Tired,
I believe the data for Sep/Oct/Nov will be skewed with last minute buyers trying to avail themselves of the expiring $8k 1st time homebuyer credit.

I expect a significant dropoff in sales/prices in Dec/Jan due to that expiration. Even if a new/higher credit is introduced, the period will likely be for a year, so there’ll be no sudden rush instigated as those left still qualified to use it will likely have a year to do so. Just my thoughts, fwiw.

Realtors (and title companies) are now in an interesting situation. Of course they want to hype up the ‘market recovery’, so they put out the news that sales are going gangbusters. Not since the frenzy of the bubble,they say, have sales been so strong. Of course,what they leave out is that most all of the sales are at the bottom end of the market.
Meanwhile, every realtor in town now knows that he/she can do a lot better financially actually selling 7 $100K houses than spending 18 months trying to sell one delusionally overpriced $700K house.

Does that 719 number include condos? Because if it does, then one-half of those sales were below $166K.

Uh…. As repeated many times on this blog, the recovery is regional… & Reno is no San Jose.

Similar to bob c’s story, I got a call last night from the new buyers of my neighbors property. It just sold for approx. $1.4M. It had been on the market for about two months.

So some sales are happening out there. Granted the wine country isn’t Reno either, but if a RE recovery is going to happen, places like this getting back to normal sooner may become somewhat of an indicator for when Reno stabilizes.

Oh I know, jobs, inventory, average household incomes all will play a part, but in the big picture when more areas start to stabilize, Reno will be shortly behind, even in those 500K homes.

If only because it will be where retirees go after they sell.

bob, you’re quite right - Reno is no San Jose. That’s one of the things I love about this place.

No $500 million city hall that needs a 100K window washer and three people to operate it.

No $3 billion annual budget.

A somewhat civil city council, in that they aren’t manning the battle lines for every council meeting.

I could go on, but you get the point…..

If you’ll recall last time you accused me of being an ‘outsider’ I pointed out to you that my son attends UNR, I have a deposit in on place in Reno, a business in Carson City, season ticket holder to the Aces, and hope to move one of my businesses to Reno soon.

That’s my story. If that’s hypocrisy, or you have a problem with that don’t read me.

What I did point out that you’ve yet to reveal what skin you had in the game, at least since I’ve begun reading here in mid 2007.Apparently hit a nerve.

But really, it doesn’t interest me anymore. I think readers can figure it out for themselves.

The much discussed property at 1025 Manor just got reduced in price to $539k. That’s $405/sq. ft. for those who won’t accept the “finished basement” as premium square footage, or $204/sq. ft. for those that will.

I think we can all agree that this property shows that a high degree of denial still exists at the medium to high end of the market, and I expect prices for places like this to crater over the next 6-12 months.

I remember when the agent got on the blog and rabidly defended the pricing. Seems her efforts would have been better placed scrounging up some $150k properties to list. FWIW.

Downer posted:

“What I did point out that you’ve yet to reveal what skin you had in the game, at least since I’ve begun reading here in mid 2007.”

I’ll tell you why I despise individuals such as you. You blow into Reno with your big money, fake money, credit, whatever, buy a couple of speculative investments, all the while driving up prices well beyond what locals could ever hope of affording, and all of the sudden you’re an expert on the scene because you’ve hemorrhaged a bunch of cash or fake equity. I’ve got news for you- you don’t know jack about Reno, or real estate for that matter, pal. Guys like you are a dime a dozen. You haven’t disclosed ANYTHING about yourself other than the fact you bought at the peak. Big effing deal, Downer. The idea that you’re qualified to discuss real estate on this blog because you’re a fool with money, yet locals who are waiting for something they can rightfully afford are not, is the most ludicrous, narcissistic stance I’ve ever heard of. Not surprising it comes from somebody in “the wine country.” My advice to you is to stay right where you are, because you won’t stink as much as you would around Reno.

Thanks for the post Big Reno Fan. Crazy seeing Reno above Las Vegas. Could it be all the homes out in BFE?

someone enlighten me as to BB’s interest in
the reno market? we all have biases or reasons
to be interested (no one does this as a public service) and being a newbie maybe i can understand the hostile dynamics that surround him

i share some of his beliefs or acknowledge their
possibilty, but i can’t understand his personal
angle in this market

thank you

i’ll give to you after i get the offers and accept
one……that is propritery info until all offers
are in and a back up is put in place (i promised
realtor i would discuss no numbers…you never know)

its the zip code 95120 almaden valley
our public schools are shining bright and
we have no crime…its become a haven for
those that value those 2 items

the rest of san jose has been hurt….because
there are no distinquishing aspects one neighborhood to another

the better the location the better the pricing power……..because there are so few ‘nice’ areas

tell your friend i live in almaden valley (williams, bret hart and leland high) and he
should understand the picture

scroll through lower end 95120 properties and you’ll see what i mean

Bob C,
You make a very good point, mentioning those top three priorities in real estate. Old Southwest Reno is another example of how location can insulate you against the downturns.

I’d love to live there someday, and continue to be frustrated by the fact that the Old SW continues to have “sticky” prices. Those old houses on leafy streets just haven’t taken the hit that the rest of Reno has. Only downside to this part of town is that the schools (elementary and grade school) aren’t as good as certain other neighborhoods (South Suburban and Caughlin Ranch, for example).

