Okay, so it looks like we’re having a real meltdown in the lending arena. As standards tighten and money becomes scarce, this will only make it harder for buyers to purchase. And with our local market already overflowing with inventory (only 9% of resale homes offered for sale are actually selling), sellers are going to have to cave on prices in the months ahead as this all unravels. What do you think? Should I be looking for another job? Thanks to Jim and Reno Ignoramus for all the links.
Subprime: The Menthol Cigarette of Loans
Wells Fargo Cuts Lending Amid Credit Crunch
Bond Turmoil Worse Than Internet Bubble
A Foreclosure Storm on the Horizon?
Very Major Changes to Home Loan Standards
American Home Mortgage Throws in the Towel
Sales, Shutdowns & Bankruptcies
The Foreclosure Prediction Map
Mortgage Fraud: All in the Family
Hedge Funds File for Bankruptcy
Credit Suisse: Tightening the Housing Food Chain
New Housing: From Bad to Worse
Charles Hugh Smith: Housing’s Three Black Swans (scroll down to 7/30)
Meanwhile, celebs and the riche don’t seem to care much about the current state of affairs, as many of them continue to purchase high end properties across the United States. roundup
Mike Van H
Geez pretty depressing stuff there. The atticle entitled ‘Future of Downtown Reno’ should really be titled ‘Future of Grand Sierra Resort.’ Because that is the only project in town that is selling condo-hotels, which IMO is one of the lamest concepts the real estate industry has produced to date, and a few notches below timeshare condos.
I’m sure downtown Reno’s condo sales will suffer, and ARE suffering, however downtown Reno as a whole is not entirely betting it’s success on condos alone, thank God. The whitewater park, a soon to be baseball stadium and thousands of people enjoying downtown every day to me is a marker of its success, even if not one more condo project is built downtown 🙂
You know, everyone is very gloomy on this blog with good reason, but how about throwing out some solutions? Be proactive? What needs to happen to fix the market? Prices need to come down? Is the sole responsibility at this point on the sellers waking up and smelling the coffee? If prices came down to 2003 levels before all this began, would the rest of the market adjust? Or do construction costs need to come down too? Do builders need to stop building to available inventory and start being absorbed? Will at some point all of this ‘click’ with people in the industry who have the power to turn this market around, or will people fight against it every step of the way? Is it even fixable at this point? Or will we have to ‘ride it out’ until it hits bottom? What if it never hits bottom?
BanteringBear
Diane posted:
“…sellers are going to have to cave on prices in the months ahead as this all unravels. What do you think? Should I be looking for another job?”
Yes, sellers have to lower prices in a big way, but it’s already too late for many. They should have done it months ago, when the writing was on the wall. Instead, they chose the path of greed, and that will prove to be their downfall. Qualified buyers are now on the endangered species list, and it’s full doc now. No more stated crap, which was the real driver of prices.
No, Diane, you probably don’t need to find a new job. If I had to guess, I’d bet you are one of the better agents around. You will have to work harder for your money. But, you seem to work with higher end clients, who are less affected by increased lending standards. What you can do, is start talking the sellers off their fantasy prices. The $800k barns have gotta go. I’d peg that lot at $200k max right now. As far as the barn goes, it’s extremely subjective. I’ve seen property for sale throughout the country with old barns of equal quality, which are given zero value. JMHO. Keep up the good work, you’ll be fine.
BB
Frank Borghetti
Did anyone attend the auction last week?
Nothing in the newspaper about it?
No one is mentioning it?
MikeZ
RE: “What if it never hits bottom?”
Oh, we’ll hit bottom, alright.
Every other, past correction has come back down to the same long-term trend lines for affordability.
Median price WILL come down to ~4X median income. And price:rent WILL come down to ~120.
The market is dead and grieving is a long process. It takes time to go from initial denial to final acceptance.
More sellers will have reached acceptance by next spring. And, then, things should REALLY get interesting.
Green NV
Every house in Reno devalued 10% last week.
Diane Cohn
Frank, what auction are you referring to?
NVMojo
We were actually stupid enough to go looking for another place to rent last weekend. I came away from the adventure thinking most landlords are on drugs of some sort. Greed is spilling out all over.
Left me with the attitude that I am still going to burrow in. We can afford to wait at least another year before buying. By then, that half a million dollar 1925 adobe house I want should be a heck of alot lower if not on the auction block. Then we’ll make an offer. I don’t want to be in the same desperate shoes they are in right now. No way.
I don’t need to go into debt just so I can convince myself I own something the bank really owns.
2sleepy
Here’s a better link to the black swan article:
http://www.oftwominds.com/blogjuly07/housing-black-swan.html?ref=patrick.net
By the way, I have a friend who has several rental houses, he said that this week he got 30 calls on one listing. So, I guess this market is good for at least some people..
Eric Ransom
I know the changes in mortgage lending will mean different things in different markets. I do believe, however, at the end of the day it will be good for the industry as a whole. It has been too easy, for too long for people to borrow money and we need to see a correction.
NVMojo
http://www.youtube.com/watch?v=SWksEJQEYVU
Have you seen the Jim Cramer meltdown? Holy cow!
Word is that we are looking at over 1.8 million foreclosures nationwide.
Phil Hoover
Oh Diane, you are so…. negative!
Thx for telling the truth! :o)