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!
smarten
Don’t know what the problem was in finding Diane’s article in today’s business section online, but I found it at: http://news.rgj.com/apps/pbcs.dll/article?AID=2008804130328 . Enjoy.
I’ve already posted a blog on ChaseNation which references the article commends Diane for being realistic and proactive [rather than maintaining that positive mental atttitude (“PMA”)] in this difficult market. After reading the article, why doesn’t the group visit my blog [at http://www.chasenation.com/profiles/blog/show?id=2000642%3ABlogPost%3A5026 ] and add your own accolades directed to Diane? If enough of you go, hopefully there will then be sufficient “action” to get the post moved to Chase’s “featured blogs” on ChaseNation’s main page? Then I’d looovvveee to hear Diane’s colleagues put a warm and fuzzy spin on her market outlook!
And Sully, you’ve uncovered my real identity [darn, my anonymity is gone]!
doofus
Diane’s article in the RGJ – BB has a convert!
http://news.rgj.com/apps/pbcs.dll/article?AID=2008804130328
Kimo
Thanks doofus. Great article. Smarten, why don’t you post it on ChaseNation?
I vote for Cohn & Co.
Why not, Diane?
Gail
Was Diane’s article ghost written by Bantering Bear or Reno Ignoramus?
It’s amusing to see Diane refer to sellers as “delusional” (echos of BB), and refer to the myth of the “Rich Californians” (echos of RI).
I kept waiting for a reference to voodoo loans. Maybe that’s next month.
MIke Van H
A little off topic from Friday’s post, but did you guys see this site? http://www.asynconhome.info/ Apparently this homeowner is raging mad about his 2007 Syncon Home’s neverending series of defects. With builders cutting back serious costs, do you think this is a common problem perhaps under-reported? Or just a fluke lemon house?
Diane Cohn
Thanks for the vote of confidence, everyone, but for the record I really do like Chase and have absolutely no desire to be the broker–None, zip, nada, now and forever.
I’m totally on board for the Lone Eagle Grill anytime with whomever shows up.
As for the bottom of the market, I’m kind of leaning toward Sully’s observation that historically builders bottom two years before the rest of the market, so January 2010 is sounding kind of reasonable… but have homebuilders really bottomed?
Sully
Diane, unfortunately, the ones that are smart enough to NOT want the job are the very ones that should have it.
DataGuy
SkrapGuy, regarding unit 1211 at Palladio…
The unit is a resale. It was purchased on 7/18/07 for $544,740 ($355 per square foot) according to county records. It is one of the corner units that face south and east and have the curved balcony. ALL of the “11” floor plans have been sold – their average original sales price was $418 per sf. In comparison, the average sales price per sf for all 66 sales to date is $380.
When Palladio first started pricing their units, I think they were offered in the low to mid 300’s per sf – with more desirable units like “11” priced at the upper end of that range.
I know a buyer who contracted for an “11” unit the moment they were originally offered for sale. After a series of price increases (but still way before completion) the developer offered $100K to try to “buy back” that early presale. That was probably about the time that they were making the highest priced sales of that floor plan.
Here are the sales of the “11” units – from lowest to highest. Columns are Unit#, SF, APN, Price, $/SF and close date.
1211 1536 11-532-11 $544,740 $355 7/18/2007
511 1608 11-525-11 $551,399 $343 11/1/2007
1011 1730 11-530-11 $620,400 $359 6/28/2007
1111 1743 11-531-11 $695,000 $399 10/19/2007
811* 1729 11-528-11 $726,437 $420 12/21/2007
911 1730 11-529-11 $810,150 $468 6/27/2007
611 1731 11-526-11 $860,150 $497 7/31/2007
711 1724 11-527-11 $865,000 $502 6/22/2007
* NOTE: A very prominent local real estate developer bought two units (801 and 811) at one price – presumably to combine them. Total cost per square foot for the combined sale was $420 which was then allocated to create individual unit pricing.
As you can see, there were tremendous differences in the selling prices of the various “11” units. The earliest contracts were written for around $350 per sf. The highest sales escalated to around $500 per sf and I think that all of the “11” units were sold before the building was completed – even though a couple units did not close until late 2007.