That said, who knows what winter will bring to RE prices throughout Reno? It’ll be interesting to see who’s eating crow come springtime .

RI - if was me you were referring to, (California Money)I firmly believe that Reno’s salvation will be from retirees. I base this on these assumptions; No income tax. Lower cost for housing. Good climate (IMO).Great people.

I could be wrong. It’s been pointed out earlier today. But WTH, it’s what I believe.

I know of one person at my office who bought their house in August under one of their father’s credit while letting their house in Somersett go into foreclosure.
Another got a short sale offer on her own house and turned around and bought a short sale house a few weeks later. Banks are lending.
There appears to be a lot of creative financing still going on around here.

nvmojo, I brought that fact up a few months ago. I was looking at a house (short sale) and followed the ownership trail. It lead to another house they purchased, just before defaulting on the one I was looking at.

This might explain where all the people that are getting NOD’s are going, as they are not showing up in the rental market and the population is not changing enough for the number of foreclosures.

I would have thought there was a law against that, but apparently no one seems to care or budget constrains have kept enforcement to a minimum.

“IRS probing home-buyer tax credit claims: report”

“(Reuters) – The U.S. Internal Revenue Service is probing more than 100,000 doubtful claims of a tax credit meant for first-time home buyers, the Wall Street Journal reported on its website on Tuesday.”

“Lawmakers have expressed concern that significant number of claims might turn out to be fraudulent, the paper said.

The IRS was investigating 167 “criminal schemes” involving the credit, according to the House Ways and Means oversight subcommittee, the paper said.”

http://news.yahoo.com/s/nm/20091020/ts_nm/us_homebuyercredit

Wow,

Reading BB’s angry response to Down But Not Out, sparked a flashback about living in Reno nearly 30 years ago.

This was the early 80’s and at the time, Reno/Sparks was not exactly the Garden of Eden. The best employers in town were Sierra Pacific, Nevada Bell, and a few Banks. The local casinos controlled the politics and labor market.

About 30 of us relocated to Reno to work for a Fortune 500 company. These were first job out of college positions, and our pay was about on par with the locals. It did not take us Reno newbies long to find out that we were less than welcome in town. We discovered it was okay to come and spend our money, but after the money was gone, the message was quite clear - leave and go back where you came from. We coined this attitude the “Casino Mentality”.

Upon reading BB’s comments, I thought, Oh My God, it has been 30 years, can it be possible so little has changed? Are the locals still that angry and resentful, about outsiders? Are people who relocate here welcome only as long as they are spending money? Is the “Casino Mentality” so deeply ingrained, that it can erupt into a Mel Gibson Moment, at any time?

Since BB believes him/herself to be the expert on the locals, I will annoint myself as the expert on outsiders who bring our families, businesses, capital, professional expertise, and employment opportunities to Northern Nevada.

For the record, we brought our business to Reno in 2000. As commercial tenants we have paid over 800K in rent to local landlords. Our staffing has been as high as 15 employees.

A universal and constant complaint of all Northern Nevada employers is the subpar quality of the local labor force. Many local employees have a low commitment to their workplace, a low level of education and training, and a less than positive work attitude.

Did you ever wonder why there are so many warehouses and low paying warehouse jobs? Like many other companies, we eventually figured out the Reno area was best used as a distribution/warehousing center, allocating the higher level jobs to metropolitan areas.

Until the “Casino Mentality” attitude changes, Northern Nevada will always be a second rate economic center. Companies such as Mirosoft licensing and Intuit will use the Reno facilities as 1-2 year training center. The upper management positions and high salaries will be located in Seattle and Tucson.

What does this have to do with local Real Estate? A lot.

The growth of this area was not caused by people like BB and his ilk. It was hundreds of outsiders like Down But Not Out, who brought their business, capital and expertise to this area that created the growth and expanded opportunities for everyone. Like most businessmen, they worked their butts off to make it happen.

The casinos and local city hall slobs of the early 80’s, liked things the way they were. They were hardly open to the idea of growth which would result in sharing power and eventually allowing labor arbitrage. The handwriting was on the wall 10 years ago with the advent of Tribal Casinos, can anyone really believe that this cabal had the vision to diversify the regional economy. It was outside businessmen who were the fundamental drivers of change and growth in Northern Nevada.

Perhaps the locals did not get their fair share of the wealth that was created during the 1990’s early 2000’s. So what, who said life was fair? There is a constant bitch about how the area has changed. Too bad, I don’t remember local contractors withdrawing bids because of quality of life issues. Anyone who claims that the Reno of 30 years ago is better than the Reno of Today is suffering from terminal dementia.

It is the outsiders that BB hates so much that are the very ones who made this area prosper. Talk about hypocrisy.

There is a lot of thoughtful and useful information posted to this blog. I appreciate the many insights regarding local and national real estate trends. That being said, there is also a “kick them when they are down attitude” towards developers such as Fernado Leal and homeowners that made unlucky purchasing decisions that I find disturbing.

Okay, his timing was bad. The units were too expensive, perhaps he is/was greedy (not an uncommon human trait)etc. etc.

At least the man tried. He worked hard to bring the project to completion. He raised capital, provided for hundreds of local jobs and he had a vision (more likely an illusion) about a new downtown lifestyle. For crying out loud, give the guy a little credit. Compliments are free.

