This blog’s own Mike McGonagle was quoted in an article in today’s RGJ. Check out the story here Lower land, materials costs spur new home construction.
According to the piece, new home construction in Washoe County is starting to show some signs of life with building permits up 15 percent Y-o-Y.
Via Como LLC developed an 18 unit chunk of ArrowCreek on Via Como, Via Solano, Via Verona, and Via Ponte. They received a NOD today on their last 4 unsold properties (10044, 10058 and 10072 Via Solano and 10142 Via Verona). The finances on this project are a real mess and shows that the developer who drank the Kool-Aid can suffer just as much pain as the individual buyer.
- 10/11/2004 - Construction loan for $7,224,000 on the $5,634,000 land purchase price.
- 1/12/2005 - Second loan of $1,070,000. Reconveyed 5/4/2006.
- 1/24/2005 - Construction loan modified to $9,510,000.
- 4/22/2005 - 3rd, 4th and 5th loans for $396,000, $700,000, and $1,131,000. All appear to be from the developer or related parties, and the loans are subordinate to the construction loan. The 4th and 5th were reconveyed 10/9/2009, which may be news to the construction lender.
- 3/1/2006 - Construction loan modified to $12,382,499.
- 7/20/06 - 6th loan for $4,286,585.
If no more of these loans were payed of, there is a total of $17,065,084 in loans out on the project. Here’s how the sales have gone:
- 9/30/2005 - 10212 Via Como sold for $738,019. Current loan balance is $1,227,000.
- 11/2/2005 - 10198 Via Como sold for $1,206,410. A NOS was filed last week, and the house is listed at $630,000.
- 1/4/2006 - 10240 Via Como sold for $1,270,410. Loans total $1,050,000.
- 1/10/2006 - 10282 Via Como sold for $1,393,770. It closed as a short sale in October for $580,000.
- 1/19/2006 - 10296 Via Como sold for $1,050,000. Loans total $840,000.
- 1/27/06 - 10114 Via Ponte sold for $1,010,170. loans total $784,000.
- 4/25/2006 - 10310 Via Como sold for $1,132,500. loans total $1,019,000.
Then sales stopped dead for almost 2 years and more inventory was built. When sales started up again, prices were greatly reduced, and the buyers were cash or at least 50% down:
- 2/27/2008 - 10086 Via Solano sold for $720,000.
- 3/21/2008 - 10044 Via Ponte sold for $625,000.
- 4/16/2008 - 10086 Via Ponte sold for $850,000.
- 5/14/2008 - 10072 Via Ponte sold for $745,000.
- 5/30/2008 - 10030 Via Solano sold for $740,000.
- 6/18/2008 - 10058 Via Ponte sold for $732,350.
- 7/24/2008 - 10100 Via Ponte sold for 739,000.
Total sales of $12,942,356 on over $17,000,000 in loans plus however much equity the developer originally put into the deal (it may have been the $5.4M land purchase). The holder of the $12,382,499 first construction loan filed the NOD, so they haven’t been made whole, though the amount due is not referenced in the NOD. All other lien holders will end up with zero.
The first wave of sales has already seen resale at 42% of original price, and a second short sale pending for at 52% or less . Everyone else is seriously under water. They will never in their lifetimes be able to sell their houses for what the paid for them. Never. The second wave probably thought they were getting steals in 2008, and have probably each lost at least 15-20% in value.
I’m sure there is a lot more to this story that I can’t glean from public records, so your background comments will be much appreciated. Como / Coma. Tomato / Tomahto.
The Builder’s Magazine reports that Silverwing Development intends to auction twenty-two single family homes this weekend. The properties are part of The Cottages & Laguna Terrace developments. Opening Bids start at $79,000. The auction will be held at The Peppermill Hotel Casino on Sunday October 4, 2009.
According to the story the developer will "employ SOLD2U to reduce it’s standing inventory…[and] will allow the developer to sell out and substantially reducing carrying costs, marketing time and exposure to vacancy liabilities."
“All bidders are required to be pre-qualified with a Seller’s Preferred Lender, either Bank of America or MetLife Home Loans, prior to the Auction, including those Bidders who wish to use another lender for their purchase. Registration is required to attend the auction.”
For more info see the websites: AuctionTheCottages and AuctionLagunaTerrace
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Lost Valley Road just listed as MLS #90003449. It is a 1830 SF 3/2 in one of Centex’s Cyan projects in the South Meadows, which has been heralded as the one bright spot for new housing sales. Listed at $247,000 as a sort sale, the home was purchased less than 7 months ago for $285,105.
I don’t have any personal information about the seller or what went wrong - sometimes life just happens. What drives me to distraction is the financing that was allowed to be used. The loan is for $280,699 through CTX Mortgage, a division of the developer. It is classic FHA paper, 97% financing with some closing costs thrown in. The seller put $4406 worth of skin in the game, and now We the People are going to eat the loss on this one. This was less than 7 months ago - didn’t we already know better?
