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.

The foreclosures started (Notice of Default) January thru June 2007 averaged 199 per month while January thru June 2008 brought us an average of 489 per month.  Foreclosures completed (Trustee’s Deeds) January 2007 thru June 2007 averaged 48 per month with January thru June 2008 bringing in 179 per month.  Take a look at this report provided by Jud Klinger of Datasource (www.datasourcenev.com) which also provides a comparison of resales for 2006, 2007 & 2008. 

But don’t worry, your funds are safe and accessible through Mutual of Omaha according to online sources. Just another sign of the times as the domestic house of lending continues to fall. Thank goodness the system still works, for now.

Meanwhile, liquidity options for WaMu are running low, though I’m sure the government won’t let that one unravel, much.

Word on the street is that the IndyMac bailout will cost the FDIC 10% of its reserves… true or false?

Then (toward the end of the ego-fest in the UK Telegraph) Donald Trump says buy real estate now, as it’s the place to be.

Some poor woman back east committed suicide just before her house went to foreclosure. Please, if anyone is even considering this, don’t do it! It’s just money. What’s important is you, not your insurance payout.

And then there’s that mystery surrounding the Wells Fargo Earnings Report… fact or fiction?

But here’s the good news: Brian Kaiser sees a light at the end of the tunnel based on recent numbers.

And today the House passed the "Housing and Economic Recovery Act of 2008" which introduces several key programs to help homeowners refinance out of toxic loans and get first time buyers into home ownership. Overall it’s a mixed bag, but I think it will prop up the system and have some positive benefits.

Back to the topic of buy now or wait, in the lower price range stuff is really starting to move. Over at Carson City-based Creative Real Estate Online, the investor forums are totally active. They are coming into the marketplace nationwide for deals that cash flow. The contrarians are here, and they’re buying properties.

1475 Palisade is the Old Southwest house purchased in December 2004 for $619,000, and gutted to the studs before construction stopped.  It had been listed at $479,000, and went back to the bank as an REO.  The bank listed it at $313,000, and it just closed escrow at $213,900 in what appears to be a cash deal from a pair of locals (Derungs, Pelster).  Listing agent Larry, if you are still out there, can you fill us in on your experiences working with the bank on the short sale, and how the offers you presented the bank stacked up to the final sales price?

Ridge Field of Dreams is still a bit of a work in progress.  2260 Ridge Field (RF 1) was the builder house listed at $912,275.  It closed November 16 for $863,495.  2395 Ridge Field (RF 2), purchased in September 2005 for $596,076, was foreclosed on on October 31.  In a double closing, the bank sold it to a buyer that pre-negotiated a deal for $531,158.  2385 Ridge Field (RF 3) has been reduced from $1,189,999 to $999,999.  This is the only Somersett property that did not come current on their special assessments, and was "sold" for $5811.04 last week (2 year redemption period).  2335 Ridge Field (RF 4)  was purchased for $761,906 in December 05 by RF 3’s daughter, and was originally listed at $929,000.  It is currently listed at $589,999.  The Trustee’s Sale was scheduled for July 2, and seems to have been delayed - there is no evidence of the default being cured.

4390 Interlaken was only mentioned in comments on one of the other blog posts, but is an interesting REO story with walk-on appearances by Guy and myself.  It is a nice house located on the east side of Lake Ridge, and was purchased for $293,000 in December 2001.  It was refied in 2004 for $265,000 by First Horizon and a Weststar Credit Union Issued a $200,000 HELOC in 2005, setting up an almost ideal investment situation.  There was a long listing history, starting at $679,000 and finally dropping to $579,000 or so.  The owner only needed to clear $475,000 or so at the time to pay everyone off, but stayed greedy.  Guy and I tried to set up a deal similar to the double escrow on Ridge Field at about $290,000, the amount then due on the first mortgage.  First Horizon blew us off.  I went to the auction on the courthouse steps in January, and the sale got delayed and was never re-advertised.  The Weststar rep who showed up never asked me who I was, what I was doing out there on a nasty morning, or what my interest in the property was.  On April 1, Weststar stepped up and bought the house for $300,000 at the new sale, trying to protect their second position  They listed the house at $399,000 (about what I would have done, before the lawn died from neglect), and the house just closed at $355,000.  With holding, escrow and commission costs of about $25,000, Weststar recouped about $30,000 of their $200,000 exposure.

(More fun on the Recorder’s site!  Enter a bank’s name in the Grantor field, and search for Deed from the pull-down menu.  It is a quick way to see what the banks are actually unloading as REOs)

Today I went out with some buyers looking in the $200K-$250K range. Like all internet shoppers they sent a specific list of properties to see. Of course they’d picked all the best deals, which meant that half were in escrow by the time we hit the pavement. No problem, I found some other best deals for them to consider. Here are three of the particularly interesting properties we looked at:

Lots of opportunity out there right now if you’re willing to contribute a little elbow grease! If you want to make an offer on any of these properties, please contact JoAnn at 877 963 4263.