Many writers post about the local real estate market as if they are a hedge fund manager, buying and selling Real Estate like shares of Apple Computer. For those who derive their income from real estate, it makes sense. For most of us, real estate buy/sell decisions are complicated by many human factors.

- we may have owned a residence for over 10 years, and are mostly indifferent to the housing price change. We sold high and bought high or we sold low and bought low, it is all relative. Apparently, we are all kind of dumb, not like the some of the real estates tycoons that post here.
- we bought houses in good school districts so our children could have a better education. Perhaps we overpaid, or bought a little more house than we can afford. Perhaps, we believe Our children’s education is more important than the absolute value of our real property.
- we retired in Northern Nevada to buy or build our dream house. We sold our 1800 sq foot ranch-style home in a nondescript California suburb and bought a larger home with a spacious kitchen, granite counter tops, and a garage that is large enough to actually hold two cars. Are we happy that our home value has decreased? No. Was it a bad decision to fulfill the lifestyle we want? No.
- we planned on expanding our family size, so we decided to buy a bigger house rather than trade up at a later date. We may have gotten in a little over our heads. Does this make us greedy speculators?
- perhaps we are very successful financially, we want to build a house that displays our wealth.
- job transfer etc.

The plus 500K homes will eventually recover, but like most of the posters I expect some tough times over the next 1-2 years. The dream of the beautiful house, with the view, with the nice yard, in the right school district never ends. It just gets postponed. Those of you who post otherwise and are basing their assumptions on very logical economic fundamentals are simply ignoring the power of the human factor.

BB - it will be all those outsiders you hate so much who will restore equilibrium to the local real estate market.

BTW - no point in posting love it or leave it replies. We have always felt that Reno/Tahoe area is very beautiful and have mostly enjoyed the last 10 years living here. We have made a decision that an uban, multi-cultural experience is as important for our children as secondary school curriculum and plan to return to West LA. Besides, my wife hates the cold and misses the ocean. We will retain some business functions in Sparks, so will still be traveling here on a regular basis and will eventually sell or downsize the 500k plus home. I guess time will tell who is correct about the outlook for these homes.

I agree with bob c on that.

I saw the name dirtbagger and thought for sure Derrick was back. Not so at all.

Now RagingBull = Derrick? I might believe that.

Downer,
I ain’t no Derrick.

I also don’t have a crystal ball, nor does anyone else on this blog. What tickles me most are those with a sense of absolute certainty and conviction in their assertions. That type of hubris is a sure recipe for eventual disaster, regardless of the topic in question.

We can argue ad nauseam as to whether there is deflation, inflation, boom, bust, good deals, or sucker’s bets. Here’s some secular issues that you cannot argue against:

1) Dollars are being printed into oblivion, meaning eventually it’ll take alot more dollars to buy everything, including real estate.

2) The world keeps populating itself into oblivion. More people equals more demand for housing.

3) New home building is at a standstill. Eventually, the supply will run out.

Now, there is an awful lot of supply out there right now due to REOs. But do not subject yourself to the fallacy of pessimism. It is always darkest before the dawn. That supply is starting to get sopped up. Just look at Guy’s stats.

Bottom line: If you’ve found a place that you like and can afford, it’s a hell of alot less risky to buy today than it has been any time in the last 9 years. If you’d rather wait and see what happens and rent for a while, that’s ok too!

Dirtbag,
One of your soundbites gave me a belly laugh:

“We have made a decision that an uban, multi-cultural experience is as important for our children as secondary school curriculum and plan to return to West LA.”

West LA? Multicultural? Is that Bel Air, Beverly Hills, or Santa Monica? Yeah, lot’s of crips and bloods in those barrios with which to ejumacate the kiddies.

Can anyone out there argue against me that California is the most completely FUBAR state in the nation? $30B deficits, taxes going through the roof, an inability to govern, horrible schools…

Unless you got the kiddies in a private school in 90210, but, then, oh yeah, what about the multi-cultural stuff??? Not many new immigrants there in those schools….

Dude, any credibility you had got blown out with your upcoming move back to the land of milk and honey — West LA. Oh yeah, lot’s of friendly people there, too……not! As BB might say, BWAHHHAAAAHHHAAA. You can have it. Bye Bye.

Can’t wait to buy that REO you’re walking away from.

BUYING NOW VS WAITING??

There’s absolutely no rocket science here! If interest rates were not temporally/artificially low the housing market would be completely wiped out? And prices would have been well on there way to correcting them-selfs to realistic affordable levels, {Keeping home prices artificially inflated is not the economy’s cure…Its the poison}}

OH SURE.. The Realtors making a case for buying now vs renting “Buying is cheaper” bla bla bla

Thats great until down the road after the euphoria of having a new home wears off {and your Realtors long gone, Counting there commissions} and you realize that your home is now worth $40,000 less than you paid, And now you find yourself trapped, No refinancing, No upgrading, No relocating, Just stuck carrying all the benefits of negative equity hoping for some kind of miracle from Uncle-Sam..

Most of the current buyers will agree with you? The market does have incredible evidence to continue to fall, But there in it for the long haul and don’t care about price just the payment?
{Mimicking there Realtors sales pitch}… Is that about the stupidest thing you’ve ever heard??

These are the same kind of people that were duped into buying 04-05 and 06

I SUBMIT THIS: Wait be patient? Keep your-self mobile, Rent a little longer, See how this very volatile market plays out? So you piss off a little more rent money BIG DEAL! Better than being stuck with negative equity carrying the payment,lost taxes etc etc. For who knows how long?….

