Hey, I don’t want to get the rep as Mr. Negativity Man here. You have to understand my primary information sources. I track and research new MLS listings which leads me to a lot of "must sells" and troubled properties. And my public records searches are aimed directly at properties going down the tube. Negative seems almost normal to me, but my source material is admittedly tainted.
So for a reality check, I wanted to look at a random chunk of property and see what is really going on with the buyer’s financial situations. Are the assumption I have been making equal to the reality? Do people have skin in the game? Are they really refi’ed / HELOC’ed into oblivion? My only screen was to find a short block (so I don’t go blind on this post) and that the block was new construction that sold out near the peak. It only took 3 hits on the Reno MapServer to find the winner …. Dancing Aspen in Damonte Ranch. 22 homes that originally sold between late 2004 and late 2005. Officially Centex’s Villages at Damonte Ranch 18B, probably Copper Creek.
The street is about 80% owner occupied. Most folks are move-up buyers from other Reno properties.
The buyers brought an unexpectedly large amount of equity to the table for the market at the time. 4 bought with 100% financing, 3 with 95%, 3 with 90%, 8 with 80%, and 4 with greater than 80%. The loan types were also more conservative than I expected. 1 subprime 2/28, 2 3/27, 11 5/25 or 7/23, 7 30 year fixed, and 1 15 year fixed. NO Option ARMs. No NODs have ever been filed on any properties on this block.
And what have these folks done since their original purchases? 10 have done nothing. 2 have refi’ed to reduce their principal balance. 4 have refi’ed to balances under their original purchase price. 6 have refi’ed to balances over their purchase price. My guess is if they had to sell, 5 or so of these homes would end up as short sales or foreclosures in this market, but it isn’t happening yet. There are 2 current listings on the block – one of the "no action" home listing at 15% over their purchase in 11/04, and the other basically "no-action" home listing at their 9/05 purchase price. Both started with 95% financing.
It certainly isn’t the Street Of Dreams, but it might just be the Street Of Reality. The financials on the properties are much better than my "Jaded" assumptions, and yet about 20% of the houses seem like lost causes if the owners get into "must sell" situations. It seems like owners with skin in the game are holding on, right or wrong.
SmartMoney
With many locations in CA now approaching 2001 prices, such as this http://bubbletracking.blogspot.com/2008/03/roll-back-to-2001-in-city-heights.html I don’t see how these folks think they can get anywhere near 2004 prices for their homes. How much longer before Reno catches up to CA on the downside???
Diane Cohn
OMG, Angry-Albino-Laser-Cat is killing me. I can hardly get past it. Mike, you have the rights to post that, yes?
I think the cross-section Mike randomly focused in on is telling. Sure, maybe the foreclosure rate is up 1700% in some neighborhoods (and if you beg Guy, he might actually post that particular chart just in from Ticor today), but not everyone needs to sell right now. And because people live in houses, they may hang in there and mitigate the situation, somewhat.
DERRICK
While we may not know when we are exactly at a bottom until after the fact, It is my belief the bottom is right now..
Sure we still have plenty of unrealistic sellers out there, however we also have many realistic sellers out there as well..
It is my personal belief that if I can buy a home right now at 2001-early 2002 levels with the seller alos paying any and all closing costs + some allowances then I am getting a pretty decent deal.. If the right house or condo pops up on my radar I will be giving it some serious thought.
DERRICK
While we may not know when we are exactly at a bottom until after the fact, It is my belief the bottom is right now..
Sure we still have plenty of unrealistic sellers out there, however we also have many realistic sellers out there as well..
It is my personal belief that if I can buy a home right now at 2001-early 2002 levels with the seller also paying any and all closing costs + some allowances then I am getting a pretty decent deal.. If the right house or condo pops up on my radar I will be giving it some serious thought.
Sully
Derrick, I too will buy at 2001-early 2002. Where are they all? Everything I have been looking at recently are still at late 2004 prices.
MikeZ
While we may not know when we are exactly at a bottom until after the fact, It is my belief the bottom is right now.
And what makes you think that the bottom is right now? Share your data.
DERRICK
Sully I have quite a few listing that I would be more than happy to share with you.. It all depends on what part of town you prefer.
DERRICK
Sully here are just a few that I turned up in a quick search, again it would depend on what are you are looking at.. personally I have been looking at the spanish/wingfield area. (183). Anyways here are a few examples of late 01′-02′ pricing:
mls#70016386
mls#80001899
mls#80002173
MIke Van H
Very interesting, I typed in one of the MLS numbers Derrick gave, and it came back with a property in St. Louis, Missouri by accident. http://www.realtor.com/search/listingdetail.aspx?mlslid=80001899&ml=3&typ=7&sid=fbfbaeeef813418e889fe1c6b6820fbe&lid=1094003284&lsn=2&srcnt=3#Detail I was pretty surprised to see the asking price for a 3 bedroom home there. Of course, the median income for St. Louis is $26,000 compared to Reno’s $40,000-ish, so that explains msot of it…but it’s still ‘weird’ to see a 3 bedroom house for under $200,000, even in another city. Sticker shock maybe lol.
