As he did last month, CBam has graphed the median sales data from June 16th’s post. This time around he formatted the data across three separate one-year series. CBam has informed me that presenting the data in this manner helps to eliminate some of the "noise" brought on by the busy real estate selling season.
Good work CBam and thank you for your contribution.
Lindie
Look at MLS # 70006772. 8465 Fairway Chase Trail in Somersett. 3148 sq.ft. Purchased on 8/26/05 for $750,687. Flip gone bad. Asking: $709,500.
Now look at MLS # 70007550. 8405 Fairway Chase Trail. 3148 sq. ft. Same exact model. Couple houses down the street. Flip gone bad. Foreclosed upon. Owned by the bank. Asking: $599,900.
Anybody want to take a stab at offering a rational explanation for why a buyer would possibly pay $110,000 more for the same house?
GreenNV, how is this one for delusion?
Also interesting to see who the record owner is who is going to lose about $250,000. Seems even politicians can become bag holders.
MikeZ
Pulte’s “Perfect 10 Sales Event”
Pulte homes thinks prices are still heading downward, offers $10M in incentives in Reno:
http://tinyurl.com/yqqaud (Pulte.com)
When’s the last time you saw a promo like this in the middle of what’s usually the peak sales season for real estate?
BanteringBear
The national homebuilders understand how dire things have become. Many of their CEO’s are now saying that they don’t see things turning around until 2009 at the earliest. Their sense of urgency is increasing each and every day, and price cuts are the only way they can unload their vacant completed homes.
This is really bad news for homedebtors trying to sell their homes. They are forced to compete on price with the national builders. The problem is, the national builders can and will sell at a loss if they have to. This is really going to tank prices for resales. I have a friend trying to sell in the old southwest. It’s been over six months since I warned him of this, but he didn’t heed my advice and waited to long to adjust his price. Now, a prospective buyer can purchase a brand new home, comparable to his, for nearly $125k less than he is asking (after his $70k reduction). He’s cooked.
I drove by the listing at Sierra Canyon (Del Webb) in Somersett which was priced at ~$245K. That’s a decent price for right now, but looking at the glut of inventory there, it’s not hard for me to imagine those small 2/2’s selling for under $200k from the builder. Maybe that price can be had already. The carrying costs are eating these guys alive.
Lastly, it is my belief that granite countertops and stainless appliances are already out of fashion. The trend is toward colored enamels for appliances, and anything but granite. I’m hoping to pick up a La Cornue range at fire sale pricing during the fast approaching meltdown.
Green NV
More like Pulte’s “Perfect Storm Sales Event”!
It is very possible to have two “identical” homes priced $100,000 apart. The costs of those initial upgrades and backyard landscaping can really add up. But this is not the case on Fairway Drive.
8405 Fairway was purchased 3 Nov 05 for $789,285, 10% down, $631,400 1st through Greenpoint and a $78,900 HELOC, also through Greenpoint. Greenpoint took back the loan 14 Dec 06 for the remaining balance of the 1st loan – $674,038. The HELOC was completely loss, but was balanced by the original down payment. Greenpoint looks to take about a $100,000 hit if they manage to sell at the $599,900 asking price. Their take on the property’s current value? 24% under the original purchase price. DOM 67. (As an aside, the owner just took a $75,000 haircut on his principal residence).
8465 Fairway was purchased with $40,000 less in upgrades than 8405. But they have installed full rear landscaping, which for arguement’s sake probably cost $40,000 or so, making the properties pretty close comps. Using the -24%, this should be listed at $599,900. DOM 77.
Poor 8480 Fairway Chase, 2904 SF – purchased for $589,709 and currently listed at $675,000, DOM 40. Wells Fargo did 95% financing on this one with a $471,767 1st and a $88,456 HELOC. Then allowed a $180,000 HELOC on 14 November 06! Wells has $740,000 exposure on a house that should be selling for about $450,000. This not a foreclosure (yet) but I’m putting in my dealpool.
Thanks, Lindie, for pointing out this delusional street of dreams. I had missed it.