One thing looks to be certain… There’s going to be plenty of inventory to choose from?….

Is this blog being taken over by crazies who can’t even remember what they said three days ago?

“What tickles me most are those with a sense of absolute certainity and conviction in their assertions. That type of hubris is a sure recipe for eventual disaster, regardless of the topic in question.”

Raging Bull,
October 20, 2009, at 3:41 pm.

“Bears, your moronic mantra has grown tiring. Don’t fall victim to not being nimble enough to change your attitude with a changing environment. I call the bottom. And it is NOW”.

Raging Bull,
October 17, 2009, at 11:10 pm

Absolute certainty? hubris?
jezzus, dude, any modicum of credibility requires that you can go more than 72 hours without making yourself look like a fool.

Ah yes, the multi-culturalism of L.A. How I miss the used diapers littering the sidewalks.

this blog is my favorite reading

and dirt-bagger i took my son at age 11 or 12
to watts (during day) to play some street ball
and it was one of his most memorable days–we
had a blast

If banks are holding back converting NODs then maybe we are in for an L shaped recovery (if we are at the bottom). Banks trickling out houses will balance out the shortage of new builds.

Sully -

You are correct. I made some misjudgements about moving and running a light manufacturing business in Northern Nevada. I under estimated the value of an having an established manufacturing infrastracture(as in So Cal). Relatively simple tasks like finding a local replacement for injection manufacturing was nearly impossible. Locating competitive sources of custom packaging was difficult. I had to teach myself about PLC’s and ladder logic programing because there were no techicians in the vicinity. The list could go on and on.

We gave up on domestic manufacturing and outsourced production to Toluca Mexico and SE Asia years ago. We simply could no longer compete against the foreign imports. End of story.

I find the posts about Los Angeles amusing. That is the mark of a great city. We can all live in LA and have different life experiences. Most of the people who moved to LA and stayed, started out living in the gritty parts of town. I worked and manufactured in East LA, Vernon, and South Bay. If dirty diapers on the sidewalk is the worst you found, am curious where you lived and worked. How about a dead bum in a downtown alley or a garment district that smells like piss. As time passed (25 years) most of us moved to the better areas.

As for an urban life style, isn’t that exactly what some members of the Reno community are trying to create in the downtown core.

Final point - Opinion only. Our children will need social and work skills that will enable them to live and function in a multi-national world.

My wife and I believe that completing the education of our children in Los Angeles will help give them that exposure.

People move to and from Reno every day for all sorts of reasons. It does not mean they dislike the area or the people that reside here.

Down but not out….don;’t tell me that you are another one of the guys that got caught up in the housing boom.

So you are saying that the upturn is a “few years away”? Looks like I can sleep easy tonight knowing that.

West LA and Reno are worlds apart culturally.

Sorry, heinie not hinnie.

I just want a nice house in a nice neighborhood. Reno has plenty of that. I’m not from Reno, but I’ve visited many times, and my wife grew up there. I really like Reno. I plan to move there with my wife and kids next year.

I don’t need monumental growth, or big companies moving here. In fact, if that started happening, I’d consider it a detractor. Move to any metropolis in the country if that’s what you’re in to.

Get bigger. Get busier. Get more traffic. Get more crime. Get more of everything. No thanks. Reno has all that I want.

I like Reno just fine, and am quite happy if no one else does. If you are happier in California, go for it. I was raised there and don’t want to go back, except to visit. It’s a beautiful state, but the governance of California is a real mess, and taxes are set to skyrocket.

Reno has Lake Tahoe nearby, a good university, good neighborhoods, the Aces, great outdoor recreation.

If you really don’t like Reno, then why are you on this blog? What I get from this blog is a good feel for what is an appropriate price for various houses in various neighborhoods. It’ll ensure I don’t screw myself too hard when I do buy. All this talk about how great California is makes me wonder about the authors, and why they are on this blog.

I like Reno, just fine. Sue me.

I like reno, too. But it doesn’t like itself. When I suggested a mini area, I meant mini - not a throbbing high tech center hiring thousands of people.

Something more like a large training center/school that specializes in high tech jobs.

I don’t want the LA or Silicon valley rush hour traffic either.

But depending on casinos for tax revenue isn’t getting the job done. Tribal casinos have taken too much away from them. Hot August nights only goes so far.

How else are we going to fill up all these 400K+ houses. The US Census dept came out with an update last month and shows the median household income in Washoe County (for 2007) at $54,500.

Are you willing to pay 4-5 times more in property taxes, so the county can keep their spending program in place? Or perhaps sitting on your heinie is a better way, seems to be the mind set here anyway.

Another thing, the part about the limit on the trusts. That creates zero problems with traffic!

And I agree with the statement on California governance, that’s the main reason I left. But this is 2009 not 1909.

Sane Economists don’t make monetary bets on the future of the economy - especially on this blog.

So coining lyrics from Cypress Hill Mr. “Insane in the Membrane, is “anyone…willing to bet…that today’s $1 million asking price in IV, will exchange hands at 500k sometime in the next 4 years? Any takers?”

Well again, you need to define your poison [so I will]. And I’m not willing to wait 4 years for you to pay up. So let’s make it 2 years. And given the market, I think I need some odds. So how about it SE?

