Is it just me, or does the 5:30 commute on 395 from South Reno to I-80 seem lighter to you these days? Yesterday I had lunch with some colleagues at a an upscale restaurant in South Reno. I arrived at noon and ended up waiting a half hour as the rest of my party was running late. The restaurant was near empty. By the time my party arrived at 12:30, I think only four out of 30 tables had people at them, eating lunch. This fine restaurant used to be filled with professionals. I hope a lunch crowd this small isn’t typical for them because if it is, the business won’t be able to support itself.

The other day I took my daughter to Meadowood Mall so that she could pick out her birthday present. All the stores were open, but very few people were out shopping. I don’t know if that’s normal for a Monday after 5:30 pm, but my daughter noticed immediately that no one was around and remarked that she’d rather shop on the weekends when there were more people.

That same evening we hopped over to the Sierra Summit, where again, hardly anyone was out. The Abercrombie store was fully stocked with four employees, lots of inventory, pricey halogen lighting, an expensive stero system, and we were the only ones in the store. As a former business owner who used to run payroll and pay all the bills in a retail location, I cringed on behalf of whatever corporation owns this store and wonder how long this can go on.

I had a long conversation with my financial planner back East who manages my 401K. He was so concerned about the sorry state of the credit markets, the housing markets, and all the ripples yet to unfold throughout US and world as result of this mess, that he called to suggest another line of income I could pursue to help me get through these next few years. I wished I had recorded the conversation for podcast because he was so well informed… but then again, for you regular readers of the blog it would just serve to confirm what you already know.

Noah Rosenblatt over at Urban Digs in Manhattan recently posted an update on the credit situation from the front lines.

Meanwhile, back in Reno, 89511 is beginning to seriously correct. I’ve seen a couple of bank-owned properties hit the market recently at real lowball offering prices. One, 770 Sandoval, a 3000+ sq ft home in Southwest Vistas, decent inside, hit the market at $499K, producing at least four bids for its banker owner. My clients bid higher than asking, but not high enough, and another party walked off with the escrow. I imagine this property will close in the lower-mid fives, but we shall see. Its cousin, 410 Octate Circle, another bank owned property, at 2500+ sq ft recently closed for $490K. Even Arrowcreek is not immune, as one of the bank owned Bella Terra homes listed for $200K less than the two neighbors for sale down the street, someone promptly stepped in with a strong offer and opened escrow. Just perusing MLS sales in that area since March 1, I see 18 sold, 14 of them under $1 million. Of those 14, the average sale price per square foot was $190, with a low of $153, and a high of $274. That’s pretty dismal for Area 165, one of the most popular, upscale neighborhoods in town.

But the big shift I’m seeing now is that banks are getting serious. Once they take back the keys, they list them low, respond quickly, take the best offer and open escrow. No more hemming and hawing… they seem to finally be getting down to business, and this will be the year that they blow them out the door.

Buyers in this market need to be poised to pounce on these best deals, they need to be prepared to compete and they need to be highly qualified with fantastic credit scores and 20% down. Sellers, I’m sorry, but if you have bank owned properties in your neighborhoods they will be comp killers. Until we flush the foreclosure pipeline, banks will drive down prices to meet demand.

Both the number of new homes sales and the number of re-sales in Washoe County increased for the month of March according the most recent data distributed by our friends at Ticor Title.   March re-sales were up 15% over February’s units sold.  And new home sales were up a whopping 48% over February’s new home sales.

Notices of Default (NODs) continue to skyrocket with another 437 recorded for March.  That’s 14 a day.  Excluding weekends, that’s more than 20 NODs recorded per day.

Click on the charts below to enlarge.

 A few items from our wacky world of real estate, and some speculation for your consideration:

The Summit at Grand Sierra Resort now  has 2 units in foreclosure.  The original room count was 825 - DataGuy, any update on how many have sold?

R & K Homes is in default on their Grand Vistas project in Hidden Valley.  The NOD is for $3,565,030.  The project was to include 74 homes, and quite a few are already built.

5 PM Friday News Flash - Reynen & Bardis just defaulted on their Regency Park development in Stead.  Phases 1A and 1B were scheduled for 157 homes. The whole project looks like closer to 600.   I know site work has started, but don’t know the actual construction status.  R & B doesn’t show this as one of their active communities on their web site.  Anyone up that way want to check it out?  Corners of Stead, Echo, and Military.

260 Lakeview in Verdi was the house that went up for auction in January, and "sold" for $338,000.  The sale still has not closed, the auction signs are still up, the trees are still fallen over in the front yard.  It doesn’t look like the deal took.

The new back door to Somersett is almost complete.  The last item of work is the roundabout on Old US 40 / 3rd Street, and the are pouring the curbs for it today.  It will be great to have two ways out of Somersett in case of fire, right Diane?  Also planned for the roundabout is a Shell gas station with a mini mart and restaurant.

Here’s my bottom call - you will know we are there when the median drops to $235,000.  The simplified version of my guess is peak median ($345,000) less 20% (banks write-off 2nd mortgages) less 15% (builder competition, banks needing liquidity, must-sells).  I’ll allow you to add 50% of your post purchase upgrades to your basis.

A lot of the A and Alt-A adjustable loans are tied to 6 Month LIBOR +2.25 - 2.75%.  LIBOR is currently at 2.616, down from 5.329 a year ago.  Many mortgages are actually adjusting DOWN from their initial rates.  Even some of the Subprime loans are adjusting down, or at least remaining pretty constant.

