823 Ophir Peak just listed in Incline Village for $617,900. Take a look at the pictures on the MLS – the place is a dump. But this little dump is costing Bank of America (and you and I) over $750,000. Here’s the story:
The house was purchased in May 2005 for $1,035,000. Well sort of. The actual sales price was $1,150,000 and included $115,000 in "personal property". The personal property was counted as the down payment, and BofA gave the owner a $835,000 Option ARM 1st and a $150,000 HELOC 2nd for the recorded sales price. Could this place possibly have been worth over a million, even back then?
In October 2006, BofA enabled a refi – $937,500 OA 1st and a $187,000 HELOC ($1,124,500). In January 2008 the HELOC was replaced with a new one with a $416,000 limit ($1,353,000). Five months later, the owner stopped paying and the NOD was filed in October. BofA bought the house back at the trustee’s sale in February for $835,397. The amount due on the first loan was $1,045,498 at that time, and the HELOC was written off.
I’m not allowed to speculate that fraud might have been involved in the transactions I profile on this blog – there are liability issues. You are not under the same constraint in your comments.
Roylin
Boy, I also to have say that I find it pretty remarkable that the former President of the Board of Realtors writes a piece for the local newspaper that essentially says to people that sometimes the only sensible thing to do is to walk away from your contractual obligations. I don’t mean to take a side here, or criticize Mr. Capurro. But, wow.
SkrapGuy
Yea Down, in fact, I think you might find many of the archives interesting as hell. Some nonsense, but mostly quite interesting and informative. But be sure you back at least to mid 2006.
As far as Mr. Capurro goes, if I recall correctly, he actually commented here didn’t he? After Mike put up the thread about his house becoming an REO?
DonC
BB — You have a perfectly valid point about whether the HAI shows houses are at an all time high means that prices will rise. It doesn’t. It’s just one data point. If buyers can’t get loans or if, as you point out, job losses continue, then housing prices will continue to sink. (Job losses are BTW a lagging indicator so they won’t go away until after the recovery has started).
However, if the financial system is stabilized then job losses won’t continue at the current rate and, given the affordability index, housing prices will go up. In this sense housing is like stocks, which at the moment have a very attractive PE ratio. Does this mean stocks will go up? No, but the likelihood of that happening in the next few years is pretty high.
This leads me to say that if you expect to stay in a house for five, ten, or more years, and you can swing it, buying a house now isn’t a bad idea. If you want to flip it, or even if you can pay cash, that’s a different story.
Your point about affordability in Reno is a fair one. The HAI number is national. But if you look at family income and house prices for Reno you’ll find Reno doesn’t seem to be an aberration. I’ll also note that the data today shows new home sales up, and if you get the WSJ you will find an article yesterday suggesting that housing prices in the Central Valley in CA may have bottomed. (I can’t link to the WSJ because its online version is not free). What we can conclude from this is that falling prices are drawing in buyers, which is what happens in a bottom.
This does not mean of course that prices everywhere will go up. A long bottom seems likely. And they may take a very long time to get back to bubble levels. When we bought a house in Houston in the late 80’s sellers were coming to closings with checks, and AFAIK house prices have never gotten back to where they were in the oil patch real estate bubble of the early 80’s.
BanteringBear
DonC posted:
“I’ll also note that the data today shows new home sales up, and if you get the WSJ you will find an article yesterday suggesting that housing prices in the Central Valley in CA may have bottomed.”
From the NAR:
“The National Association of Realtors said that existing home sales rose last month to a seasonally adjusted annual rate of 4.72 million million units, up 5.1% from a rate of 4.49 million in January. February sales were down nearly 5% from year ago levels.
Anybody that knows anything about housing understands that sales typically increase month over month this time of year. The only apples to apples comparison is year over year sales. They are DOWN from February of last year. This is not good news, much to the disappointment of the shills.
billddrummer
To BB,
I tend to agree with you on all points. Furthermore, just because one area has ‘bottomed’ doesn’t mean prices will start to rise. There’s still lots of inventory out there, and if you read more closely, it’s clear that new housing is still in the toilet.
Don’t expect any appreciation for any type of real estate for a looooong time.