Derrick
“it is my belief that granite counters, and stainless steel appliances are already out of fashion”
Stainless steel will NEVER be out of fashion, and neither will natural stone counters. THATS MY BELIEF. And the materials of choice by the majority when it comes to kitchen remodeling.
Fact is people LOVE stainless Steel and natural stone counter tops. It not only looks nice but adds value in the buyers eye.
Reno Ignoramus
GreenNV,
You continue to post such excellent comments. You truly add great value to this blog.
Let’s talk about 8480 Fairway Chase for a moment. Wells Fargo has loaned about $740,000 on a house that sold for $589,000.
This owner is paying on $740,000 in debt on a house that everybody (except the owner and his realtor) knows has lost value since it was purchased.
Do you think this was a subprime borrower? We hear over and over that the only trouble in the lending industry is in the subprime sector. We hear over and over that the carnage will not spill out of the subprime sector. Do you think this buyer/borrower in the fine upscale community of Somersett, whom Wells apparently thought was creditworthy to the tune of 3/4 of a million dollars, was subprime?
I have posted previously that I think the notion that only the subprime sector is in trouble is quite problematic. Others have posted that people with good credit scores will pay their debt, just to maintain their stellar FICO, even in the face of declining value of their house. I think this owner/borrower might be a good example to watch in that regard.
I could be wrong, but I would bet that this buyer/borrower had a pretty good credit score. So far, apparently, he is making the monthly nut on $740,000 in debt on a $450,000 house and I guess he plans on bringing a big check to the closing when he finally attracts a buyer.
I have my foreclosure watch set on this one. We shall see.
Reno Ignoramus
Speaking of subprime garbage, have you all been following the story of the Bear Stearns internal hedge fund that is blowing up? This is a fund with $2 billion in subprime trash that had been packaged into collateralized debt obligations.
Here is the name Bear Stearns gave this fund:
“The High Grade Structured Credit Strategies Enhanced Leverage Fund”
George Orwell had nothing on the guys at Bear Stearns.
jkat
I think Derrick is right, he has Cherry Moulding and Granite countertops, plus a few brick pavers in his backyard. I would pay 100 k more for his house than the exact model without these upgrades.
I bet Derrick even has a few secret buyers that would buy his house for 100 k more than any house in his neighborhood.
Reno Ignoramus
My post the other day comparing the Smithridge condo to the Arlington Towers condo got me looking more closely at the Smithridge condo market. Holy Moley what a trainwreck.
All Smithridge condos are essentially the same. The only difference in original construction is that the very first units that were built, which are the ones on the northern edge of the development, have about 1040 sq. ft., and the later built ones have about 1220 sq. ft. They are all 2 story with basically the same floor plan. A few of them have gas heat, but most have electric baseboard heat.
Here is the list of asking prices for the 29 Smithridge condos that are on the market as of today:
$149,000
151,500
159,900
164,900
174,900
174,950
175,000
178,000
179,500
179,900
179,900
181,000
184,000
185,000
188,000
188,500
189,000
189,000
189,900
190,000
194,500
197,400
197,500
199,000
199,500
199,999
202,900
205,000
205,000
How would you like to be trying to sell and sitting in the middle of that pack?
But you think that’s bad, look at Fleur de Lis:
$292,000
294,000
309,000
325,000
329,000
345,000
359,000
365,000
379,000
396,000
399,000
399,000
399,000
419,950
425,000
453,900
454,000
459,000
485,000
518,000
525,000
529,500
539,000
539,000
545,000
557,000
559,000
559,000
569,000
570,000
574,000
585,000
587,000
589,000
595,000
599,000
599,000
599,400
625,000
625,000
645,000
687,000
There are 42 of them. It is true there are more models and variations in sq.ft. But would you like to be in the middle of this pack either?
And oh, there were 3 price reductions in Smithridge today and 2 in Fleur de Lis.
Green NV
Materials.
Stainless appliances add about 20% in cost, and are a pain in the butt to keep looking good. Still, I think they look slick. I’ve got them, mostly.