I’ll give you five examples [take your pick] of the current $1M IV listings I have in mind that WON’T exchange hands for $500K within the next 2 years [meaning you lose]:

MLS #937526 - 886 Rosewood Circle listed at $990K

MLS #938558 - 809 Rosewood Circle listed at $995K

MLS #938557 - 826 Rosewood Circle listed at $995K

MLS #938556 - 832 Rosewood Circle listed at $995K

MLS #938409 - 869 Rosewood Circle listed at an even $1M

Given this is Nevada, I’ll put up $1K; you put up the multiple of this figure; Mike will hold onto the cash [are yhou willing Mike?]; let’s have Mike invest the money in a no load China emerging markets mutual fund; and whoever wins inherits the fund’s position.

When you throw out a bet on this blog [are you listening Derrick?], you put up or leave [and when you leave, don’t come back using one or more aliases].

So are you game SE?

Sure Walter; that’s the point.

Come on, brand new, over priced construction that has been on the market for over a year. Price/square foot approaching $400. Delusional seller in trouble. Construction loans coming due. Mortgage resets on the cusp. If I gave you a similar example in Somersett or Damante Ranch, how would you respond? It’s not like there are a lot of IV properties for sale at $1M. And what are the odds they’re going to resell within the next 2 or 4 years for that matter? At least I selected something we can say will sell [a multiple number of times] within the next 2 years.

And what’s this garbage with 4 years? Let’s make it 10. Or how about 20 [so no one will even remember the bet; let alone collect]? Mr. Econ is willing to bet that after IV real state has dropped 40% or more in value in the last year plus [just listen to the pundits], it’s going to drop another 50%? He doesn’t know what he’s talking about and my “clarification” of his bet makes this abundently clear to anyone who really knows IV real estate.

Marilee (aka Bantering Bear),
Your so funny. That’s good. You almost had me Bear. I almost can’t keep up with your aliases. Where you been all day?!!

What’s so clever about the post is that you joined right in with that new name (transgender, even), and did the very thing you were accusing us of.

I can’t hardly keep up with you.

So, Dipsh!t (very appropriate), I mean Derrick, how many different names now, huh? You angry that I saw through your latest “tired of waiting”? No matter what name you post under, you’re completely transparent as you write like a child, and your message is always the same. I would actually not be surprised if you are Marilee as well, though there are too few spelling and syntax errors. Unlike you, I have absolutely zero need, or interest, in posting under different moniker’s.

BTW, I’ve been meaning to mention that since you were foolish enough to use your full name when you first started in with your mindless diarrhea of the mouth a few years ago, I went on the Washoe County assessor’s site to look at the house you used to pretended to own. You don’t own a house in Reno. You’re a fraud. And, after your latest see through posts as “tired of waiting”, it seems that you are, if you’re not still lying (which would be hard to imagine), buying a condo. This, from somebody who has insulted anyone who has ever lived in an attached product. You have ZERO credibility, and are obviously a lost soul in dire need of attention and help. If I hadn’t seen your myspace page (thanks to GreenNV) I’d think you were 13 years old, though perhaps you are of the “slow” variety. Sad, sad, sad…

Sane are you really an economist? The reason I asked is because economist have a poor track record for calling the start/end of recessions.

I do like your 2nd qtr 2013 date, as it coincides with something I’m working on that is not directly real estate related. I was concerned about the CPI data (because of all the changes made to it) going back to 1929.

Long story short - My charting showed the beginning of a new bull market (stocks) in Oct/2012. This date would be six months ahead of your “bottom” (?). It actually fits in the puzzle.

BTW,
Did anyone notice the unemployment stats that came out this morning?
Nevada is sitting at 13.3% - a new record.

Move, I’m not sure where I stand on the Yucca Mountain issue, but I am finding a lot of head in the sand mentality here.

I’m not a proponent of uncontrolled growth, there is already enough here to last a couple of decades. But, I really don’t see why we can’t do something to bring in higher wage jobs as replacements for ones that have been lost.

I always thought if I gotta work 8 hours a day, I might as well make some money while I’m doing it.

Maybe everyone here makes a living at the poker tables, cause the slots sure don’t pay that well.

Smarten-

For somebody who appears to be of at least average intelligence, I don’t understand how you get caught up on such remedial things. Hyperinflation? Where in the world do you come up with this idea? While I would never discount inflation in the far future, perhaps even a decently high rate, hyperinflation is a preposterous notion. In such a scenario, we’d be talking about $10,000 loaves of bread and such. Were that to happen- a laughable scenario in my mind- housing prices would be irrelevant.

Furthermore, as I’ve posted time and again, it is MUCH better to purchase a house in a period of high interest rates than in a period of low rates. Why? Because as rates go up, house prices go down. Remember, housing prices are dictated by local wages, and what monthly payment those wages can afford. You seem to be under the impression that, as interest rates rise, the cost of ownership will, too, in conjunction. You’re mistaken. The difference will be made up by sellers in the way of lower prices. Also, you can always refinance the rate down the road, but you can never lower your principle. In addition, the higher the rate (hence more interest on the note), the easier it is to knock out the principle with additional payments every so often. It becomes easier to pay off the house.

BB is correct Smarten.
People buy houses based upon “howmuchamonth” they can afford. The grand price is largely irrelevant.
Also, an important point which I think you are missing, is that when all is said and done,it is the buyer who ultimately sets the price(that is because they can wait longer).
Thats why these real estate shills have it all wrong. If interest rates rise, the howuchamonth” value will decrease, and inevitably so will house prices.