Am I cherry picking again? Nope, right across the street on Lost Valley is MLS #80019024 listed at $249,900 short. It was purchased 4 days earlier for $279,908 with a $275,282 FHA loan through Wells Fargo - $4606 down payment. Though I don’t know the pricing history, this home has been on the market 90 days.
Are FHA loans going to be the new Sub-Prime?
The Montage is hot topic with many readers of this blog, so I thought I’d pass along a link to a story on the front page of this morning’s RGJ. Fernando Leal, managing partner and chief executive officer of Montage developer L3 Development, was interviewed extensively in the article.
Some points made in the article:
Each month I will be supplying this report regarding the number and dollar volume of resale and builder/developer sales for Washoe County for your review. This will be one more way to help us keep tabs on the pulse of Reno real estate.
The information is provided by Jud Klinger of Datasource (www.datasourcenev.com).
If you didn’t catch the Special Report on the front page of today’s RGJ, you should check it out. Among other things, the report states just how big is the economic impact to the local economy due to the housing downturn. According to one luminary, the financial impact from defaulting residential developments in the area add up to more than $250 million just for notices of default and actual trustee’s deeds.
And who is this source? None other than Reno Realty Blog’s own Mike McGonagle. Mike went on to say, "While the construction loans are probably not tapped out, this is still a huge figure and will substantially impact the local economy. I don’t think I have ever seen anything this far-reaching before with the magnitude of the properties failing."
Check out the entire story here: Housing drop puts builders in a bind
Over the past few days I have had occasion to visit a few of the new home developments throughout Reno. This morning I was sorting through assorted brochures that I had collected and noticed I had accumulated quite a few builder price sheets. Because these latest prices are not always available on the builders’ online sites, I thought I share them here for any interested parties.
A couple things to note: (1) Although these price sheets are current at the moment, they can and do change; (2) Some of the prices shown are “base” pricing; upgrades and options may change the price reflected; and (3) these price sheets are in no way intended to be an exhaustive representation of all the builders who are currently building in Reno. There are many more. Like I said above, I just thought I’d share the info I’ve collected over the past few days.
And one final note, if you see something that interests you, give me a call and we’ll check it out and size it up against the other comparable properties in that neighborhood.
I saw a commercial for this on TV last night and then received the flyer this morning. Pulte Homes is advertising a $99 move in special for this weekend only. [Click on the flyer to enlarge.] Accoring to the fine print: "Move-In for $99.00 offer consists of closing costs paid through participation in the Preferred Buyer Rewards Program, which includes financing through Pulte Mortgage LLC, and a down-payment gift funded by an approved non-profit organization."
The flyer also features a one-day-only special for Del Webb at Somersett this weekend where new Buyers get $20,000 cash back to use to cover closing costs, lower the purchase price, reduce interest rates, or add upgrades.
Thanks to Incline Jim for this doozy… a chart and graph lover’s dream! This informative slideshow presents a compelling case for the we’ve got a long way to go baby argument. Honestly, my head is spinning and I think I may be turning into, gasp, a pessimist. (Say it isn’t so!) Highlights include the salient point that consumer borrowing power is anywhere from 39-41% less than it was just nine months ago, and a sea of questionable loans are still scheduled to reset later this year. These sorts of numbers want to make me downgrade my latest, ever-changing, possible-but not-so-sure local, bottom prediction from 2009 to 2011… What do you guys think?
One new client today was telling me about his experiences with foreclosures and mayhem in the early 90’s in Houston. To him, our current local troubles were mild in comparison thanks to continuing economic growth. He told me the story of a new house that originally sold for $120,000 (a lot at the time in Houston), then sold again to an investor for $80K, then again to another investor for $40K, then again at auction to his landlord for $21K. (When the lumber is worth more than the house, I guess it’s time to buy.) Though neither of us think it will play out that dramatically here, a small part of me says, who knows? Two years ago I was blowing off all the bubble talk as an unimaginative metaphor.
I do watch our numbers with a very close eye. The only positives in our market I see so far are increased pendings, which are suspicious because I wonder how many are useless, fake, short sale escrows that will ultimately fall through as banks take back the houses. I’ve also noticed more builders utilizing the MLS, which means their pendings stay on for months on end as the houses are built, because no builder seems to be building on spec these days. And then of course, it is spring, which always brings a seasonal bump in activity.
The other bright spot is Cyan, the only new home builder I know of doing brisk sales and actually reinvoking the lottery system. With this development, Centex seems to have hit the right price point, the right location, the right value for the dollar, which of course translates into to pending contracts and hopefully closed escrows. I am glad to see that somebody is doing well in this market. It gives me hope. I need some hope.
Guy JohnsonA successful prior business owner, Guy brings to the table twenty-plus years of exceeding client expectations. “Listening closely to my clients is the most important step to meeting their needs,” he says. A former Chicagoan, Guy earned his MBA from the University of Illinois.
Mike McGonagleAn architect, business owner, and compulsive public records hacker, Mike reads the tea leaves of the local real estate market from a unique perspective. Yet another Chicagoan, Mike earned his MArch from Harvard University.