Granite countertops are this year’s Hummer. At least as long as the developers don’t spent the money to install them correctly. Breakfast bar with granite, and they need to install cheesy oak corbels to hold it up? I’ll give you the right details. And granite can stain, particularily if you are on well water here. The best functional solution – plastic laminate. It doesn’t have to have gold flakes in it anymore. Honed slate is also pretty cool, and way cheaper than granite.
If anyone tries to sell laminate flooring (Pergo) to me as an upgrade again, I’m going to smack ’em. You can do real wood for less if you shop right (Lumber Liquidators). Laminate flooring looks like, well, laminate flooring. The material cost of slate is less.
Carpet is actually a good solution out here. It catches the rampent Reno dust and makes it easy to vacuum and get rid of it. You will need to pay $45-50 a square yard installed to get anything worthwhile. The residential grades don’t cut it – you need to be looking at the commercial brands. Some of the designs are outstanding.
What exactly is “custom paint?”
I’m expected to pay 3/4 of a million for a house, and the door hardware is $8 at Home Depot? The doors are $38 hollow core faux Masonite wood grain? The cheapest ass available brass hinges don’t match the chrome handset, and I’m not supposed to notice?
If I get started on light fixtures, I’m going to have a stroke, so I won’t go there.
Any comments?
NAS
On this MLS site, scroll all the way down to “other search options” and do a Street Search for Sun Shadow. (a little court street with about dozen homes). At present, there are 5 (count’em folks) houses for sale. Four of which are the exact same model starting at 506K (bank owned) up to 699K ! The 5th house is a two story and listed at 775K. Of these 5 listings the two highest priced are models recently thrown into the mix by a builder.
I try not to beat a dead horse, but yes, the zip is 89523
Lindie
The Sacramento Business Journal reports in this week’s edition that Pulte has laid off 45 people in its Sacramento and Reno locations. Does not say how many people in each location.
I hope Pulte has enough people to work those long hours at their $10 million off sale this weekend.
NAS
whoops!
I stand corrected for Sun Shadow. There are 6 houses for sale, not 5. The 6th house is another two story, builder inventory listed at 799K. So, half the homes on one street are listed.
MikeZ
RE: “Lastly, it is my belief that granite countertops and stainless appliances are already out of fashion.”
You might be right. Some decorators and stagers are saying that granite and stainless have become too cliched.
It’s not special when half the houses have it.
Derrick
With The amazing variety in granite these days I dont see it as being cliched at all..
The difference between many natural stones Is quite drastic..
However if there was a granite that seems to be over-rated or cliched I would say absolute granite (most commonly used over all other varieties of granite)
.
Green NV
Enough finishes, and on to a few more facts.
Thanks for the props, RI. I disagree with you on many occasions, and I am sure you disagree with me just as often. But I appreciate your well reasoned contributions to this blog, and am pleased to read that you think mine add to the discussion.
I wouldn’t characterise any of the loans on Fairway Chase as sub-prime. As with most of 89531, they are 5/25s with pretty good rates. The problem is that the owners can’t meet their currant loan obligations, not that they are getting slammed by a reset. In fact, most of the owners with troubled properties in the Truckee Meadows are Alt-A loans. Which doesn’t particularily bode well for future appriciation.
Sellers, the banks have checked in and your value is about 25% less than what you paid in mid 2005. Come to jesus.
MikeZ
RE: “Four of which are the exact same model starting at 506K (bank owned) up to 699K ! The 5th house is a two story and listed at 775K. Of these 5 listings the two highest priced are models recently thrown into the mix by a builder.”
Interesting! Builders may be seeding the top end of the MLS. A few $775Ks thrown in can make the $700Ks look like really good deals to comparative shoppers who don’t yet have a good feel for FMVs.
Reno Ignoramus
GreenNV:
If the problem is that “the owners can’t meet their current obligations, not that they are getting slammed by a reset”, then why in the world did they get into these loans in the first place? Were there actually that many people buying $700K houses who were not sophisticated enough to figure out how much their mortgage payment was going to be?
Were they all just flippers figuring it didn’t matter what their payments would be because they would just flip it off to the next greatest fool before they had to make more than a few payments?
Help me out here. Please explain. I really am an Ignoramus when it comes to grasping this.
Move to Reno?