MIke Van H
Did you guy hear about the Mayor in Syracuse who is having his City buying up abandoned homes and then putting them up for public auction starting at a $1? There is no previous homeowner to deal with, you are buying it from the City. Some of them are nice homes too. 5 bedroom homes, or 3 bedroom hoems on 5 acres etc.
Kind of an inventive way to deal with the mass of abandoned homes in his region.
MIke Van H
Sorry about the typos Diane I’m usually good about that….damn Treo thumb keyboard.
Reno real estate
“the financials on the properties are much better than my “Jaded” assumptions,”
Its the same with me. When I leave the floor for the stats to do the majority of the explanation, it always breaks my jaded assumptions. And always are more trustworthy
Good stats.
John Newell
The houses Derrick listed are very interesting. Two are bank owned (mls#80001899
& mls#80002173), while the other (mls#70016386) was purchased in 1999 for $226,734, and form a quick records search, does not appear to have been refinanced. Thus, the owners of mls#70016386 may have a great deal of equity in the house, which may lead to a willingness to price the property more reasonably. I am not sure I agree that the $339,900 list price is late 2001/early 2002 pricing, however, and I suspect the list price is still a bit high for the current market.
I am not sure what to make of mls#80002173. It sold for $349,768 in Feb. of 2002, more than the current list price of $329,900. The 2002 price seems high for early 2002, but the property is located on the golf course.
The most interesting one is mls#80001899 (the one in Sparks, not St. Louis, although that is interesting too). It sold in Sept. of 2001 for $307, 823 and in April of 2005 for $599,000. In August of 2007, it sold for 471,142 at a trustee’s sale. The current list price is $376,000. At this point, the list price, which is 63% of the April 2005 sales price, has dropped nearly $100k in 7 months, and it is still nearly $70k more than the Q3 2001 sales price.
I am not sure what to make of all this, but it does not seem very positive to me.
Nanomop
“it’s ‘wierd’ to see a three bedrom house for under $200,000…”
MikeZ, you ought to spend some time searching the MLS in places like Toledo and Green Bay and Lincoln, Nebraska and and Topeka and dozens and dozens of other cities in America. You will find decent 3 bedroom houses for way under $200,000. Many for well under under $100,000. And these are not crapboxes either. They are decent, well built homes in nice neighborhoods. Reno’s prices are by no means representative of the majority of American cities. There are still some affordable places in fly-over America.
DERRICK
john newell.. You have to consider all the homes I listed are negotiable ofcourse! nobody pays asking price in this market..
that being considered all those homes are pretty good deals.
Take all those homes and slash the price 5-10% (offer) then there you go!
Gina
Doesn’t seem like “bottom” to me either. How do you account for so much inventory for sale? Derrick showed 3 listings. Out of thousands. That’s anecdotal evidence at best.
If you remember me, I’m one of those Californians waiting to perhaps move to y’alls neck of the woods. But we held off due to – well you know why.
I am on the mailing list of several developers who have yet to come down on their pricing (on the higher-end). They are just sitting and waiting I guess. There’s that whole street of new homes for sale in Arrowcreek that haven’t budged. What are they all waiting for? Beats me.
The California inflow to Reno and Vegas slowed way down when prices started their sharp ascent. We’re not leaving our ocean views and unbeatable weather for homes that are approaching the price ranges here. The motivation is money, doh! The spigot of Cali refugees won’t turn on again until these prices fall further.
Now one of my brothers who moved to Austin is taunting me with the prices there – hmmm…
Guy Johnson
Mike,
I love the cat.gif. And your post is very informative. I suspect your “Street of Reality” assessment is an accurate descriptor.
Regarding the Foreclosure chart from Ticor Title that Diane referenced in her comment above, look for that to be posted today.
Reno Ignoramus
How about this for a Street of Dreams.
It looks like 4758 Bradford Lane is for sale.
And, it looks like 4739 Bradford Lane is for sale.
And, it looks like 4726 Bradford Lane is for sale.
And, it looks like 4787 Bradford Lane is for sale.
And, it looks like 4675 Bradford Lane is for sale.
And, it looks like 4679 Bradford Lane is for sale.
Sully
Hmmm, Caughlin ranch HOA must have raised its fees.
