The Belsera Heights (Belsera, Bella and Bellazzo Courts) project on West McCarron received a $2,000,000 NOD. The loan was secured by the last 10 lots in the development, some of which are now under construction. Originally developed by Landmark Homes and priced near $1M.
The R & B Verdi project is back on the market for $7,900,000 "Make an Offer". This 1001 acre parcel has entitlements for up to 676 single family homes. Altmann Ott bought the land for $7,200,000 in October 2003, completed the entitlements and I believe walked it through to parcel map. R & B bought the project from them for $35,000,000 in June 2005 and the listing states that the property was once appraised at $42,000,000.
The short sale bids for the Grant’s Landing project downtown were due May 20. I wonder if "the Dude" has heard anything? This is one project I really hate to see die, especially with all the activity created by the new ball park.
Class A commercial properties in the Bay Area area starting to show cracks. The $43M note on 250 Montgomery Street has been called in, and Goldman Sacks is marketing it for offers. The largest project in Marin County, the Marin Commons project in downtown San Rafael, went back to the bank last week (bad Hines, bad!). We had a couple of our high-rises change hands during the peak – is Reno far behind?
Ken Cash put up a provocative post at Chasenation a few days ago regarding Loans and HOA Lawsuits. Just one more thing to be thinking about. I know that an outstanding lawsuit at my development is delaying a current loan closing.
I had to save 5750 Melarky for last so I could post a large photo, and it ties into the commercial theme of this post:
The property received a NOD a couple weeks ago for $840,000, and their is also a $200,000 HELOC outstanding. The owners dabbled in Reno commercial property, and assembled a motley crew of properties. My favorite is the vacant lot between Smart & Final and Suzie’s Adult Emporium which I know well (from shopping at Smart & Final!), now TD. It is a complex chain of title, but it seems like this house was used to leverage their other commercial and residential properties.
Free Speech Hour – what do you lurkers have to say?
EdBear
What would one expect from people who build mud houses?
reno newbie
looks like a bee hive
billddrummer
But it’s a really really nice bee hive.
df
You spelled McCarran wrong, unless it was a joke about all the real-estate corpses around here.
Mc-Carrion?
billddrummer
Didn’t the principal behind Landmark Homes declare bankruptcy not too long ago?
steven
McCarron? Really?
The faster Reynen and Bardis disappear, the better for everyone around town.
Reno Ignoramus
From $35,000,000 to “make an offer”.
That pretty much sums it up.
Also, in Belsera, I believe there are 4 or 5 resales on the market. 1 is REO, 2 or 3 are short sales. 1 delusional seller trying to time warp back to 2005.
SkrapGuy
Belsera is the project that has the half completed house on the point overlooking the city. The roofing shingles are still stacked up on the roof where they have been for the last year since the workers walked off the job.
It stands as a fine tribute to the bubble. One needs to look no further than Belsera to see so-called $1 million bubble mania houses that will eventually end up selling for well over a 50% discount. Everybody who bought there is toast. They may not yet know it, but they are.
CommercialLender
The HOA post reminds me of what I’m facing in my business: lenders are saying ‘no’ to financing requests for seemingly silly reasons. (The lender examples cited in the HOA article struck me as saying ‘no’ for rediculous reasons.)
Underwriting criteria in commercial are very tight and good quality, well located, cash flowing assets are not getting refinances. Lenders want to be paid off rather than refi or extend loans, and actively make rediculous offers to borrowers whose loans are coming due. Here’s one: an 8.5% rate, fixed for 3 years to refi a deal that’s been on this particular lender’s books for 10 years, well occupied, well located, long term ownership, class A market, no cash out. The rate quoted is several percentage points higher than it should be.
Yes, the coming wave of commercial maturity defaults will be staggering.
Perry
With regard to Belsera, I was on their interest list from the get go. Originally they were supposed to be priced in the low $500k’s. So I waited and waited. They even sent us a bottle of wine while we waited. It even had Belsera as the label. Anyway, they finally announced the prices as starting in the high $800k’s which pretty much cooked it for my wife and I.
In other news… I spent some time analyzing the YTD sales spreadsheet the County puts out. I know this is old news but if you sort by prior owner you can really see just how many bank sales there are. I wouldn’t want to have any money in the Bank of New York, Deutsche Bank, HSBC Bank USA, or US Bank. Sorting by prior owner I also saw more Montage sales I had originally missed. The subdivision is not only known as Montage PH2 but The Montage PH1 and The Montage PH3. It looks like they’ve sold 29 so far.