DonC
BB — The problem here is that you’re commenting about an article without reading it. Again, I’m sorry that I can’t post a link but it seems that if you’re going to cast aspersions — “anybody who knows anything” — you might at least read it.
Had you read the article, you would know that the number of January 2009 homes sales were DOUBLE the January 2008 home sales. You would also know that time on the market dropped from 16.6 months in January 2008 to 6.7 months in January 2009. Those are impressive numbers, and they are year over year figures, not, as you’re suggesting, month to month figures. Had you read the article you would also know that while last year selling prices were well below listing prices, now most selling prices are close to asking prices.
However, I will also note that when you are in a sharply declining market month to month sales rates are more important than year over year results. While you may think the news was bad the market came to a different conclusion. The housing numbers were part of the big stock rally today. To quote a report:
“This was above market expectations for a drop to a 4.45 million-unit pace after January’s 4.49 million rate.”
Does this mean housing is going to shoot up. Hardly. As the WSJ article pointed out, there is still an overhang of foreclosures. Housing won’t begin to move until the inventory is worked off, the inventory won’t be worked off until we have more jobs, and we won’t have more jobs until the banking sector recovers and starts making loans. But when you are at a bottom things don’t suddenly all change for the better. What you see first are pockets of improvement. Seems to me this is what we have here.
BanteringBear
I read the article, DonC, so quit the baseless assertions. Did you forget that I’m the one that cited it? Furthermore, I chose to respond to the February information because that’s what the markets are responding to, not January. You’re just mad because I’ve poked holes in nearly every one of your Kool-Aid tinged posts. Admit it.
You posted:
“However, I will also note that when you are in a sharply declining market month to month sales rates are more important than year over year results.”
Pure horsesh!t. Apples to apples comparisons are always more accurate as sales pick up in the springtime.
Further:
“But when you are at a bottom things don’t suddenly all change for the better. What you see first are pockets of improvement. Seems to me this is what we have here.”
Yawn, keep on calling a bottom, DonC. How many times can one talk about the bottom being in until they lose all credibility?
3niner
MikeZ –
There are many factors that contributed to the bubble, but there were three major ones, government interference with the free market (Fannie Mae, Freddie Mac, FHA, CRA, artificially low interest rates), fraudulent loans (buyers, mortgage brokers, loan officers, appraisers, and possibly some realtors contributed to this one), and people who thought they were going to get rich by overleveraging themselves into houses they couldn’t (or simply wouldn’t) pay off.
Take away any one of these major factors, and the bubble doesn’t happen in the first place.
smarten
If anyone cares about the specific property Mike wrote about, here’s the rest of the story.
After being on the MLS for less than a week, the property’s now in escrow. On Sunday when I submitted my offer, there were already 5 additional offers and the word was that some were for “substantially more” than the $617.9 listing price. By the time all the offers were submitted on Monday, I have reason to believe there were at least 8 offers.
FWIW, my offer was for $650K, no financial contingency, taking the property “as is,” and closing in 15 days – about as clean an offer as one can make. This afternoon I learned my offer was rejected because someone else’s higher priced offer had been accepted. How much higher? I can’t tell you but the speculation is well over $700K; a price I wasn’t willing to pay [so no regrets on my part].
So although BB wouldn’t pay more than $147K, there were a good 8 or more of us who were willing to pay many times that amount. And in response to InclineJJ’s query if it’s such a hot buy, how come no one has snapped it up? Now you have your answer.
So [hopefully] on to other opportunities.
BanteringBear
Wow, Smarten, and I thought you were a man of taste. That is one butt ugly property, and I’m not sure what the hell you saw in it to offer such a staggering amount of money. I don’t care if there were 100 people bidding, they’re overpaying in grotesque fashion. The value is in the land, but that’s no $500k parcel. This just goes to show that this bubble insanity is far from over. Wake me up in 10 years.
On the Sidelines
An observation…
Throughout the 60 or so comments in this thread there were MANY comments regarding fraudulent loans, loan officers, loan brokers, appraisers and banks.
Only a handful of comments about the part the Realtors, RE Agents or RE Brokers played in this bubble mess.
???