SkrapGuy
Good find, RI. Is this the kind of evidence that suggests that we are at the bottom? Now maybe I don’t have the financial acumen that others here do, but it would seem to me that prices, at least on Bradford Lane, likley have a ways to fall yet.
BanteringBear
DERRICK said,
in March 24th, 2008 at 7:59 pm:
“While we may not know when we are exactly at a bottom until after the fact, It is my belief the bottom is right now…”
Bartender loudly from across the room…
“You’re cut off!“
GreenNV
The “for sale” ratio on Bradford Lane looks like about 4X the county average (6/54 houses = 11%). County wide, there are about 100,000 SFRs and condos and something like 2500-3000 are on the MLS as far as I know. What makes a street poison? Do “For Sale” signs breed in the dark of night? Or does having 2 REOs in a 2 block span panic the neighbors into listing?
RI, and idea why Bradford Court, basically an extension of the same street, has zero of it’s 18 homes on the market?
On the Sidelines
“I love the cat.gif.”
That pic is an avatar of a member on the forum at ML-Implode, a website showing Lenders that have imploded since 2006.
This could (possibly???) be part of the problem why Real Estate isn’t moving right now?
NO Lenders = NO Loans.
Not to mention our new state laws that limit loan programs available. Things have changed here and not necessarily all for the good. It was an over reaction IMO and the by the time the law was “explained” it was too little, too late, the Lenders fled.
How many borrowers are “self employed” here? It’s very difficult and almost impossible to find a Lender who will provide financing for a self employed borrower in Nevada. And while some may pay cash, most would finance for tax purposes. Why pay cash and miss out on the interest deduction?
Call me crazy but this isn’t a case of sellers listing too high etc and so on as I keep reading here. It was simply supply and demand, eventually what happened was supply surpassed demand and lack of available loan programs only increased the problem. The problem we face here isn’t happening everywhere… think about it.
DERRICK
how de we account for thousands of listings? well thats pretty simple.. we have REAL sellers and people who are just taking up space on the MLS.. We all know that anyone who is asking 2005 prices Is very unlikely to sell if ever!!
take away these rediculous asking prices and you no longer have so many listings on the mls..
in the end most of these homes will sell for 2001-2002 prices.. and that Is why I think we are essentially already at the bottom with 2001-2002 prices popping up all the time..
It’s only a matter of time before the other sellers get real, if not? well thats tough love.. a few things could happen after that I suppose. 1 they take it off the market, 2 the bank takes it and places it back on the MLS at 2003 prices only to get 2001-2002 prices, and 3? feel free to comment on that..
why do I think its the bottom already mike? simply put.. when you can find houses selling for 2001-2002 prices that to me is a clear signal of a bottom… as far as I know real estate wasn’t exactly booming in 2001.
also once you factor in inflation, which as we know is running at all time highs right now.. those prices seem all the better.. ie: the faster inflation rises, the faster house prices reach bottom, imho
and yes maybe I should be cut-off.. 1 too many lemon drops for me !
MikeZ
NO Lenders = NO Loans.
There are plenty of lenders out there (and loans) but borrowers must have a down payment and a respectable FICO score.
No more strawberry pickers buying $700K McMansions with no money down.
GreenNV
Great listings, DERRICK. I think 3225 Flecha just took their neighbor’s sales comp from 2005 and knocked 20% off. They have a ton of equity, and just seem like they want out. But price hasn’t sold this listing yet at over 100 DOM.
6796 Cinnamon shows a TD at $348,000, but the actual amount due was $430,000. It is time to start watching the TD amounts on the Assessor’s site and refer to the Recorder’s site. I’m not positive what the game is that the banks are playing, but I think the are trying to reduce the Transfer Tax, and then going in for Property Tax relief.
Check out 3300 Sansol listed at $209,900, 310K TD in October, bought in May 2003 for $232,000. A Ken Wiseman listing. Ken’s repo’s have generally been at exactly the TD amount, but was quoted today in the RGJ saying that bank asking prices are going down 5% per month.
Does it actually really matter what anyone lists for today, be it 2001 or 2006 pricing? Nothing is selling at any price.
For anyone interested, there is a spell check program I’ve found that allows you to edit your postings before you post and look stupid. I found it at the WordPress site, and it was called ieSpell. Probably also available at CNET or Download.com. Seems to work posting on any blog format.
Gina
Okay, what does “bottom” mean to you? Does it mean a few homes for sale at pre-craze levels? Does it mean when folks start buying said homes and inventory finally starts going down? Does “bottom” mean turning the curve towards prices going up again? Is it when the bulk of bank-owned homes start flooding the market and a new California influx eats them up? What exactly will “the bottom” be in Reno?
Reno Realty Blog: Reno Real Estate, Market & Trends, Nevada » Another Block
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