Thanks SE -

I asked for your prediction re: mortgage rates 4 years out, and you gave it. Thank you.

BTW, my definition of hyper-inflation is NOT that a $2 loaf of bread ends up costing $10K. If it ends up costing $20, that’s enough to qualify. But again, I guess we need to define our terms.

And as DBNO points out, your initial wager was NOT fixed to two particular $1M SFRs reselling for under $500K 4 years [as contrasted to within 4 years] from now. I guess it was my mistake to take your offer literally; sorry.

And insofar as your observation that “people buy houses based upon ‘howmuchamonth’ they can afford [the grand price (being) largely irrelevant],” that doesn’t literally equate to people’s earnings nor wages - it does equate to what they can afford. So to the extent BB or anyone else makes the literal comparison wages, IMO, he/she is wrong.

For a simple example of the principle, just look at the Bay Area. For decades [up until the last year] the homebuyers’ affordability index [based upon average wages] has been at less than 20%. Yet look at what happened to home prices.

My two cents.

“So to the extent BB or anyone else makes the literal comparison wages, IMO, he/she is wrong.”

You can have that opinion, everyone is entitled to theirs, but you have offered nothing to back it up. I find it humorous that oftentimes when you are stymied by one of my posts, you resort to the “he/she” dig. You’ve known I’m a guy for years. Funny, though.

“For a simple example of the principle, just look at the Bay Area. For decades [up until the last year] the homebuyers’ affordability index [based upon average wages] has been at less than 20%. Yet look at what happened to home prices.”

Earth to Smarten: Reno is NOT the Bay Area. Reno is NOT New York City. Reno is Reno. Apples to oranges my friend. I’ve had to correct you time and again on this, and I would have thought you’d have learned. But, alas, you’re just stubborn. It’s also clear that you don’t like to hear that you may have overpaid by more than a half million for your IV house (a different market than Reno, too), so you grasp, and you grasp, and you grasp.

Bob c,
Japans crisis began in 1989. At that time their debt to GDP ratio was 50%. Currently they are at 178%.
In the last year we have gone from 14 to 41%. This is what I worry about.
Bottom line is, just like Japan, I don’t think we will have inflation until we “take our medicine”.
Meaning letting these zombie companies go bust. Or put another way, returning to the free market system. Of course that will likely push unemployment to the 20% level, and I don’t think ther’s much political will to do that.
So we find ourselves between a rock and a hard place.
Which leads me to ask people like Raging Bull, how exactly do housing prices go up in this sort of environment?

I forgot to mention..On of the Incline Creek Estates(Rosewood)foreclosed went back to the foreclosing lender and just resold for $970,000.

Bear and Move to Reno- I never bought the whole “people are friendlier here” argument. People are the same everywhere…if you’re friendly you’ll get it back in return.

Willk- Surprise! we have dirty diapers on the street and bums here too.

Move to Reno- It is a fallacy that the nuke dump would have brought billions in $$$…I don’t recall Pres. Bush offering any such money when he tried to force it on the state.

Skeptical- Nevada’s more completely FUBAR than California. Our deficits are close to their per capita, but they have a more diversified, high income industry that isn’t dependent on tourism, the first to fall in a recession. They also have most of the nation’s finest shools and colleges in the nation. Inability to govern? We’re close to that. And OUR taxes will go up too.

Sully’s right…it’s build it and they will come. We need to beef up education here and remake ourselves as a high-tech (no longer dependent on nickel slots and big box stores) and build the workforce Dirtbagger found lacking here.
Why are our local politicians giving STAR bonds to almost-minimum-wage businesses???

Smarten-

You’re coming across as a completely illogical bonehead. I would have expected more from you, but I think you’re a hopeless case, desperate to justify your recent purchase.

You say:

“If they sold several years ago and are sitting on a boat load of cash, they probably can afford to pay more for a home than what the average wage earner can afford. So when you make the generic assertion that the housing market won’t turn around until prices are in line with the mortgage cost the average local wage earner can afford to pay, I must disagree with you and I have.”

These people you speak of are statistical outliers. They do not carry a market, especially one the size of the greater Reno/Sparks area. If you look at the historical pricing in the area, pre-bubble, it has ALWAYS been supported by median incomes. If I’m to understand your diatribe correctly- you’re preaching the “new paradigm” that the Realtor shills were vomiting forth during the frenzy. Absolutely unbelievable. This is nothing more than the “rich Californian theory” Reno Ignoramus put to rest long, long ago. It seems that you’ve just turned into a complete shill. Are you a Realtor, now? Seriously.

Further:

“And that was my point about the Bay Area. For decades the average Bay Area wage earner hasn’t been able to afford the mortgage necessary to purchase an average priced home. Yet that hasn’t stopped sales, nor the increase in pricing [and this metric goes farther back than the proliferation of exotic mortgages]. Aren’t these “facts” which back up my statements?”

Smarten- this is NOT the Bay Area. Are you that dense? Just as I wouldn’t compare Modesto to SF, or Reno to Tahoe (I have NEVER compared the two, and you can research my posts where I have gone on record to say that they are two different animals), you cannot compare the Reno/Sparks to the Bay Area. You’ve got “Bay Area” on the brain. You’re not there anymore Smarten. You’re in a second home market which is on the rocks. You called the bottom, and you bought something. Great. Enjoy it. But quit the horsesh!t.