Materials:
I like stainless steel appliances because when you clean them once every couple of years or so the finish look is like new. Baked enamel colors can be good for a retro look.
Laminated countertops are the best combination for price, choices and performance. The more expensive choices are making more a statement about keeping up with the Jones than anything else.
The best cabinets are those built on site using 3/4″ veneer hollow-core with solid wood doors/faces. Basically they are one piece units with great structural strength and will last forever. The mass-produced cabinets installed in homes today look pretty but will not last for the long haul.
I like 3/4 inch thick strip hardwood flooring that is nailed and finished in place. However, over concrete, laminated flooring is a good choice as a replacement for carpeting because it is cheap and easily installed. Toss a few expensive oriental carpets over it and it doesn’t look half-bad.
The problem with wall to wall carpeting is indoor air pollution. One study shows more air pollution indoors than outdoors because the w-t-w carpeting traps and holds pollutates that vacuuming can’t remove.
Solid wood interior doors look a lot better than the hollow-core doors but the H-C doors transmit less sound so it is a toss-up.
Light fixtures should show some class but I suspect most buyers are not paying attention.
The really BIG question is quality of construction that can’t be seen. Is the exterior framing 2×4 or 2×6? Quality of windows and plumbing hardware? Is all of the plumbing and electrical systems easy to get to and repair? What is the quality of the heating and air unit and hot water supply? Construction is the first thing I look at because if that isn’t very good or superior the rest of the house doesn’t really matter.
Mike Van H
Holy crap Reno Ignoramous I would NOT want to be in the middle of that pack trying to sell my place at Smithridge or Fluer-da-whatever. And I thought the fluctuations in Arlington Towers Condos were bad. It’s like no one does price comparing before they put their condo up for sale.
Derrick
wood floors are a great asset to any home. However if you plan on installing wood floors you should always 3/4 inch because of expansion and contraction associated witht the climate changes in reno.
IF you go with a 1/2 inch flooring you will more than likely be dealing with bowing or warping.
We went with brazillian cherry lite 3/4 inch pre finished. NOT STAINED since we used it in the kitchen as well.
IF taken care of wood floors will last a lifetime, and although more expensive than carpet in the long run they are a better investment I think.
SkrapGuy
To GreenNV:
Let me chime in here with Reno Ignoramus and thank you for the high quality of your posts, especially the ones where you refer to the hard data regarding a property. Would you be willing to share with us how you obtain the info regarding the purchase money mortgages/HELOCs, etc. that encumber a specific property?
Thanks.
Green NV
SkrapGuy,
My info is all from the public records available on the County Assessor’s and Recorder’s web sites.
If you are interested in a particular address, start on the Assessor’s site http://www.co.washoe.nv.us/assessor/ Under Asessment data, click Real Property, click through the cover your ass screen (actually read it sometime), and enter the address you are jonesing for (insider tip – use street name only and not number if you want a bunch of houses on a street). Click on the address. Click on Additional Sales. Click on the link for “ICris on the Recorder’s web site”. You will have to register, but it is easy. On the Document Search page, enter the owner’s name you found on the Assessor’s site in the Grantor field. Last name, first name, initial will narrow down the search results, as will spouse’s name. Deeds of Trust are the loans. Deeds are sales or changing the vesting on Deeds of Trust. Liens and Notice of Defaults and Sales will also show up.
In a market as unstable as we have in Reno right now, I can’t imagine making an offer on a property without knowing the background story. Happy hunting!
BanteringBear
And, SkrapGuy, while you’re there, go ahead and punch in all of the names of friends and family members with new boats, jetskis, motorcycles, 5th wheels, etc. It will immediately become clear where their fake wealth came from. The future’s so bright, I need nightvision…
SkrapGuy
Hey GreenNv thanks a lot.
Bantering Bear, I think I will take you up on your suggestion. I am going to find out the name of that guy on Fairway Chase in Somersett who has borrowed $750,000 against his $450,000 house. And then I am going to do a DMV search to see if any of that cheap easy HELOC money has been transmuted into any rapidly depreciating toys.
ContractorBids
hmmmm I like this post but I would love to see some on how to save on construction costs in this tough market