Lastly some pitiful examples of where we’re at with pricing. I know there have been comments about Smithridge returning to original values but Yorkshire Manor off of Rock has done the same. Some units are selling in the $50k range. This appears to be less than their original price in the late 70’s. These peaked in the high $100k’s. I don’t know the condition of this home but 7999 MARINER COVE DR in the Turtle Creek subdivision sold for $66k on the 18th of last month. Obviously this drives comps down but I think speaks to the rental conversion of a previous post. How can this not drive rents down?
Since we peaked way too high does that mean we’ll bottom unreasonably low?
In the new home builder area it looks like Centex, DR Horton and KB Homes are serious about selling.
Paul
Speaking of Developer fiascos, In December 08 someone purchased 80 finished lots off Mt Rose Hwy. formerly owned by Reynen and Bardis, from Colonial Bank, the lender that aquired the property from R&B through foreclosure. $4,050,000 for 80 FINISHED lots or $50,625 per finished lot. That’s a deal for that area. If they can build for $80 – 100 PSF they have a viable project right now.
gobagheera
Paul, what size are those 80 finished lots on Mt. Rose? If they’re 1+ acres, it probably was a good deal, but if they’re not, I would think they’d have a hard time breaking even. A 2500sqft home at $80psf build would be around $250k w/ lot costs. Add in marketing, sales staff, sales office, etc, etc, etc, and I think they’d have a tough time competing against REOs and realistic home sellers on the market. And I know Montreux is right there, but Mt. Rose seems like a really inconvenient location. We live in Reno and one of my major pluses to it is having a very short commute to get to major areas of town (airport, downtown, restaurants, stores).
On the commercial side, I’m looking forward to the grand opening of Legends at Sparks tomorrow. I really hope it will work out, but my logic tells me the odds of it being a success is stacked highly against it.
Sean
Highland Place, a small development across from mcqueen high school had a notice of sale put on it earlier this week for almost $3 million. This was financed by Colonial Bank which is another bank that may be going under soon(they, like Corus had a lot of loans in florida and are getting hit hard)
BanteringBear
“Highland Place, a small development across from mcqueen high school had a notice of sale put on it earlier this week for almost $3 million.”
Are these the houses directly across from McQueen? The hideous eyesores in which the builder put SOLD signs in more than 50% of each house’s window’s years ago? The same signs which are STILL there? This practice should be illegal. Isn’t that fraud? Why is it OK for these greedy dirtballs to lie to and mislead potential buyers, by misrepresenting the truth?
Perry
I’m pretty sure the builder of Highland Place is also the same builder that constructed the Extreme Makeover house in Silver Springs.
Tom
GoBag, it might be that those R & B lots are the graded lots on the south side of MRH, adjacent to the Estates at Mt. Rose community. That was to be the next phase of that project. Those are nice flat lots, some are an acre, and some back up to the public open space alongside the trail and the creek. I would love to have a home on one of those. You don’t hear the highway traffic from that side, because a rise alongside the highway serves as a natural noise-blocking berm. If any builder is offering something over there, and one of the regulars here hears of it, please post a heads-up. Thanks.
Tom
Actually they are on the other side of the road, sorry for any confusion
Worried Guy
Word to the wise…Always check out those FEMA Flood maps when looking at those properties in and around South Suburban and Southwest Suburban near Mt. Rose Highway. Some of the areas have some issues there near Galena, Thomas and Whites Creeks.
GreenNV
Great point about the FEMA flood plain zones – they show up in a lot of unexpected places. The 2009 revised zones are on the Reno mapserver under Property Map.
Highland Place is complicated by the fact that the original development and financing was for an assisted living building. What a butt ugly project! Beazer Sacramento style 3 stories with 3′ side setbacks. We ought to plow this one under and plant corn, except a few people actually bought here.
Down the hill at Sharlands and Mae Anne is the former D R Horton Villa Toscana project, 280 triplexes based on their Esplanade project. Horton bought it for $13,000,000 and tabled the project literally on the day slabs were to be poured. Previous owner paid $2.75M. It has just been listed at an undisclosed price.
McCarran. McCarran. McCarran. I’ve got it now!