Lastly, the money quote was:

“…I believe I am entitled to assert the same concept applies everywhere, including Reno/Sparks”

Then:

“IV is not Reno/Sparks [do I have to keep reminding you?].”

You lost all credibility with me after that nonsense, Smarten. You’re nothing more than Derrick with an editor.

John Rusin wrote:

“Sully’s right…it’s build it and they will come. We need to beef up education here and remake ourselves as a high-tech (no longer dependent on nickel slots and big box stores) and build the workforce Dirtbagger found lacking here.”

Plenty of smart people born and bred in Reno. They leave because the jobs just aren’t here. The low wage jobs draw people from other areas. Take a look at the casino and warehouse workers and the majority of them are out of staters. The educated locals either take over mom and dads business, start their own, manage to wrangle a decent paying job in Reno (of the few that exist), or head out for greener pastures.

BB; back in the “early days” San Jose was the same way. People wanting to leave the “cow town” for greener pastures. WWII brought many to Santa Clara County via Moffet Field. Many returned to retire in the “valley of hearts delight”.

Amongst them were some very smart people, Lockheed Space and Missiles Division, NASA etc.

It took a few decades, but it went from a cow town to the tenth largest city in the nation.

I don’t want that here, but look what happens when you take your head out of the sand and get off your heinie.

Interesting idea, Move to Reno, but as Yucca Mountain is federal property, the state could not “lease” it to the federal government. The federal government was able to proceed with the project without state approval because it owns the proposed site (although commerce clause powers are also implicated).

The concessions, as I understand it, would have involved federal funds for infrastructural improvements (roads, rail, hazmat response teams, etc.), funds for NDEP oversight of transportation of waste materials in the state, and regulatory concessions regarding environmental standards, superfund sites, etc.

To John Rusin… This is common business sense… the rest of the States with Nuclear Power need Yucca to work… we should get paid.

I am a degreed ChE, and many would call me a tree hugger. I strongly believe in Yucca as an Intermediate (<120 yr) storage area until we learn how to re-process.

I also believe in John Newell’s case, that we should leverage this great environmental and business need to the advantage of current permanent residence. We can offer it to them for… cash for K1 - K12 education,,, pay our taxes… so we can cut high tech business taxes… luring the highend CA evacuees.

At first I thought this may not fit the RRB topic line, however the more I think about it… the more important now than ever for NV and the country. We could use the additional tax income to offset those for high-tech, high-paying business tax incentives…. and the US could then build more clean Nuclear Energy… helping contruction in the near term… and creating a new industry that lessens our foreign oil dependence and creates a truly sustainable industry growth in a core business segment.

Smarten-

I might have been a little hard on you there. Didn’t mean to sound so harsh, it’s just that I was flabbergasted by your posts. There is no comparison between you and Derrick. For that, I apologize. That was a low blow. You’re a smart man, and that’s why I am so confounded by some of the things you said. We’ve gone round and round about interest rates, inflation, and many things over the years, and we’ve definitely got some opposing viewpoints, so I’ll agree to disagree on things with you. But, you better not pull a disappearing act should my prognostications prove true.

time to take some more meds BB.

mr. bipolar

Sane Economist,
Just like an economist to guess that in four years “both mortgage rates and 10 yr yields well pretty much be where they are right now.”

Well, heck. And the skies opened up and the birds where chirping and light shone in the darkness. Thanks for your amazing insight. How many years did you go to school for that?

I suggest you read “The Black Swan” by Nasim Taleb. You just might learn something.

As it stands, your credibility is shot.

The correct answer is “I don’t know, and neither does anyone else on the planet. And anyone trying to hazard a guess beyond six months is either an idiot or a shill.” But I guess they didn’t teach that at the JC where you got your degree…

As for why home prices will increase in the coming years? You cannot “monetize the debt” and print trillions and trillions of pieces of paper without devaluing that paper. This is an historic experiment and it will end horribly — just like Weimar and Zimbabwe.

So, the underlying, real value of RE will likely go nowhere, but the wheelbarrows of paper needed to purchase said real estate will multiply exponentially, roughly correlated to the debasement of our once proud currency.

johnny posted:

“time to take some more meds BB.

mr. bipolar”

This comment actually had me erupting in laughter. Anybody familiar with Derrick’s posts over the years will see the irony in this. From somebody who has posted under at least 15 different aliases, and who changes positions with the temperature, he’s definitely got experience with this particular subject matter. What ARE the meds for such an affliction, Derrick? Tell us what’s in your medicine cabinet. Then, we’ll understand better your need to present yourself in multiple different lights. My guess is you just didn’t get enough love as a child. Sad, sad, sad.

CL -

I just wanted to comment on how I very much appreciated reading your car purchase story. I think many of us have experienced something[s] very similar.

However sometimes the financing can make up for price [or at least act as that little added incentive if the price isn’t precisely where we’d like it to be]. So when car manufacturers offered 0% financing [OAC of course] because banks essentially weren’t lending, in my mind that represented an incentive that made up for price. And when the government offered the first time homebuyers’ tax credit [even though one doesn’t technically need to be a first time homebuyer], that too was an incentive that made up for price [at least $8K worth of price].

Now if that $8K turns into $15K and it is made retroactive [as is being proposed], then whoever took a chance and became a first time homebuyer, is going to be rewarded.

