The Foothills at Wingfield Village is a pretty nice development, and Comet Linear is a pretty nice street within the development. There are only 18 houses on the street and the even numbered houses back up to the golf course.
3740 was purchased in December 2005 for $461,705 and received a Trustee’s Deed in November 2007. The bank resold the house in February 2008 for $280,000, 60% of it’s original value. It looked like a good deal.
3801 was purchased in March 2006 for $428,016 and received a TD in May 2008. The bank resold the house in December 2008 for $235,000, 55% of it’s original value.
3773 was purchased in February 2006 for $453,226 and received a TD in November 2008. It was listed at $259,000 ($250,000 net of included closing costs, 55% of it’s original value) and is now showing as pending.
3710 was purchased in November 2005 for $508,855 and received a TD on 2 January 2009. It was listed on the MLS yesterday for $249,000, 50% of it’s original value.
3829 was purchased in March 2006 for $472,441, received a NOD in August 2008, and was scheduled for a Trustee’s Sale New Year’s Eve. It appears the sale was either postponed or cancelled for the time being.
The most linear attribute of this street is the decline in housing values. The family that purchased 3740 less than a year ago is almost underwater already. If you were the owner’s of the other 13 houses on the street (one investor owns 3 of them), would you be willing and able to ride out a 50% decline in value or would you be packing your bags?
ursula
Yikes doesn’t even begin to describe my reaction, even though we all knew this was happening.
Move to Reno
It would depend upon whether I was an investor in the properties or actual living in the house as a homeowner. As a homeowner I would stay until I found out what Obama and Congress have in mind since they might come up with a solution that cuts the principle to FMV. If I didn’t have time to wait, I would just bail out of that burning plane.
I think that most investors will toss in the towel at some point unless they are in real need for tax deductions.
inclinejj
ouch
wait till people figure out that a couple subdivisions of R & B got foreclosed upon..
half way built sub-divisions have a real bad effect on an area
CHRIS
Hi everyone. This is Chris, I have been asking everyones advise on this blog so here I go again. I made an offer on a house mls 80018829 panther creek, it is listed for 179,900. I made my first offer at 163, thought they would come back with a counter, but they just flat denied, no explanation yet. But my question is, why would the bank sooner hold on to a property than negotiate? Do they get more in a tax write off for what is on the books or are they really looking to unload these? It appears the banks have a large inventory on the books and the unemployment rate being what it is, you would think they would be willing to at least consider offers. Is this the normal of what I should keep expecting? Thanks again!
chris
Sully
Chris, its probably because of Wells Fargo. I have put in two offers in last 4 days. One was with Wells Fargo.
Mine was cash, but a tad lower than the other one. Wells opted for the higher offer, so I walked.
Apparently Wells Fargo doesn’t think its hurting with its REO’s, I guess the Wachovia deal is on separate books.
I too am getting very frustrated with some of the banks. One has to wonder, if we end up in a depression by this summer, what are the banks going to do then?
The gov’t keeps giving billions to poorly managed banks so that they can continue poorly managing the banks.
BTW, I think your offer was generous – considering.
Phil
R&B did leave our Homeowners association, and yes they left a half done development. The HOA was in trouble as they had no money to keep up their part. The banks (there are two involved) are actually very cooperitive it seems as they are paying to upkeep their part. We do still have half done homes however.
I foresee years of inactivity. I dont see a real problem for me, as I have no reason to sell and I do not sit next to half done homes. But it is a problem for some.
One wierd part was the management company also decided not to renew thier contract and gave no reason.
The lots that are not done are very nice and many with views, it will be interesting what happens.
But I suppose a fall of 50% may be typical for the area. It is easy to panic. I like to be financially responsible and like my credit rating. Then again what do I really need it for?
BTW, my loses in the housing market pale in comparision to my other investments (dollar wise). At least I enjoy my home, and I have to live somewhere.
billddrummer
Are any new homebuilders doing well?
billddrummer
The reason I’m curious is because a development near Comet Linear seems to be selling homes, and I haven’t noticed any NODs in the neighborhood. It’s Estrella, the Taylor Woodrow development off Vista/Hubble Way. Just across the street is the R & B development that Nevada State foreclosed on back in March 2008.
