Depression Hurts

Downtown Reno Foreclosures General by Mike McGonagle

What a grubby, nasty day it has been.  Moving furniture getting ready for a sale (search CL Furniture for 215RBD later in the weekend – good stuff cheap!).  Recovering from a week of construction (yes, Bill and Pete) getting ready for a new tenant.  Trying to get a break in the rain so I could paint the new exterior door "Cocktail Olive".  I need comic relief, so here are a few nuggets from the week in real estate:

4241 Dant hit the market for $779,000.  It was purchased in December 2004 by our departing UNV basketball coach, Mark Fox, for $710,000.  He did pretty well with his first house on Sage Rock, going from a purchase price of $288K in June 2001 when he arrived, to $490K when he sold to buy Dant.  I wonder if he has a relocation clause in his contract with Georgia?  And yes, it is down the block from Allen’s.

425 Leventina finally listed at $435,000, totally destroying my comp.  It was purchase in May 2006 for $610K after being listed for a long time at $680K, then refinanced for $710K and "remodelled".  Except the remodel never finished, part of the roof blew off, and the owners stopped paying in December 2007 and were mortgage free for over a year.  Actually, this is a pretty good deal at this price.

Anyone catch the Reno television personality who received a NOD this week?

200 Talus Point is the student dorm condo project.  Unit 532 listed this week for $115,000.  It was originally purchased in August 2006 for $225K, flipped in January 2006 for $274K, before going TD in February.

2115 Brooksboro listed (or extended) as an REO at $489,900.  I believe this was Guy’s "Lakeridge Modern" listing at $795K or so a few months back.  This one was $635K in September 2000, and $825,000 in April 2007.  Serious errors in timing the market on this one!

194 Tramway in IV received a $1,000,000 NOD on April Fools day.  There is also a $150,000 HELOC in place.  It was a rustic $90,000 cabin in 1978 when it was originally purchased, and morphed into a $1,299,000 listing over 30 years.  If you are into public records searches, this one will will keep you busy with 41 recorded filings.

836 Center Street listed at  $350,000.  8 on Center is the project everyone loves to hate, or hates to love.  836 was a unit owned by the developer, and lost to a TD.  My recollection that these originally listed for $495-525K and Guy briefly had the listing on the way down.  Time to buy and be an urban pioneer?

Is the "Party Shower" the new must have amenity for the Reno elite?  Especially if it is adjacent to the "Wine Tasting Room"?  It is really a well done virtual tour.  Respect the owner, please, and confine your comments to this property.

I feel better now.

78 comments

  1. BanteringBear

    DonC posted:

    “Unlike many here I’ve been suggesting that we are in the process of putting in a bottom.”

    I see zero evidence of such. How in the world could a bottom be forming in the face of RECORD foreclosures and a massive inventory overhang associated with such? This doesn’t even take into consideration the job destruction which places further downward pressure on prices. I am in complete disagreement with you.

  2. CommercialLender

    DBNO,
    Great post, and you had me smiling especially at the last paragraph. I certainly meant no intrusion.

    Since I’m barely past the family-formation stage and you have already raised your kids, we’ve both offered 2 different perspectives, neither wrong of course. My point of view even now is that there remains more risk in buying a house today than the average buyer today recognizes. As you point out, if one is sure of their income and wish to settle in the home for the long term, great deals and cheap financing can be had.

    DonC,
    Your point on CA’s prop 13 is quite relevant for move-up buyers. On another front, I ran some calculations on a hypothetical buy in CA and found that AMT significantly and negatively impacted the tax-advantaged impact of ownership, for me at least, particularly with regard to deductability of r.e. taxes. Essentially, the Fed taxes I’d owe were much higher than I thought they’d be, which of course would drive down my comfortable range of housing price. I did not run a CA estimate, but can only imagine. Since current tax rates across the land are suspect, tax increases and loss of deductions would serve to further impact housing prices in the recovery.

  3. john

    Smarten – Delacroix, part of the Rennassance subdivision in Montreux, is not high end construction. It is a bubble born tract home at its best built by Silverstar, and deserves the price it is fetching in the market. Apparently even the owners of the Renaissance homes themselves refer to their subdivision as the “Montreux projects.” The true high end custom homes scattered throughout the pines and golf course at Montreux and mostly built by Lakecrest, are still selling for high per sq. foot prices. Case in points is 6554 CHAMPETRE Ct., which I wrote about a few weeks ago as sale pending, at 3994 sq feet, just sold for asking, $1.595. This house has 12 inch concrete and stone walls like most of the custom homes in Montreux, and all the other accessories that are missing in Renaissance, which really is just a mini Somersett, but with some extra snob appeal. There are two other sales pending in Montreux at similar prices. True, the real Montreux is not getting bubble prices of 2006, but it is still commanding very high prices per sq foot and will continue to do so due to limited supply, high end construction, clubhouse amenities, and very unique and beautiful setting. Some buyers care about and are willing to pay for these qualities.

