Thanks to Reno Ignoramus for forwarding a link to RealtyTrac®’s Foreclosure Rate Heat Map for Washoe County. The map shows the number of foreclosed homes by zip code. Mouseover the areas to have pop-up stats like: “89506: 224 foreclosed properties – 1 in every 65 housing units”
Here’s the link: RealtyTrac®’s February 2009 Foreclosure Rate Heat Map.
billddrummer
Thanks for the link, Guy.
If you input Sparks, NV, the 89436 zip code has 1 in 22 housing units in foreclosure.
Walter
1 out of every 22 housing units in foreclosure? That’s unbelievable. That has to rank among the highest zip codes in the country for foreclosures, doesn’t it?
SkrapGuy
Yes, that’s what RealtyTrac says. I out of every 56 housing units in Sparks is in foreclosure, and in the 89436 zip code, 1 out of every 22 housing units.
I suggest that if we look at the demographic composition of the 89436 zip code, it’s not hard to understand how 1 out of every 22 houses has ended up in foreclosure. This is where the trash subprime nothing down, I/O, lie about your income in any way you want loans were most prevalent. This is where the realtors, and the appraisers, and the loan officers all looked the other way in the conspiracy of silence because the commissions were so good. These are the loans made in the dying days of the bubble where the “homeowner” made one payment and then defaulted. Some didn’t even make one payment.
P Russo
I track zipcode demographics (real estate price, schools, income levels) and I was just curious what sort of demographics SkrapGuy is referring to in regards to the zipcodes in question. As far as my research goes I dont know that I would qualify these areas of being ‘Trash’.
SkrapGuy
P Russo, please note that I did not use the word “Trash”. You did.
By any fair measure, the 89436 zip code contains some of the lowest median or average household incomes in the Reno-Sparks metro area. This in NO WAY suggests that the people who live in that zip code are “Trash”. Again, that is your unfortunate choice of word, not mine. However, the reality is what it is.
Of all the zip codes areas in the metro area, 89436 includes the fewest number of people who are qualified to purchase a home by any traditional standard of creditworthiness. It was only through the use of subprime, nothing down, I/O, stated income loans that the vast majority fo people in the 89436 zip code were able to “afford” to buy a house. Of course, we now see, by virtue of 1 out of every 22 houses there being in foreclosure, they were in fact not able to afford to purchase a house.
None of this implies or suggests anything about the character of the people who live in 89436. Not everybody in our society is well off, and there is no sin in that. The only thing “trashy” about the situation in 89436 is the nature of the loans that were written, not the people. But when we start making $175,000 nothing down loans to people whose annual income is $30,000, can we be surprised when the chickens come home to roost?
CommercialLender
SkrapGuy,
Re-read your own post, where, in fact, you did use the word “trash” as in the 5th line “trash subprime” seemingly referring to people, not “loans”. Perhaps an apology is in order.
Martin
prusso,
I don’t see where SkrapGuy was saying anything unkind about the people who live in 89436. He simply makes a point. And it looks like there is no other zip code in all of Reno/Sparks where the foreclosure rate is as bad as 1 out of 22.
Martin
I could not agree more with SkrapGuy that these loans were trash. He did not say the peole were trash. If it wasn’t for these trash nothing down, interest only, stated income liar loans this whole bubble never could have happened.
And if the borrower was an upper middle class guy making $100K a year, getting a stated income liar loan for $800K, it’s still a trash loan.
Marla
I’ve seen SkrapGuy refer to “trash subprime loans” in many contexts on this blog. It’s one of his favorite phrases. He has been a vocal critic of the subprime lending debacle on this blog for a long time. I don’t think he insulted anybody, except maybe the realtors, appraisers, and loan officers “who looked the other way”. And they deserve it.
Carol
Just exactly how did there end up being 425 houses in foreclosure in just 89436?
I think SkrapGuy nailed it. Making loans to people who NEVER could have afforded to pay them back didn’t work out too well did it?
I find his comment in no way offensive to anybody, except perhaps to people looking to be offended.