Landmark Homes is in BK. They were going to be the master developer of about 1600 homes SW of Boomtown. That whole mess is tied up in the courts.
The big money in development isn’t in selling houses; it is in entitling the land.
BanteringBear
“The big money in development isn’t in selling houses; it is in entitling the land.”
Ain’t that the truth. The bubble was in land, not houses. Land prices are in a free fall. In certain instances, you can’t even give it away. Some of the prices people are still asking for raw land or building lots are hysterical. There are precious few people who can shell out hundreds of thousands of dollars simply for the ‘opportunity’ to develop the parcel.
Paul
I believe that they (the former Mt Rose Estate lots on the north side of SR 431) are all about 1 acre each. Tom if you’re interested I have seven 5-acre lots on a hill above Fawn Lane. I want to do a type of desert contemporary development when the dust clears.
KingBud
That’s too bad about Belsera. A couple years ago I looked at houses there. Pricing was 900K and up. Homes themselves are pretty nice, Tuscan style. Wine cellars, home theaters, very stylish. Nice views due to the elevation the development is built on.
But why pay 900K+ for a home that’s sitting right on the street curb (even in a gated community) and where you can open your window and shake your next-door neighbor’s hand ?? And it’s not like there’s other amenities in the community there like a country club.
Pricing in the 500K area is more reasonable, and I think at those price levels the remaining homes will get purchased.
billddrummer
To KingBud,
One wonders, though, whether purchasers of partially completed housing will have to get construction financing to finish the homes.
It’s my understanding that the former R & B project in Sparks that was taken back by Nevada State Bank last year (100+ lots and 4 uncompleted homes)required that anyone interested in the uncompleted houses had to qualify for construction financing, because the bank wasn’t interested in completing the houses.
And don’t forget that you’ll need a lien-free endorsement from title before you close, which could be sticky, since the project is part of the bankruptcy estate. I don’t know who the trustee is, but that’s where you’ll need to start, in my opinion.
billddrummer
And to Perry,
There’s plenty of precendent for bubbles overcorrecting to the downside after popping (Great Depression, dot-com, Enron energy contracts), and the real estate bubble is no different. When you see sale prices reminiscent of 30 years ago (in today’s massively depreciated dollars) it’s sobering, and a testament to the overshoot that characterizes bubbles deflating.
But until distressed sales cease to dominate the landscape, and fewer distressed properties enter the sale pipeline than emerge through closings, medians will continue to drop–perhaps not as dramatically as we’ve seen, but drop nonetheless.
Now, the ratio of distressed closings fell from 78% in March to 71% in May–a positive trend, but nowhere near the sub-50% rate you’d like to see. And in previous years, even prebubble, distressed sales were miniscule in comparison to the broader market, along the order of 10-15%.
So we still have a ways to go before a ‘bottom’ can be called. It’s in sight, but I look at it as descending to the ground from a plane. You can start to see detail on the ground, but you’re still thousands of feet up from landing.
We’re not close to landing yet.
Gunther
Here is the deal on the Mt.Rose estates lots for those of you who do not already know: Colonial Bank officially took back the project at the end of last year. There had been several interested parties but the main controller from Colonial Bank (not local) stepped in and took an amazingly low offer at $4,050,000 on Dec 30th from Tim Lewis (I don’t believe he is related to Lewis Homes) even though there were other offers, that did not get looked at, rumored at double of that. The project includes the 80 finished lots on the north side as well as 12 completed or partially completed homes on the south side of Hwy 431. These lots are all greater than 1 acre. Along with the cost of improvements to complete the remaining houses and appropriate pricing to sell in today’s market, the buyer, TL, essentially owns the remaning land free and clear.
Tom
Gunther, on another Reno real estate blogsite, I have also read about the sale of those lots and the partially finished houses at Estates at Mount Rose. The buyer’s entity is reportedly Tim Lewis Communities, apparently headquartered in the Sacramento area. It seems they have or had at one time taken steps to sell some of the partially completed homes. I do not know what is happening with the large flat lots north of the highway and which back up to White’s Creek, but I like that side of the highway and the usability of those lots. If anyone hears of homes being built on those, I would appreciate a head’s up. Thank you.