  4. Tom

    John, those higher-priced homes in that community to which you refer may be high-end in construction, but for our taste, they are too close together, generally have small backyards pushed up against the golf course, and the living rooms are too small. This seems true no matter what one would be willing to pay, they are still fancy houses with small rooms, all pretty densely packed-in among the pines. We have concluded that this community is essentially for golf-lovers (not us), although the setting and views are terrific. Looks like we would have to build somewhere, as we have found nothing “exciting” for us sufficient to justify a move.

  5. marcus

    another delusional seller:

    here goes! So I made an offer on a home my wife and I absolutely loved. The home which was purchased by an “idiot” 6 months ago for 301k was put back on the market for 330k.

    Now since we really loved the house we made what we felt was a more than fair offer of 299k. We made no demands as far as concessions since it is a cash deal. the ONLY thing we asked in return was for the seller to split the deed transaction cost (1,200) and for him to pay for an inspection. THAT’S it!!

    so what does this idiot do? well I can’t so for now but all I know is he is coming back with a counter offer!! completely rediculous if you ask me.. goodbye we will not entertain his counter and will move on and continue our search for a new home. 🙂

  6. marcus

    btw he bought the home from a bank.

    it’s news to me that prices have gone UP in the last 6 months!

  7. john

    Tom – check out the Stonehaven’s currently for sale in Montreux. There are two or three. Large lots, not on the course, huge great rooms, no small roons, excellent cement and stone construction and very high quality fixtures.

  8. Tom

    John, we looked at the floorplans for those. They use the Great Room concept, which generally includes a small living room and not-so-large dining room. Not for us, we would fill those little living rooms with “stuff” with no room left for humans. We don’t want to down-size on common area rooms that much.

    Someone on this blog said that we are looking for a classic home from a different era, maybe not available in Reno-Tahoe. Perhaps that is true. But we know those houses do exist, but in Los Angeles in Hancock Park, Holmby Hills, Hidden Hills, and Brentwood. We wish we could pick-up our house and move it to the Mount Rose corridor (!).

    Thanks, though, for your tips.

  9. marcus

    an update on the above house i mentioned that we made an offer on.

    his counter offer was 329k! What a joke!
    it looks as though our house search will continue!

  10. DonC

    CL – I’m not following why the AMT would affect your real estate purchase in CA. Do you mean if you lived in CA so that there would be a sufficient nexus to tax your income? Or something else?

    BB – There is evidence out there if you’re willing to keep an open mind. Here’s an article today I just saw (should be in tomorrow’s paper). If you look at the graph of new housing starts it looks like what you’d expect at a bottom. Now it might be a local minimum but what normally happens as you put in a bottom is that there are conflicting signals for awhile and sales or starts go flat rather than showing relentless declines.

    http://www.nytimes.com/2009/04/17/business/economy/17econ.html?ref=business

    Note that I’m not alone in reading the data this way. Here is a chief economist for High Frequency Economics — I have no idea who he is BTW but hey, he agrees with me and he predicted the housing crash — who states the view in the same article as follows:

    “It does look to me like we’re hitting a bottom,” said Ian Shepherdson, chief United States economist at High Frequency Economics, about building permits. “We’re now seeing a restabilization at a much lower level. It doesn’t mean they’re about to rebound.”

  12. DownButNotOut

    Today’s news in my CA county newspaper (population 500,000?)was interesting. It falls under the heading of ‘it is was it is’.

    Headlines – ‘In some areas , economic decline slowing’ Next feature story ‘Home sales keep surging’ with a buyline ‘for the first time in a year housing prices ticked upward from the previous month’. The median price in this County is $320,00, and probably will be one of the first to rebound. Now I’m not suggesting this is the bottom, a trend, a reason to rush out. But it’s the first time I’ve read this.

    Most of us probably agree ( maybe not who knows with this diverse group)other areas will rebound quicker than Reno, so when they do we might be able to better predict when the Reno area levels out.

    I know, nothing is going up until jobs get created, but jobs don’t get created without consumer confidence rising, and that means somewhere there has to be good news.

    IMO the Baltic Dry Index and Manpower are two indicators that will precede the decline of the unemployment rate.