A trash loan is a trash loan, no matter who lied to get it.
Sully
This is where the trash subprime nothing down, I/O, lie about your income in any way you want loans were most prevalent.
Lets just move one word:
This is where the trash subprime loans, nothing down, I/O, lie about your income in any way you want, were most prevalent.
🙂
SkrapGuy
As a guy who has posted hundreds of comments on this blog in the past 2.5 years, I think long time readers know that I have never intentionally insulted anybody. Even derrick.
But thanks, Sully, for the suggestion. From now on I will try to be more Clintonesque in my parsing of words.
Raymond
You can call them trash loans. You can call them crap loans. You can call them whatever you want. But they were a joke, and they were the only reason the prices of houses got so whacked out of control. 1 out of every 22 houses in foreclosure? I don’t think there are zip codes in LV, the center of the foreclosure universe, that are that bad. Doesn’t that rather startling fact suggest that perhaps SkrapGuy is right, that something WAY out of hand was happening in 89436?
Mark
“1 out of every 22 houses in foreclosure? I don’t think there are zip codes in LV, the center of the foreclosure universe, that are that bad.”
You think that’s bad, try 89408 (Fernley). According to the link 1 in every 10!
billddrummer
Some thoughts from a former 89436 resident (lost my house to foreclosure because my income dropped 90%, among other things):
Most of the loans in foreclosure are on homes that were built after 2004, at the peak of the bubble. Remember when you had to stand in line to get reservations on new projects, before the site improvements or models were done, and the only ‘improvement’ in the development was a sales trailer?
Along with that, anyone who refinanced an older home in 2005 or 2006 (like me) was seduced by the spectacular increase in value. (My house cost $98,000 in November 1988, but was appraised for $295,000 in April 2006. That’s a crazy valuation, to be sure, but I fell for it.)
My next door neighbor sold his house at the peak to a lovely young couple. I think they’re gone now. He worked in the construction business driving a water truck. How many water trucks do you see around these days?
The people who weren’t seduced, who didn’t move-up, and who didn’t refinance, are fine.
But I think most of the loans in foreclosure now were originated by the builders of all the new subdivisions in Kiley Ranch, the project behind the Spanish Springs Wal-mart (the name eludes me), and the homes near Spanish Springs HS. Oh, and don’t forget all the houses that DR Horton, Reynan & Bardis, and Lennar built along Vista Blvd and Hubble Drive.
All those subdivisions sprang up between 2003 and 2006. And many of those homes are now on the market for 50% less than they sold for new.
Builders were pushing option ARM, interest only loans like kids passing out popsicles on a hot day. No one refused.
And Here. We. Are.
Bargains galore for those willing to commute on Pyramid Highway (not me, thanks).
BanteringBear
I’m just going to come right out and say that many of the people taking out those I/O, lie about your income loans were trash. That’ll take the heat off SkrapGuy. 🙂
billddrummer
To BB,
I’ll add financially inept, duped and unsophisticated. And the vast majority of them are Caucasion.
There, let’s put to rest how only minorities (Hispanics and blacks, mostly) are finanically inept, duped and unsophisticated.
billddrummer
Although in a sense, the builders, lenders, real estate agents, title officers and everyone else connected to the industry drank the same Kool-Aid.
So how many victims are there?
Carleton
I suggest that the reality of the situation was that there were just as many predatory buyers as there were predatory lenders. Yes, no doubt there were the inept, the stupid, and the duped. But there were just as many who knew damn well what they were doing, which was lying about their income to buy a house and banking on future appreciation to bail out their ass. And this has nothing to do with race or minority status. Greed came in all colors and national origins.
billddrummer
To Carleton,
Well put, and spot on! I’m sure there were those folks who knew they couldn’t pay, never intended to pay, and figured they’d just coast until they had to move.
As you said, greed is unbiased.
Raymond
To Mark:
Thank you for pointing out that 1 out of every 10 houses in Fernley is in foreclosure. What’s that work out to be? 2 on every street?