And now that ALL Incline Village residential real estate assessments are being rolled back to 2002-03 levels and refunds for excess property taxes paid are in fact going to be processed by Washoe County, whoever took a chance and purchased IV residential real estate is going to be rewarded with lower A/V and lower property taxes. And if anyone anticipated this eventuality and included in his/her purchase contract an assignment of his/her seller’s right to such property tax refunds, then he/she is going to be rewarded even more so.

Now if we believe Mr. Econ, very low mortgage rates will remain for at least 4 years and there’s no reason to jump into any purchase that would require a mortgage. But if we don’t share his views [and I personally don’t], obtaining historically low purchase money mortgage financing now during this window of opportunity may actually offset the “uncertainty” [or according to some, the inevitability] of home prices creeping lower. Again, the potential for a “reward” that transcends price.

My point CL - it’s not always just the price. But again, I enjoyed your story and look forward to more.

I had 9 offers — 1 at asking and 8 over
and my low end 95120 home sold first weekend
on market

The strategy was to price it a hair under market
and attract a crowd

100 people came through home saturday….almost
as many sunday

1 guy wrote a nice all cash offer that expired
in 4 hours on sunday as he sensed the interest

my realtor told me not to accept it—i got
even higher offers

and there’s always a few bears around ‘your
realtor stinks–he underpriced your home’
and ‘you should have priced your home way
higher got even more’

This is a high 6 figure home—i am dumbfounded
by what occured

smarten; 95118 is where I’m from - what street is it on?

keep talking sh*T about my personal life BB. that way when I see you in public I can give you my dentists business card.

BTW that is not a threat, merely a warning.

further, I will slap a lawsuit on your ass faster than you can say uncle, for public defamation.

Thanks Bob -

I will give Jerry a call.

And Sully, I can’t believe you’re in 95118.

The street name is Scossa.

Again sharing personal info which I should think twice about doing with this crowd, some of you may recall that I invest in deeds of trust. Well here was a condo that I made a junior loan against two years ago. As property values went down in this “prime” part of San Jose [not], my borrowers chose to walk away rather than continue paying. So now I’m stuck with a problem - I have workers over there as we speak doing renovation work. Then I must sell or rent it out.

But here’s the interesting part. With pre-payment penalties, delinquent payments, unpaid principal, interest, foreclosure fees, delinquent property taxes, delinquent HOA dues and a senior mortgage in default [that I’m going to have to cure on my former borrowers’ behalf], they are looking at about $250K in indebtedness that they’ve been “relieved” of. And given this property was a rental for them, they’re facing a hell of a tax problem [can you imagine what $250K of additional income would do to your personal tax situation?] in California where there’s state as well as federal income taxes to be paid. I’m filling out the 1099 as we speak.

smarten, your place isn’t too far from where I was. I have friends on Luning a couple of blocks away.

OMG, that’s funny. Classic! Truth hurts, does it Derrick? Can’t take your own medicine?

I’ve seen pictures of you, and to be honest I don’t think you could beat your way out of a wet paper bag. Noodle arms and a beer gut are hardly something I fear. Nice try, though. Thanks for the laugh.

PS- I’m bigger than you, buddy, and I’ve a feeling your tone would be quite different in person. You’re very lucky I’m not a loose cannon, because you have foolishly posted your picture, place of employment and other pieces of information which somebody could easily use to bring harm to you. You should be more careful in the future. You’re going to mouth off to the wrong person, and your dentist is going to be working overtime.

Best not to post ANY personal information here, Smarten, for obvious reasons.

In light of all the euphoric sentiment here (irrational exuberance), it’s time to scratch the surface of the current housing market to show people what’s REALLY going on. More and more stories are hitting the mainstream media about rampant fraud in regards to the $8k tax credit, but even more troubling are the stories of unqualified buyers “qualifying” for homes. It seems that, while they are verifying employment, credit scores, etc., the lenders are still willing to assist in the financial suicide of borrowers, at the expense of FHA and taxpayers, as they ignore healthy DTI ratios, lack of down payment funds, and other crucial factors which determine whether or not a prospective buyer can truly afford a residence.

20 Year Old Buys Home With $183,000 FHA Loan And Just 3.5% Down

“Denise Tejada bought a house last month at the age of 20, thanks in large part to a loan guaranteed by the Federal Housing Authority.

Without question, Tejada’s loan is toxic–to her and to the taxpayers who are backing the loan. Her house cost $155,000. Tejada’s loan was apparently made on a micro-down payment of just 3.5%, the minimum down payment to qualify for an FHA loan. On top of this, however, she got an additional government backed loan to make improvements. Her total loans amount to $183,0000. In short, she was immediately underwater on her new house.

The monthly payments on her debt amount to $1328. Her income is $2470, leaving her with just $285 a week to live on. She’s paying 54% of her income to make the mortgage payments. She earns that income by holding down one full time and two part time jobs.”

http://www.businessinsider.com/20-year-old-buys-home-with-183000-fha-loan-and-just-35-down-2009-10

Housing recovery? BWAHAHAHAHAHAHAHAAAA!!!

I’m already over it, CommercialLender. Sounds like you need to move on, too.

Many months ago, maybe even a year ago (I can’t recall precisely), there was a long discussion here on the RRB about how FHA is the new subprime. Like everything else in this market implosion, though, it will take about 3 years before that reality is acknowledged.