Who knows what an 11 unit would bring today? Certainly not $582/SF. Probably less than the $500/sf highs, but how much less????
The following six units were still “listed for sale” in Oct of last year when the building was completed but have since been sold. With the exception of unit 1204 – a three bedroom corner unit facing north and west just below the penthouses – recent sales have been in the low to mid $300’s, similar to early pre-construction levels.
$/sf – Unit#
$323 – 503
$303 – 607
$342 – 905
$334 – 1106
$336 – 1107
$419 – 1204
By my count, there are 26 developer-owned units, that have yet to close, but most (18) of those are 3 floor plans 4, 6 and 10 out of the original 11 floor plans. Their website currently lists 19 available units – so some of the 26 units may be in escrow or have deposits pending or simply not yet added to the county sales listings.
I am guessing that the developer is back to selling what inventory he still has left at somewhere near his earliest pre-construction levels – and he is making new sales but having a tough time clearing out the slowest selling plans.
The more popular sold-out plans like “11” will probably carry some premium to developer sales of the less popular plans, but not what this particular owner has in mind 🙂
DataGuy
Regarding Mike’s question about Grand Sierra condo sales…
County files show 199 closings. Numbers by month…
26 – Dec-06
60 – Jan-07
28 – Feb-07
22 – Mar-07
16 – Apr-07
5 – May-07
2 – Jun-07
6 – Jul-07
6 – Aug-07
5 – Sep-07
4 – Oct-07
14 – Nov-07
0 – Dec-07
1 – Jan-08
1 – Feb-08
3 – Mar-08
SkrapGuy
So the guy who has Unit 1211 on the market now is asking $350,000 more than he paid 9 months ago. Is this proof positive that Delusion and Denial still run strong? That’s absolutely amazing.
Thanks DataGuy for your excellent info. Who are you, masked man?
SkrapGuy
Regarding the Grand Sierra, also amazing. December 06 had 26 sales. December 07 had 0. January 07 had 60 sales, January 08 had 1.
4 total sales in Q1.
If this is not an up close example of the proverbial Dying Vine, what is?
I believe that I read that GSR had to sell about 400 of these condo-hotel units in order to qualify for the additional financing to move forward on the water park phase.
Gail
It looks like the GSR, Reno’s “luxury destination resort”, better keep hawking those $49 a night rooms in the Bay Area. Is this what we mean by rich Californians propping up Reno’s real estate market?
Did you see where the Mirage in LV laid off 400 managers? Said the gambling business was down. Good thing it’s different here in Reno.
Reno Ignoramus
Maybe it’s time for Miss Trudi to host another Nikki Beach party. It appears that the impact of the last one on sales has worn off.
MIke Van H
By the way, regarding the Grand Sierra Resort…not sure if this was said before in the above comments regarding the foreclosures….but foreclosures at the Grand Sierra are a really disasterous scenario for them, more so than a normal condo…since the ‘hotel-condos’ were supposed to generate revenue by being rented out as hotels when not occupied, this obviously did not happen as planned. I wonder how many more will turn up as foreclosures.
Semilla Gomez
Sir,
Please check your facts before you publish slandering material. The loan that you referenced as default by R&K Homes, is not in fact “R&K Homes” at all, and applies to TWO houses out of the 74 that are there (model homes). R&K Homes is NOT in default on that project, is still building that project, and if anyone wants to go out and look, will see it’s one of the most beautiful and upscale subdivisions in the Reno area.
We already have to deal with the rumors about our company and its owners along with the issues of the market. I ask that before you write what YOU think is correct, check the facts first. The NOD clearly shows the APN’s, includes one incorrectly (sold/closed last year), and if you were to have looked them up, you’d have seen they were two parcels, not a final mapped subdivision.
We’re just trying to sell homes, keep the economy moving and allow folks to have a nice house to live in. As long as we have those that work against us, we cannot be successful.
Thank you.
tallguy
It took some time, but I just noticed 260 Lakeview come up in the Washoe county property sales data, sold for the specified 338K. So I guess the deal did take, though I doubt any of the neighbors are very happy. That is not going to help the comps.