I’m sure that SkrapGuy would say it was trash subprime loans that have turned Fernley into a trainwreck. So would he owe an apology to all the people in Fernley too?
billddrummer
To Raymond,
Nah, no need to apologize to the people in Fernley. They just got taken advantage of and couldn’t get to work last year when gas was $4/gallon.
Sully
Has anyone else noticed how slowww the county has been lately in posting data (other than NOD’s)?
I’m wondering if the county is working in conlusion with defaulters in order for them to have time to qualify for a freebee FHA/VA loan – before their credit scores show up.
I found one creative defaulter, that bought another house, homesteaded it, then told Wells Fargo they couldn’t make the payments anymore (on the first house). Now that house is up as a short sale. Wells Fargo has only filed a NOD (12/08), probably will sit for awhile as the note is for 350K – house is worth about 245K.
Would it surprise anyone to know that the second house was FHA?
SkrapGuy
Yes, Raymond, I would. Here’s what I have to say (with an assist from Sully):
Fernley is where the trash subprime loans, nothing down, I/O, lie about your income in any way you want, were prevalent.
Please note that I did not say the people in Fernley are trash. Ok? Is that clear?
Inept One
Trashy builders selling trash houses in trashy developements to trashy buyers getting trash loans written by trashy brokers approved by trashy underwriters purchased by trashy government backed agencies written about on trash blogs by trashy bloggers. Let me know who I havent offended.
3niner
BD said:
“(My house cost $98,000 in November 1988, but was appraised for $295,000 in April 2006. That’s a crazy valuation, to be sure, but I fell for it.)”
Unfortunately, this happened to a lot of people. You were probably told that this was a way to “cash out” some of your equity.
If you had sold your house for $295,000 (or more), and become a renter, you would have really cashed out your equity, and in retrospect it would have been a good financial move. What you did was simply to borrow money, which probably got spent on something you couldn’t really afford.
It’s too bad that you (and so many others) had to learn this the hard way.
3niner
I’ve seen many people blame greed as the cause of all this. I disagree, greed is actually good, when combined with honesty and good judgement. It’s what grows our economy.
The problem was the many people who were both greedy and dishonest. There were some people who were simply foolish, but they needed dishonest people to lead them into these terrible decisions.
I primarily blame dishonesty. Of course, many real estate professionals were dishonest, but dishonest government officials and buyers were a major factor also.
John Newell
A couple of posters mentioned Fernley. I have been watching the Fernley market closely for the last six months as I am representing an estate with a house in Fernley. 1400sq feet, 3-bedroom, less than $103,000 owed (at time of death), but we have had no offers sufficient to satisfy the note. The decedent bought pre-2003 with a traditional loan. Were he alive today, he would be upside down even though he did not have a voodoo loan. I now have to justify to the court why we cannot sell the property and will have to allow it to revert to the note holder. Las Vegas is worse because the problem is larger scale, but Fernley is just sad.
billddrummer
To 3niner,
You’re right about that. I spent the money on a cash settlement to my then-wife, as her share of the equity. I should have sold the place (as you suggested) and found another house to rent in the neighborhood. In fact, there was one renting down the street for about $1100/month, I believe.
Kids could have stayed in their schools, the ex would have gotten her money anyway, and we could have moved on without the acrimony and stress.
As it turned out, everything crashed for me at once.
Now I own nothing, am upside down on my car, and don’t have a bank account.
But that’s OK. It’s better than being married.
3niner
BD:
Hindsight is always clearer than foresight. It’s easy for me to give retroactive advice, but I’ve managed to lose over half my net worth, in the last year or two.
I’ve made decisions that were probably at least as costly as your’s. I simply started from a more financially secure place. Oh well, retirement just got a bit further away.
billddrummer
To 3niner,
I spell retirement
“W-O-R-K T-H-E R-E-S-T O-F Y-O-U-R L-I-F-E”
In fact, I’ve often joked that I’ll have to work after I’m dead. One knock means yes, two knocks means no.