BanteringBear
Ophir Peak sold for $450k in 1998. Four years earlier, it sold for $385k. It’s nothing more than a middle of the road home in Incline Village. Considering the deflationary environment, and the fact that it needs updating, I think $650k+ is absolutely ludicrous. Lots of people falling all over themselves and each other to overpay for a rapidly depreciating asset. Another sheep gets sheared.
Reno Ignoramus
OTS, we used to take the realtors to task a lot more in the early days of the blog. Back then, it was pretty common to include the realtors in the discussion of just how much fraud, deceit, and general garbage could be packed into one deal.
More recently, the realtors seemed to have diminished as objects of discussion. One reason may perhaps be that Diane and Guy have commented that they have to conduct business with their realtor colleagues, and that can be made difficult if the readers of the blog are calling out realtors as parties complicit to the fraud and crap that was obvioulsy going on in the deals that Mike makes the subject of a thread.
But your point is well taken.
smarten
BB, you may not “care if there were 100 people bidding [for Ophir Peak because in your opinion] they’re overpaying in grotesque fashion,” but like it or not, what has transcribed describes fair market value. Obviously, a number of us saw things in this property you did not.
You can go all the way back to 1998 and track the price changes for every Incline Village property but the fact remains; 11 years later, no SFR has sold for less than $470K in some number of years years and given this home’s location [remember, location, location, location] and lot size, there’s no chance it would sell for $470K. If you believe the home is a teardown [which it is not], I guess that makes the land worth in excess of $500K!
Besides, I’m married and sometimes husbands must place interests above theirs. So look at it this way: I get brownie points for trying and since I was outbid, it was really a blessing in disguise.
Guy Johnson
Skrapguy, your March 22 comment regarding the real estate holdings of the “regulars here” was simply amazing. I’ve been a contributor to this blog since February 2007, and a regular reader of this blog long before that. Although I recall some of the info you recounted, there is no way I could have remembered half of those details. Very impressive.
BanteringBear
Smarten-
Perhaps I was a little harsh on you. My apologies. I haven’t walked through the property, so I cannot honestly speak to its charm, condition, etc. I agree that whatever it sells for constitutes its current market value. I also believe you when you say that no house has sold for less than $470k in some number of years. However, I think that will change as we move forward, and all Incline Village houses will lose substantial value.
I also have a sneaking suspicion that you would be putting a fair amount of cash into the house in the way of improvements upon closing. Am I off base? Assuming another $75k (which is very conservative), you’d have $725k into the place. I believe you’d be upside down to the tune of $300k by the time the market bottoms. JMHO. Good luck in your search. I hope you find a great house you love at a great price which you can afford.
DownButNotOut
Guy, it was a good recap. But in my archive research few regulars have come forward with any update recently of what they’re doing with their RE holdings, which was what I was asking.
SkrapGuy wrote’The problem isn’t that the “regulars here” haven’t provided the info you ask for. The problem is you haven’t been around long enough to know what has been discussed here, sometimes ad nauseum. This blog didn’t begin when you arrived’
Great from a good old boys standpoint and even historical perspective. What I was asking was what are they doing now, which as far as I can tell wasn’t answered.
But you’re right – it was simply amazing.
Royal Flush
BB wrote: “Wake me up in 10 years.”
Gladly, now go hibernate. Seriously, I enjoy(ed) reading your point of view but your posts, typically in response to someone, convey such contempt.
BanteringBear
Royal-
You show up every so often to tell me to go away, then disappear yourself. I’ve got news for you- I’m not going anywhere! So, quit reading my posts if you don’t like them. Yes, it’s that simple. Just gloss over them. But, alas, you like to try to run people off, try to create some RRB utopia that fits into your little minds eye. Won’t happen. Perhaps you, deRRicK (or diablo or whoever he’s going by these days), Downer, and all my little haters can get together and have a group therapy session. Unbelievable- the thin skinned nature of you whiners…
Royal Flush
If you won’t hibernate…how about a good nights rest?
3niner
OTS said:
“Throughout the 60 or so comments in this thread there were MANY comments regarding fraudulent loans, loan officers, loan brokers, appraisers and banks. Only a handful of comments about the part the Realtors, RE Agents or RE Brokers played in this bubble mess.”