GreenNV
Chris, I’ve got to agree with Sully – you’re offer was a good one and WFB should have responded. They’ll be sorry. Here is some advice: hunker down for a month or two if you like this neighborhood. There are at least 10 properties on Sportoletti, Antinori and Latour in foreclosure and about to hit the Trustee’s Deed stage at the same time. This is going to drop the floor on pricing in the neighborhood big time. I bet they go for less than 50% of original pricing.
BanteringBear
I’m going to agree with others here, Chris, and say that your offer was MORE than generous (I would have offered much less as I don’t consider anything less than 25% off list lowball, and I think the banks are the ones who can truly “afford” to accept such an offer). Might be good to sit back for a bit, and just pick your spots. If the bank drops the price on that home, you might want to offer them even less in the future. You make the market, not them.
DonC
To address the question posed: “would you be willing and able to ride out a 50% decline in value or would you be packing your bags?”
Not exactly sure what you mean by this. Once you buy something it’s yours, for better or, in this case, worse. You could just walk but in a recourse state you would end up paying anyway, unless you go bankrupt, in which case there wouldn’t be much choice anyway. NV is a recourse state, correct?
Faces with this situation I’d look to refinance. If the interest rate is low enough then to some extent it doesn’t really matter. Even in a non-recourse state the question would be how much more less or more would it cost you to rent.
The real crunch time comes if you have to sell. Same as with stocks. You portfolio may be down 50%, but unless you need to sell it has no practical effect. In five or ten years who knows what the price might be. Housing has an additional complication because if you have a mortgage you have to make a payment every month, but to some extent it’s the same in that paper losses are simply paper losses until you make them actual by selling. (Not saying it’s not a loss. It is. It just has the same practical effect of having your house gain 20%. Doesn’t matter if you’re not selling.)
As for prices in general, I’m guessing that at the low end of the market we’re at the bottom. Absent an interest rate rise the prices we’re seeing now are more or less what they’ll be into the foreseeable future. Prices are down but volume is up, way up, which tells us that we’re putting in a bottom. So offering 25% less may not be a great strategy if you have your heart set on a specific house in this part of the market.
On the other hand, the higher end seems only to be beginning the drop. Today the data suggests that something like 8% of jumbos (Alt-As) are now at least 30 days overdue, compared to 2% of conforming loans. If like Smarten you’re looking in Incline Village it probably pays to wait (though there seems to be quite a number of foreclosures in IV as it is).
BanteringBear
DonC posted:
“Faces with this situation I’d look to refinance. If the interest rate is low enough then to some extent it doesn’t really matter.”
I think you’re naively overlooking the fact that there is no way to refinance a property which is underwater. It will not appraise for the amount owed unless the original buyer put 50% down; a highly unlikely scenario.
“As for prices in general, I’m guessing that at the low end of the market we’re at the bottom.”
IMO, this is naive as well. As the more expensive properties crash, the low end will be crushed into oblivion.
inclinejj
If like Smarten you’re looking in Incline Village it probably pays to wait (though there seems to be quite a number of foreclosures in IV as it is).
The number of NOD’s NOT’s and REO have increased in Incline Village in the last 3 months..More higher end properties are going into default also..
DonC
BB — Good point about not being able to refinance because of the price drop. Since I don’t have a mortgage sometimes I can overlook some obvious issues.
Don’t agree at all with the idea that as the higher end declines it will put further pressure on the lower end. What we seem to have now is a bifurcated market where at the lower end you see lower prices and more sales and at the higher end you less declines and very little sales activity. Basically there’s a gap. Until the gap is eliminated, which for a variety of reasons I don’t think it ever will be, the higher end isn’t really going to put pressure on the lower end.
Sully
Mike Mc – years ago (actually decades) FHA loans required an entry hall closet near the front door.
Do you know if this is still a requirement for FHA loans?
As there doesn’t appear to be any closets in the newer homes; I’m wondering if this requirement was dropped or FHA was so busy with processing toxic loans that they didn’t have time to check out the floor plan.
GreenNV
Sully, thanks for the walk down memory lane! Until the mid 80’s, HUD published minimum standards for properties eligible for FHA financing. These included minimum room sizes and probably had the entry closet requirement. I remember bedrooms had to be at least 9′ or 9′-6″ wide. There were also construction standards to make sure the homes would last for the term of the mortgage. These still exist. Google “HUD Minimum”.
By 1983 the standards had become a jumbled mess, and were actually increasing costs for what was supposed to be a low cost housing program. Most of the design standards were dropped, and FHA was able to accept local building codes instead of their own defacto code. Room sizes became more of a market driven issue.
