Since it looks like a long, wet weekend, and since I didn’t even get a chuckle out of you readers with "squirrel underpants", here are a couple of dull and boring items for your enjoyment.

CC&Rs - We all know what happens when you sign off on your loan documents without reading them and thoroughly understanding what they mean.  But have you ever given your CC&R document the same scrutiny?  This is the latest and greatest edition of the Montage CCRs. ( you may need to enter User Name rrb, and password 877yodiane) 85 pages, dry as toast.  smarten, if you have ever seen a more one sided document, let us know.  No completion or closing dates defined - the developer has no responsibility at all and can string things along until they are "done" or when it is in their advantage to issue the 30  day Notice to Close document.   A lot of leeway for major design changes.  Also look at how the HOA is funded - half a percent of the unit cost due at closing -  I wonder how many buyers missed that one?  Do any of you see any "out" clauses?  I know a at least a few readers here would love input on how to "skate" on their contracts with the Montage.

Master Plan Changes - When you buy into a planned unit development, you have a certain confidence that your neighborhood will build-out as planned.  Don’t bet on it.  The master developer of Somersett has applied for this Master Plan Revision (since postponed - click Agenda, and look for item 7) that represents an 18% increase in allowable density for the overall project.  Since about half of the ‘Sett is already built out, that is a 36% increase in the allowable density for the rest of the project.  Senior apartments, assisted living facilities, long term care facilities?  Somersett already has the "Raisin Ranch" - Del Webb’s 1200 unit Sierra Canyon.  Can you imaging the outrage when some of the "other" densification includes subsidized housing (w/o golf privileges)?

IP, thanks for the heads-up or I would have missed my own party!  It was great to meet a lot of you (lurkers included) Wednesday night.  You are why we all put in all the hours researching our posts here.  If any of you have ideas for posts you would like to see, just ask and we will see what we can do.

I am sometimes asked about the state of the rental/apartment market here in Reno.  Unfortunately I do not track the rental market that closely.  However I do keep an eye out for the occasional article or report addressing the subject so that I can forward to those interested parties.
Last week’s Northern Nevada Business Weekly contained such an article.  I thought I’d share the link to the story here: Economy muddles apartment marketplace Here’s an excerpt from the article: “There used to be five buyers for every deal, and sellers could get multiple offers. Now there are five deals for every legitimate buyer.”

Agree? Disagree? If you are a local landlord or have some insight regarding the current rental market (i.e. rents, vacancy rates, etc.), please share with the blog by commenting below. 

The new listing at 8695 Tom Kite looked like just another Somersett owner getting serious about today’s real estate market.  The home was purchased in October 2005 for $842,306, has probably seen another $100,000 in landscape work, and is listed at $700,000.  Interestingly, the owner put 40% down and there is only a $500,000 first loan recorded - an Option Arm for $500,000 through Washington Mutual with a 125% cap (low-ball alert).

The real story turns out to be the owner’s other properties, purchased between October 2004 and April 2006, ALL with Option ARM loans from WaMu:

-  2635 Burr Ct., $495,000, 80% first loan plus 10 % HELOC, later upped to $119,525.

-  2290 Emerald View, $578,750, 72% first.

-  1480 Mescalero, $339,900, 80% first.

-  5895 Blue Canyon, $315,000, 80% first.

-  6052 Bankside, $310,000, 70% first.

-  896 Sauvignon, $311,000, 70 % first.

-  1798 Evening Rock, $642,500, 30% first and a later $239,000 HELOC.

-  1421 Foster, $271,000, 65% first.

-  700 W. Golden Valley, $330,000, 75% first.

Our gentle land baron certainly put some skin in the game on most of these 10 properties.  I would guess that the varying first loan percentages may have to do with out-of-state 1039 exchanges. but who knows?  I also assume they have been paying the minimum amount required by the loans, which would put them at least 10% negative amortization on each loan by now.  And Reno’s median has dropped how much?  Safe loans can go really, seriously bad.  The owners are current with all payments as far as I can tell - I have no beef with them (well I do on the moral end, but that’s another post).  Watch these properties - they may show up as bargains shortly.