Speaking for myself, I’m inclined to believe that realtors had a much smaller role in fraud, simply because they lacked opportunity. The others you mentioned, all play a primary role in the financing process. They can provide or ignore false information, depending on their particular role.
The realtor wants the sale to go through, and might encourage a buyer to provide false information, but it’s unlikely that they would be falsifying information themselves. The mortgage broker or loan officer should be obtaining information directly from the buyer, appraiser, credit services, etc.
DownButNot Out
So to get this straight BB, you dignify ‘all my little haters’ with lashing out at them? Hmmm.
BTW – this line started with BB in typical manner bashing everyone that might think differently than him. PursuitAce gave up on anymore writing on the Blog, in general due to feeling slammed for voicing his thoughts. I wonder how many others out there feel the same way and just don’t bother? Some fresh contributors were actually nice there for awhile.
smarten
Thank you BB. I truly appreciate your apology. Actually, I didn’t want to put a whole lot of money into Ophir Peak. At my target price [which BTW was $560K] I thought the property would actually cash flow as a rental. But at $700K or more, no way. My suspicion is someone is going to buy this property; put $1.2M or so into it; and either make it their dream home or attempt to sell it for $2.6M or more. We’ll see.
And to Down. You want to know what some of the regulars have been doing real estate wise? Well here I’ve given you the inside look into a REO resale first highlighted by Mike [how many other principals have chimed in?].
Several months ago I went into similar detail insofar as another Incline Village SFR was concerned where you may recall the seller came back at what I viewed as a delusional counter offer and I chose to walk away rather than respond.
I hope you can appreciate the fact I don’t want to draw attention to my every real estate move; at least not until it’s either dead or [heaven forbid] successful. But I will tell you that I have another offer outstanding which was created from an opportunity that did not otherwise exist. I probably won’t be successful with this one either but at least I’m out there trying; putting my money where my mouth is; and, sharing my experiences with the group for what they’re worth.
In fact I don’t recall how long you’ve been a contributor to this blog but some of the regulars may recall that a year ago I was talking about positioning myself for a purchase on January 11, 2009. I may not have been accurate on my timing but the fact I was looking to the future to make a purchase, and doing something about it to actually make it happen, IMO represents evidence of actually doing something as opposed to just talking.
Reno Ignoramus
To Smarten:
“I’m married and sometimes husbands must place interests above theirs. So look at it this way: I get brownie points for trying…”
Perhaps the most honest words ever posted on this blog. And, I think we all understand. Need say no more, my friend.
Diane Cohn
Hmmmm, if I recall, there was a steak dinner at the Lone Eagle Grill wagered with that January 11 prediction… is this the RRB Utopia of which you speak? 😉
smarten
Diane, we were there – where were you?
But just in case you feel “cheated,” the next time you’re coming our way, please give us a call and we’d be happy to take you and your husband to dinner at the Lone Eagle Grille [hey, there’s a 15% mid-week discount for locals].
BTW, Derrick never accepted the “wager” [and the wager wasn’t mine nor was it tied to my prediction – I merely suggested the payoff could coincide with my birthday dinner] and I don’t recall anyone saying anything about “steak.” But if that’s what you’d like to order, it’s fine with me.
Hope you take me up on the offer but if it isn’t exercised before Diamond Peak closes for the season, my offer’s withdrawn. Hope to see you.
inclinejj
I too looked at Ophir Peak while it was in nod and thought hmmmm nice location but the property looked like a tired old rental..
I passed on the property long ago and wouldn’t get into the multiple offer BS.
Then again with a log jam in jumbo financing lets see if Ophir Peak closes
smarten
A bit of a postscript re: Ophir Peak [but certainly not the last one].
Intero agents Bruce and Sandy Soli report that within three days after Ophir Peak was listed on the MLS, there were a staggering SIXTEEN purchase offers, three of which came from their office [ http://www.solirealestate.com/Nav.aspx/Page=Http://www.TahoeHomesBlog.com ].
IMO although this property at the listed price represented good value, it didn’t warrant this kind of activity. It will be very interesting [at least to me] to see who was the ultimate high bidder and at what price!