absurdity, just perhaps not quite as absurd as the original absurdity?
Marla, I agree; half of an absurdly high price–it may be an absurdly good deal, or just absurd, depending on the absurdity of the starting point; only the Queen of Hearts could solve it:
Queen of Hearts: “Now then, are you ready for your sentence?”
Alice: “But there has to be a verdict first.”
Queen of Hearts: “Nonsense! Sentence first! Verdict afterwards.”
If anyone from Ticor Title reads this, I am curious how you filter the Notice of Default data. The raw data are that NODs were 513 for 4/08 and 554 for 5/08. As Mike (GreenNV) has noted before, multiple NODs may be filed on a single property, and thus the raw data is often greater than the number of actual properties receiving NODs. Even so, it seems curious that Ticor’s data show a minor decline in NODs for May when the raw data show a relatively significant increase. I wonder if this may indicate that we are seeing more properties with multiple encumbrances going to default.
Pricing forward at 3%-4% per year from 2000, which was pre-bubble, and assuming no major upgrades in-between or damage now, that house would sell for $360K-$390K.
As big as those numbers are, it makes me wonder because so far they’re just on paper. It takes about a year for today’s foreclosures to be dumped on the market, adding to the already-bloated inventory of unsold homes.
The foreclosure process varies from state to state and in the length of time it takes from the first default notice to the assumption of the title of the property by the bank.
Guy, would you have any insight on the length of time for Nevada?
I’ve questioned Ticor’s numbers in the past, but think they are pretty accurate now. A year and a half ago, their NOD numbers were within 2% of the gross number. That variance has steadily risen to closer to 20%. Very few 2nd mortgage or HELOC NODs get filed - it’s pointless. I think the difference is the ever increasing NODs filed by the HOAs (including the newest wrinkle, HOAs filing NODs on the banks REOs that are skipping HOA dues). This also means that if a lender files a NOD on a property today, going on to a NOS is a virtual certainty.
Basic timeline is NOD 3 months after first missed payment, NOS 3 months after NOD, auction 3 weeks after NOS, and TD recorded a week after the auction. So the fastest the process can proceed is 7 months. I have seen REOs hit the MLS the day the TD is recorded, though the average is about a month.
SkrapGuy,
If I am interpreting your question correctly you want to know what percentage of homes currently listed for sale, are listed at a price that is lower than the price the house last sold for. This is a difficult endeavor. One would need to examine the sales history of every listing individually. That being said, Short Sales would definitely fall into that description, as well as probably all bank-owned properties. And determining the percentage of short sales and bank-owned properties is straightforward. In the Reno-Sparks area (MLS #100) there are currently 4,576 residential listings. Of those, 864 are short sales; and 530 are bank owned properties. So roughly 30% of the listings are selling for less than they were purchased.
Doug B. Cooper,
Regarding your question for length of time required to foreclose, GreenNV provided an excellent answer to your question. (Thanks, GreenNV)
Guy, never post a number when I’m within 50 yards of a calculator! Using my “photogenic” memory and going back to your Conditions of Sale post from 25 April, in the last 2 months REO listing have gone from 9.5% to 11.6% of the MLS (surprised it’s so low), Short Sale listings have gone from 11.7% to 18.9%. Builder listings are about 8% of the MLS. It seems to me that the “organic” seller (traditional hands-length relationship) has about the same chance of selling successfully as getting hit by a bolt from Zeus.
Anyone else amused by the cheer leading going on over the rise in pendings? How many are on short sales that may take 3 months or more to close, if ever? How many are loan or home sale contingent and will never close? I only trust closed deals, and it really seems to me that things are going downhill for the organic sellers right now.
1. I can not imagine under any circumstance that someone ever payed nearly 3/4 of a Million dollars for this home. For that much money one expect at least one special stand out feature.
2. Can anyone explain why the Washoe County Assesors has not listed this house on the Bank Owned List? Also if you look at the Parcel Summary it doesn’t show the Foreclosure at all.
APN # 208-052-11
Is it simply an oversight/mistake on their part?
If I remmeber correctly, right now short sales and foreclosures account for about 30% of all listings, but close to 75% of all sales. So, at least 75% of all houses actually selling today are selling for less than they last sold for. No doubt there are also some non-short sales and non foreclosure sales that are also selling for less. So perhaps we are around 80% of all sales today taking the market down from previous levels. That’s pretty ugly.
Green is of course absolutely correct that pendings in this market are very suspect. It used to be that the pendings:listings ratio was the best leading indicator of the market’s health. But with so many “short sale pendings” now that never come to fruition, I believe that even that ratio may be indicating a healthier market than is really the case.
Just because a listing is advertised as a short sale DOESN’T necessarily mean it is offered for less than the seller’s acquisition price some years ago. All it means is that the sales price is less than current outstanding encumbrances thereagainst. With all the 110% financing, refinancing and HELOC seconds, I suspect there were quite a number of owners who were able to pull out inflated equity at the height of the market; equity that exceeded their initial acquisition prices.
And for identical reasoning, I would place some of the pending foreclosures and REOs in the same category.
So I don’t think we have enough data to conclude that all short sales and REOs represent properties listed for less than their owners’ acquisition costs.
You are absolutely correct, Smarten. My statement was an over generalization of short sales.