So, WaMu.  10 Option ARM loans to one party, and I never saw that Second Home Rider box checked off once.  This owner is PERFORMING as far as your books go, but how much longer can that last?  You are going to be hosed even on  the loans that looked like sure bets.  And this is on the Good Stuff on you books.  I can’t imagine the rest of the garbage a deep audit would find.  You screwed the pooch big time.  Time to die for your sins.  The thing that makes me run screaming into the night is that you won’t be a JP Morgan Chase savior issue when you belly, you are going to be an FDIC issue.  And that means me, the taxpayer, is going to be saddled for your bazillion dollars in criminally stupid underwriting.  WooHoo.

Of all the projects downtown, the Belvedere (Sundowner) is the one I could never wrap my arms around.  What was it supposed to be when it grew up?   Too expensive for UNR student housing.  Too far away from the "inner city" development for the locals or investors.  Really strange unit plans.  High prices.  I get what Grand Sierra Resort, Holcomb Lofts, Ponte Veccio, Gray’s Landing, Arterra, Wingfield Towers and others were trying to achieve.  But what was the Belvedere thinking?

The notice of default on the $32,000,000 construction loan was finally filed yesterday.  This isn’t much of a surprise to anyone who follows downtown.  Construction has been at a standstill for months.  The first mechanic’s lien was filed in October 2007 (and subsequently released).  Literally hundreds of additional liens have been filed by the contractors and consultants since (some cured, most not),  and the Reno tax liens have been huge.  The "closings" the last few months (2 May was the last one) have mostly been to parties connected to the developer.   And several lien holders have been petitioning to foreclose based on their mechanic’s liens.

There are literally millions owed to local contractors and consultants who, most likely, will see zero return from their accounts receivable.  There is an additional $6,500,000 in hard money loans on the project that will probably be wiped out.   There are probably a few saps that actually bought here to live, and now will find that they are the sole support of the HOA.  Can you imagine living in a ghost ex-casino?

RIP,  Belvedere.  I can only hope the next incarnation of the Sundowner won’t be the King’s Inn Jr. and be left to rot for 30 years as a blight on downtown.  I’m not too hopeful.

So, OK, blogmind, what should the Sundowner become in its next iteration?.

It is hard to know what to feel about what the foreclosure numbers mean in a Regional context.  What does 2% of the county’s housing units going into some sort of default mean to you or me?  That’s 98% NOT in default, right?  A Plevelism!

We can respond to the more social aspects, like in Diane’s A Conversation Overheard post.  It’s sad and we all now know people in this situation now, but it’s a rarity, right, and not in my neighborhood.

Sometimes you just need to see it to start to getting a grasp on the magnitude of of the situation.  We are a visual species, after all.  Take a drive around your neighborhood, and take a look at the scorched earth effect.  Our climate does not take kindly to forced xeriscaping, and when the funds for TMWA and SPPC payments run out, the desert is quick to reclaim it’s territory.

This is Lennar’s Sterling Pointe, but it could be any neighborhood in any zip code here at this point.  (low batteries killed the shots of the 3-pack of  scorched earth including, a Chase listing).   I’m not trying to pile-on Sterling Pointe - it is just close to my neighborhood -  but at least 8 of the 89 homeowners have abandoned their yards and NONE of these are REOs yet.  So far, the banks have refused to actually foreclose and inherit the the maintenance cost, HOA  and property tax liens.

I know from the numbers that there are at least 1000 REOs cued up to enter the MLS at some point in the near future.  There are numerous reports of the lenders increasing their time lines for the initial NOD from 90 to 150 to 180 days.  One of my neighbors has been in default for over a year, and their bank still hasn’t made definitive move to up the ante from a NOD to a NOS and seize the property.  This is creating a vast pool of "shadow" REOs of a greater magnitude than any of the default action we have seen to date.

I never thought I would see the day where I considered that Bantering Bear might be an optimist.

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.

• Centex Homes - Cyan - Sierra Meadows.pdf
• Centex Homes - Cyan - Sierra Rose.pdf
• Lakemont Homes - Canyon Pines - Vintage and Reserve Collection.pdf
• Monterey Development Group - The Village at Somersett Town Center.pdf
• Monterey Development Group - The Village at Somersett Town Center - model pricing.pdf
• Pulte Homes - The Vue at Somersett.pdf
• Pulte Homes - The Vue at Somersett - model home pricing.pdf
• Ryder Homes - Talon Pointe at Somersett.pdf
• Toll Brothers - Mountain Crest at Somersett.pdf
• Toll Brothers - Saddle Ridge at Damonte Ranch - price list.pdf

A bunch of little items for the short week.  It will be a little out of order, since I can’t figure out how to enter any text after the "Son of Creep"  chart, so I had to move it to the closing position.  And remember, if you have questions or comments about specific areas, the Forums are always open.  We need to start using them more.  I promise at least 2 scoops there next week.