Want completely free access to foreclosure listings nationwide? Try ForeclosurePoint.com. This site has various levels of membership ranging in cost, but the basic level gives you unlimited FREE access to foreclosure listings nationwide including:

• Full property street addresses
• Property details including maps and birdseye satellite imagery
• Your own Saved Properties list
• Estimated opening bid amounts
• Estimated market values

I registered for the free service; entered Washoe County, and got 5,226 listings returned.  You can also search by zip code.  For example 89523 returned 379 properties that are currently in some stage of the foreclosure process.

Credit markets are still a mess, they aren’t showing much sign of improvement, and the Fed seems to be running out of cards. Noah Rosenblatt over at Urban Digs analyzes the current state of affairs on Wall Street. If I seem to be obsessing on the global credit situation, forgive me, but it can’t be ignored as it all affects the ability for buyers to borrow money to buy homes here and elsewhere.

The RGJ was a little glum yesterday, I’d say, when they ran that piece about the housing slump persisting. But two things caught my eye. One was near the bottom when Bernard Baumohl of the Economic Outlook Group declared that "the worst of the hemorrhaging is behind us" which might be possible on a national scale, but I’m not convinced that holds here where we had such a dramatic run-up. The other thing I noticed is that Mark Vitner of Wachovia called the bottom of the market for late this year or early next year, which is awfully close to Smarten’s January 11, 2009 birthday bottom prediction. (Still hoping he’s wrong so that we can cash in on that free dinner at the Lone Eagle Grill…. mmmm, love that place!)

Today the RGJ seemed a little more upbeat with the news that foreclosure filings had dropped by 10% in June, which is of course, positive. (Though Mike McGonagle scooped that news right here on the blog a few days ago.) But is it seasonal, tied to spring homebuying patterns? A dead cat bounce before the Alt-A onslaught looming on the horizon? Or with notice of defaults down, are we seriously working through the foreclosure problem here in Washoe County?

Bloomberg doesn’t seem to think the worst is over yet, but I’m sure some will simply blast them as being the negative media. Still, a million foreclosures is tough to ignore and something our markets will have to deal with.

BTW, did anyone notice that ad on page 6D the paper ran back on July 3? The one with the list of 68 properties destined to go to auction due non-payment of Reno Special Assessments? Just eyeballing the list, I’d say about half were in Somersett, though the online list is much shorter, so I guess owners are finding ways to pony up the cash necessary to bring their accounts current. I’m sure the list will shorten as the day of reckoning approaches. The sale is scheduled for 1:30 pm on Tuesday, July 15 at the Reno City Hall Council Chambers, 1 East First Street, and starting bids are low. I wonder how this works. Do the banks show up to bid on these properties to retain title, or do people just buy them for whatever price, the city transfers title, and that’s the end of it? Or do buyers end up with clouded titles that require a lengthy, expensive process to clear?

On another note, be sure to check out our cool new Zillow mortgage widget right below the Zestimate box (scroll down, middle column). It’s a quick and easy way to get a quote without being hassled by salespeople who eat their young. Enjoy!

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.

The May foreclosure numbers for Washoe County are in, and we continue to set records in all categories.  Notices of Default totaled 554, up from 513 in April and 179 in May 2007.  Notices of Sale totaled 374, up from 313 in April and 116 in May 2007.  Trustee’s Deeds totaled 233, up from 187 in April and 56 in May 2007.

Where are these defaults happening and are there any trends?  NOS filings typically include the property’s zip code, so we can get a pretty good look at the geographic distribution.  And by looking percentages of the total number of NOS’s by area, we can see if the loci of the hotbeds are starting to creep.

I’ve combined a couple zip code regions.  89402 Crystal Bay with 89451 Incline Village.  89508 Cold Springs is in the process of splitting off from 89506 North Valleys, so the current zip code is not always correctly identified.  Likewise, 89519 Caughlin Ranch is a fairly recent split from 89509 Old Southwest.  The total number of NOS’s in the chart exclude commercial or developer filings.

The March sales numbers from the Center for Regional Studies finally got released today, and some very interesting (and disturbing, if you are a seller) trends are emerging.  55% of all resale SFR’s and condos recorded by the Assessor’s office were REO’s county wide.  In both January and February, 35% of recorded sales were REO’s.

Using Guy’s "Special Conditions of Sales" figures, REO’s representing roughly only 10% of the MLS listings are accounting for 55% of actual resales.  Private party resales actually fell from 107 in February to 79 in March.  I’ve had 2 Chase agents and several agents from other brokerages tell me that they are no longer accepting owner listings.  Looking at these numbers, it looks like an extremely wise business decision - the tail is wagging the dog.

Sales numbers gleaned from MLS data can’t distinguish new builder homes listed on the MLS from actual resales.  Factoring Diane’s monthly sales numbers down 8% to get rid of manufactured housing, her resale figures are 7% over CRS’s numbers in January, 22% over in February, and 31% over in March.  I am not criticizing or debating the validity of anyone’s figures here - each of us has our own methodologies, so the trend lines are all that is really important.  And I realize there might be a huge surge in manufactured housing resales (not), but it seems to me that builder sales through MLS listings are becoming a significant and unreported percentage of resales.