  13. marcus

    its official…

    My wife and I have ended our search for a new home.
    we can’t justify selling our house even for full price offer after having looked at MANY I mean MANY properties all of which were higher priced than ours, yet NON were nearly as nice..

    life goes on

  14. GrtefulD_420

    DonC – You are truly reaching at straws to reach the conclusion as to which you desire.

    1’st – That graph of “the bottom” is not clear, and it was announced today. “housing construction unexpectedly plunged to its second-lowest level on record — fresh evidence that the recession is far from over.” — So this evidence is defunct.

    2’nd – What does the national “housing starts” have to do with Washoe County real estate? Nothing.

    This market is crashed and it will fall even further than ever imagined. Period. The government has not stepped in, locals are far past the 5% underwater. The backlog of foreclosures of 300+ per month will completely destroy the market by the fall. Remember we have just finished the 1’st half of the Housing correction[subprime] and have just started the 2’nd half [Alt-A’s]. This has been well documented by the economists (and noted on this blog many times) and nothing has happened to change these numbers except for the worse. Worse because the % default is higher, becuase people are further under water and the economy job loss is higher. The job problem most definately includes Reno, who’s #1 (casino’s) and #2 (Contruction) markets have been hit hard [they may never recover].

    DBNO – your justification for the positive physcological effect on one’s being, by owning a home, is completely defunct and immoral. This may have been the case if one could actually buy a home and gain equity. That use to be the case. Unfortunately, this does not exist and therefore one cannot have that feeling. The only feeling they will get is extreme stress. Knowing that everyday after they purchse the house they are more & more in debt and that any slip, such as job loss, health or accident could put them on a path of losing it all, going bankrupt nad inable to purchase for the next 7 years.

  15. Dbno

    GD420 If I was in your scenario you describe I wouldn’t even be looking at a house purchase. I would be working on stabilizing my situation first and foremost.

  16. jim

    MLS# 90005144 Is there anything wrong with this listing?

  17. Sully

    jim, house is nice. Power lines and sub-stations in back might not be a attractive view though.

    Check it out on zillow.com – the start page is the overall view, you can move the picture to the left and see the sub stations at right and top.

    Also, a lot of power lines running out of the sub-statations.

    This was my biggest drawback for that particular part of the street. BTW, not many houses come up in this area, I have been looking for two years up there and this house caught my interest the day it came out.

  19. Tom

    Jim, I think it is an attractive price for a property of that size, and if I were looking there and for a similar house, here is how I would deal with the view of those power-lines:

    Along that black iron fence and into the yard about 4 feet from the rockery retaining wall, put tall Junipers every 6-8 feet along the entire fence line. Get them in 36 inch boxes. Those will be tall enough to screen out that power station and the poles, and I think you will still have enough yard for a family gathering.
    Good luck with it.

  21. Back2Basics

    Jim,
    House looks great, but if you have kids, that neighborhood is bound for Hug. Schools are a big enough deal for our family that we’ve been picky at which neighborhoods we look at.

  22. Sully

    An adder to adingo8myeconomy comment. Any thing from China is either toxic, don’t last or don’t work. Wal-Mart is Chinas’ biggest trading partner, thats why I avoid it like the plague! 🙂

  23. jim

    Thanks for the input! I forgot about schools, that is a bummer its in the hug district.

  24. Tom

    Good point, Sully. We even looked at high schools, visited school websites and looked at club and activities pictures, drove around and watched the students leaving after school– and our kids are grown! Reason: the culture of the local high school and the teens in the neighborhood reflect the nature of the community in many respects, not just in the classroom. We thought the Galena High group was a great bunch of kids, for whatever it is worth.

  25. Tom

    Back2Basics, I meant, who made the schools comment.

  26. GratefulD_420

    DBNO – The comment was not to describe my situation. My situation is very advantageous. Just wanted to take the fantasy out of the “home purchase” that you were trying to rationalize. I do agree this satisfaction of Home Ownership could be true, its actually something I seek, however I strongly disagree someone could purchase a house as a decreasing asset and feel the same way.

  27. Dbno

    Yet people still buy houses. Go figure.

  28. DonC

    GD420 – The article included the numbers you’re referencing. In fact that was the starting point for the article. If it matters, March wasn’t the worst, it was the second worst. But the low numbers were part of the reason that the quoted economists were concluding the market was hitting bottom.

    You have a point about Reno housing not being necessarily tied to national trends, but the reality is that it is part of a western housing market, and what happens nationally will generally be reflected in Reno.

    FYI, I do want things to get better. Having so many people unemployed is a terrible thing. However, as a buyer rather than a seller, lower prices for real estate in Reno wouldn’t hurt my feelings in the least.

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