Break out the barbecue, dust off the patio furniture, and enjoy your weekend!

Yesterday, Inman News posted an article about live auctions of residential real estate (see Real Estate: An Auction Block Party)

The gist of the article was the growth of live auctions as a means of selling one’s home in a slowing market.  However, I found the mention the National Auctioneers Association’s multiple listing service for auction properties more intriguing.  This site spans the US and includes residential, commercial and land auctions.  The site is very well done with various search capabilities and incorporates data from Google and Zillow as well.  You investors, bargain hunters, etc should bookmark this one.

So I looked up Reno and found a couple auctions being conducted next Monday (2/18).  How’s a 3BR, 2BA, 1,625 sq. ft. Fernley house sound at $25,000.  O.K. so $25,000 is the opening bid, but if you’re the only bidder out there…

Or, perhaps a 3BR, 2BA, 2,080 sq. ft. Verdi house for $50,000 might sound more appealing.  [Again, $50,000 is the opening bid.]

If anyone attends either one of these auctions, let us know the outcome.

Zillow reports that home values across the U.S. continue to decline, with condo values down 7.4% year-over-year and single family home values down 5.5% year-over-year. Additionally, one in three new homeowners are now underwater on their mortgages.

Here is the summary of their fourth quarter survey for Reno-Sparks:

And here we have results by city:

And results by neighborhood:

Putting on my NAR membership hat, the good news is that we’re still up on a five and ten year basis… And my personal favorite, the most popular searches on Zillow by zip code:

Thanks a bunch to Drew Meyers and the Zillow team for including our little metro area in this set of reports. They’ve done them for cities nationwide.

Sales in January were off 44% from the year prior as inventory increased after the holidays. Meanwhile, the median sales price increased slightly to $269,000. Months supply of inventory increased in every price category except in the over $2 million range. Overall we have a nearly 20-month supply of homes… even more of a buyer’s market than in months past. Pendings are up 18%. Full report.

Note: My numbers differ slightly from Guy’s as I include manufactured homes that qualify as real property.

Just as we saw with last quarter’s numbers vacancy rates again increased across the board.  However, a reshuffling of the ranking has occurred.  Somersett has once again regained the top spot as having the highest proportion of vacant listings.  And with 63% vacant and 8% tenant-occupied, only a 29% of Somersett’s current listings are owner-occupied.  29% owner-occupied represents the lowest level seen since I began tracking the data (see links below).

The West-Southwest takes over the top spot for highest proportion of owner-occupied listings, with 74%.

The vacant listing rate for the entire Reno-Sparks MLS now stands at 42%.  This is up from 38% in October and 34% in July.  Forty-two percent!  Where have all these homeowners gone?  Was anyone ever living in these properties to begin with?
Add in an 8.1% tenant-occupied rate, and less than 50% of the listings on our MLS are currently owner-occupied.

The home stagers must be doing a brisk business around town.

Find 2007 "Vacancy" figures at the following links:
October 2007
July 2007
May 2007

Data courtesy of NNRMLS February 2008.

Good News: The number of houses for sale continues to decline.  Down 1.3% from last month.  Also, the median For Sale price continues to decline Down 0.57% from last month.  While the median Sold price increased almost 4% over last month.

Bad News:  Only 171 houses were sold during the month of January.  This is a sharp decrease from the prior month (a 30% drop from December’s 244 Solds).  As Solds continue to decrease; months supply of inventory will continue to climb.

Here are the latest numbers: 

Note: The median table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, NV and Sparks, NV. Residential data includes Site/Stick Built and Condo/Townhouse. Data excludes Manufactured/Modular. Data courtesy of the Northern Nevada Regional MLS - February 2008.

The Nevada Real Estate Division publishes real estate license statistics on a quarterly basis.  I last published October’s numbers for licensed agents in Washoe County.  Today I updated the table with January’s numbers.  As expected the number of active licensees has declined since last quarter…by 72 agents.  Because we had 3,176 agents in October, a reduction of 72 agents represents a 2.3% decline.

The number of inactive agents increased only by eight agents, so 64 agents have left the business entirely during the last quarter.  That’s equivalent to two agents every three days

We have 26 homes for sale in Montreux according to our MLS, not counting developer unlisteds. Thirteen are under $1.5 million, and I see one pending, 5920 Cartier for $1.295 million. In 2007 we had 23 sales, putting the rate of absorption at 1.92 homes per month. At the current rate of sale, we have a 13.5-month supply of homes, not counting unlisted developer inventory. Still a buyers market, but definitely one of the strongest high-end areas of town.

< $1.5 Million

YEAR           SOLD           DOM           $/SQFT          AVG $
2003               8                345              $339          $1,153,620
2004             21                218              $343          $1,045,999
2005             15                190              $379          $1,237,108
2006             10                272              $383          $1,240,033
2007               6                297              $366          $1,186,535

> $1.5 Million

YEAR           SOLD           DOM           $/SQFT          AVG $
2003                5               504             $368           $2,074,402
2004                7               217             $345           $2,007,429
2005              15              200              $410           $1,945,122
2006              12              377              $431           $2,037,565
2007              17              450              $464           $2,091,712

Data courtesy of NNMLS.