NOD/NOS/ TD for June

NODs dropped to 552 from 554 in May.  2921 YTD.   NOSs dropped to 337 from 374.  1709 YTD.  TDs dropped to 216 from 233, though 27 more were recorded by noon today.  1076 YTD.  NODs filed by HOAs are definitely on the rise, but the net number of properties receiving default notices appears to have peaked, at least for now.

Developer Sales

Here is how many new houses have actually closed so far this year per the Assessor’s office in a few of our higher profile developments.  A few more sales may dribble in.  If there are specific developments you want a health check on, just let me know.

-  Grand Sierra Resort - 9.

-  Village at Idlewild - 7.

-  Belvedere - 36.

-  Virginia Lake Crossing - 9.

-  Sierra Canyon - 8.

-  The Vue - 7.

-  Sterling Ridge - 40.

-  Cyan - 78.

Fruitman and the Moon Tour

The fruit stand at Mae Anne and Sharlands most afternoons is awesome!  Pick up a couple baskets of cherries for $5 and do the Moonscape Tour.

The backdoor to Somersett opened Friday at the roundabout on the East Verdi off ramp.  Great to have a second way out, just in time for fire season.  So with cherries in hand, drive west through the ‘Sett until you hit the Sierra Canyon Rec Center.  Turn right (west) for the full effect, and follow Del Webb Parkway to the new Somersett Parkway extension.  Ever wondered what over 800 vacant lots looks like?  To the moon, Alice!  Seriously, it is a grim and scary sight (site).

Notes to Listing Agents

-  It is July.  You are not inspiring confidence in your commitment to you listings when the photographs are drifting snowbanks over your REOs driveway (especially those "new listings" of yours).  Is it to much to ask for updated photos?  And with a camera, not your cell phone?

-  If you reduce the price of a listing, make a comment in the first line of your revised listing comments.  Searchers only see the first line or so, so making a comment at the end of the comments is wasted.  Noting the date of the reduction is also an interesting concept!

-  Get your listing address correct.  Lots of folks search by zip code - get that right, too.  89519 used to be part of 89509, and  a lot of the residents have been resistant the change.  But there is no excuse to be finding Somersett listings there.

-  PSST - if you post on Craig’s List with Postlets, the date of the original posting shows up on the bottom of the listing.  You can look a bit befuddled if your new, reduced listing is from May.

So finally,

Son of Creep

I could track 32 of the 337 June NOSs by zip code.  The rest are duplicates, developers, and commercial properties.  I’m not sure any real patterns are developing, but it’s interesting.

I received the following announcement this morning from the Director of Marketing for Somersett.  Stop by for a chance to win a Vespa…

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Somersett is proud to announce the addition of a weekly Farmers Market to their event calendar.  The Farmer’s Market will take place in the Somersett Town Square every Wednesday evening from 4 p.m. – 8 p.m. from June 11 through August 20.  

Attendees can enter to win a Vespa from Freedom Cycle in Reno at each of the Farmers Markets to be given away at the final Market on August 20.  The drawing is completely free and there will be weekly prizes as well.  Complete drawing details will be available at each market.  

The market is open to the public and will feature fresh produce as a Nevada Certified Farmers Market, packaged food vendors, local artists and vendors, food specials by Roundabout Market Everyday Gourmet and drink specials by Whispering Vine Wine & Coffee Company, free live music and activities for the kids.  

The June 11 will feature live music by the The Rusty Strings, June 18 will be The Beat Freaks and June 25 will be The Mark Sexton Band.  For more information on the Somersett Farmers Market or for a calendar of events, click here http://somersett.com/whatsnew/calendar.php , visit somersett.com, or call 775-787-4500.  

To visit the Somersett Town Square, take I80 to Robb Drive and turn left on Sharlands Avenue, which turns into Somersett Parkway. Follow Somersett Parkway into the community and turn in at the 2nd roundabout.