I miss some of the old HUD standards, though some had become ridiculous. Under the IRC (our current code), minimum habitable room size has dropped from about 100 SF to 70 SF, with a 7′ minimum dimension. The only other requirement is that each dwelling have one room that is at least 120 SF. I don’t think Tom would approve!
BanteringBear
DonC posted:
“Don’t agree at all with the idea that as the higher end declines it will put further pressure on the lower end. What we seem to have now is a bifurcated market where at the lower end you see lower prices and more sales and at the higher end you less declines and very little sales activity. Basically there’s a gap. Until the gap is eliminated, which for a variety of reasons I don’t think it ever will be, the higher end isn’t really going to put pressure on the lower end.”
Huh? You just posted:
“On the other hand, the higher end seems only to be beginning the drop…If like Smarten you’re looking in Incline Village it probably pays to wait…”
You’re contradicting yourself, DonC. Is the high end going to drop, or isn’t it? You can’t have it both ways. Are you going to start parroting the “new paradigm” mantra, too?
DonC
BB – Not sure what exactly you think is inconsistent. The low end has declined and is finding a bottom; the higher end is more at the beginning of a serious correction. The higher end will decline — that’s the point of the jumbo delinquencies — but my guess it will follow the more typical pattern and move downward more slowly, with fewer sales rather than lower prices.
Prices in residential real estate are sticky downward, with large price declines created by distressed sales — foreclosures, people who need to move, or builders unloading inventory. To me there will just be more of this at the low end that at the higher end. That’s why I’m saying the gap won’t ever fully close.
DownButNotOut
BB- I don’t see how this contradicts DonC’s statement. Anyone else see what BB’s saying?
smarten
I too think Chris’ offer was MORE than reasonable. Here’s some insight on WFB REOs [it comes from an agent who gets most of WFB’s REO listings in IV]. I’m only repeating what was told to me.
First WFB determines FMV. This comes from a broker’s opinion letter [“BOP”] supported by an independent appraiser’s opinion. This becomes the listing price.
For the first 5 business days after a property is listed, WFB won’t respond to ANY offers by anyone [was your offer Chris within the first 5 days following the property being listed for sale?].
After that WFB will hold tight on their listing price, not coming off more than 3%-4% [in your case, $174,500].
If the property hasn’t sold in 60 days, WFB will start lowering the price in 3%-5% increments until it does sell.
Maybe WFB thought your $163K offer was too far off its $174,500 floor and for this reason, didn’t bother countering – I don’t know.
I’m tracking a WFB REO. It hasn’t yet been listed for sale but reverted back to the bank at foreclosure sale for $850K+/-. Based upon recent REO activity in IV, we typically see such properties listed for about $100K less than the price it sold at trustee’s sale [a perfect example is 661 Saddlehorn (a property Mike reported on some months ago and a real bargain if you don’t mind living in this neighborhood) which was just listed yesterday for $575K; $100K less than the price bid in at the trustee’s sale].
Well I’ve been informed that the REO I’m interested in is probably going to be listed for $1.1M-$1.2M; hundreds of thousands MORE than WFB bid in at the foreclosure sale. The reason – FMV. I’m floored by this mentality which in many respects mirrors Chris’ experiences. One would think that if WFB could get what it bid in at foreclosure sale, it would be delighted. But I guess not.
inclinejj
Smarten
I think I know the house your talking about..If it was such a good buy at the foreclosure sale someone would have bid..Even at 850k
smarten
Incline jj – I agree w/you but it’s out of my hands. Further, if you subscribe to the fact we’re in a declining market and the price tomorrow will be less than it is today, why hold out for something more than you paid if you can unload the asset today, as is? If things don’t go your way, you may very well end up taking a bath – which I guess is fitting.
But seriously, this 661 Saddlehorn property in IV is a heck of a deal at $575K! The problem for us is we’re not just looking for a “deal;” we actually want to live in it.
Sully
If there is any truth to this new bank bailout costing 1 – 2 Trillion, then WFB will soon feel like that horse left at the gate.
I can’t imagine over 300 Million Americans putting up with an additional bailout of that size. Think revolution! Who needs a gov’t that is catering to the same people that are trying to destroy the country?
CHRIS
SMARTEN,
Thanks for the info, yes this house was over 5 days out. I heard they are taking it to auction in feb…still makes no sense???
thanks to everyone who responded to my questions, you all healp clear the muddy water!
chris