BanteringBear
I’m actually quite disgusted by a lot of that development on the Mt. Rose highway. Urban sprawl has ruined the very area I used to hike with my dog. Long, long ago I used to park in a dirt area near Thomas Creek Rd, and we’d take off from there. Now, though I haven’t been there in a few years, there are houses and developments sprouting up everywhere. It seems that Washoe County is hell bent on developing the very little area of beautiful forest on it’s western edge. Sickening.
GreenNV
The old 210 lot R & B Callamont (Terrasante) project is back on the market for $7,500,000. Purchased for $27,500,000 in February 2005 ($18,684,200 land, $8,815,800 water rights) and financed with a $16,500,000 loan, it went back to the bank in April for $12,274,000. I think another $10M improvement loan also got wiped out.
That’s right, it is selling for less than the cost of the water four years ago. Land, less than zero.
Tom
Bear, I understand the feeling. I used to ride my horse in the Chatsworth hills of northwestern Los Angeles, an area now filled in with S & S Construction’s housing tracts–very dense housings. But nothing lasts forever, and as to those former R & B lots, isn’t it better to allow building on 1+ acre lots rather than pump up the density to four or five small houses on each of those lots? I think if something is going to be developed over there, the less density the better. Less traffic, water and power needs, less burden on schools, less noise. Understand, though, that I am prejudiced–I would like to live in that area.
Sean
Looks like notice of sales are accelerating and bringing out some of that shadow inventory. Just today there were over 60 NOS filed(432 so far for the month)
DownButNotOut
“I’m actually quite disgusted by a lot of that development on the Mt. Rose highway. Urban sprawl has ruined the very area I used to hike with my dog. Long, long ago I used to park in a dirt area near Thomas Creek Rd, and we’d take off from there”
BB -I hear this a lot where I live – if you hike a ridge for the last few years or picnic on an open meadow, people seem to feel entitled to continue this use – despite the fact these areas are privately owned and you’ve been fortunate enough to use them for free.
Buy the property and you can turn it into a dog park or a dirt bike track. But to lament the owners for building on their private properties is wrong. Just as I’m sure you’d agree if it was your property. As Tom points out, in this case it could be a lot worse if the lot’s were smaller.
Reno Ignoramus
Last month, there were 210 trustee’s deeds recorded for the whole month. Through the 16th of this month, there have been 222.
As for land values, about 3-4 months ago, I sent Guy an article from the LV Sun about lots in LV selling for less than the cost of improvements. In other words, raw land being worth zero. It is also going to happen here. I believe that unimproved lots in Reno being worth nothing, at least in the sense of there being no buyer willing to pay anything for them, will be become unremarkable as we move forward.
big baby
tissues are on sale at costco BB
Tom
(off-topic note)
Hey there, locals, did you know this?
Rock guitarist and golden oldies singer Dick Dale of the original Del-Tones will perform tonight at the Nugget! Now there is a reason to drive out to Sparks!
I know, those surfer songs are too far Back in the Day for most of you. But still, you are fortunate to have unusual shows like that available nearby.
billddrummer
Sparks Nugget, home of the C list performers!
But seriously, it is nice to see that the players from the early 60s can still find work.
Back on topic, I’ve seen land appraisals here (proprietary) fall by as much as 90% from 2 years ago.
It’s even worse in outlying areas (Fernley, Dayton).
So if you’ve got land, keep it.
If you want to buy some, it’s cheap.
CommercialLender
Sudden uptick in NOS and Trustee sales: is this due to the end of the spring buying season and banks are trying to dump inventory before the seasonal buying boom ends? Or, have the banks suddenly gotten the message, or did they finally staff up their REO departments?
This is not due to the end of the foreclosure moratorium (ia?), I don’t think.
****
Another topic, just talked with a friend who owns a single family mortgage operation, a broker. Says if not for FHA, he’d be fairly much out of business. He’s done VERY well over the last 7 years, but is now talking of folding up shop. Scary. The market has moved to direct lending only and once the market destroys the broker model, there’ll be a lot less competition and therefore rates will increase and loan underwriting will tighten. This does not sound like a recipe for increased lending at crazy terms that MUST happen in order for housing values to increase at any decent rate.
BanteringBear
Tom asks:
“…isn’t it better to allow building on 1+ acre lots rather than pump up the density to four or five small houses on each of those lots?”
Personally, I am partial to large lots as I appreciate space, and privacy. However, I would have liked to see, long ago, much of that land in the Mt. Rose corridor protected and preserved for public use, and wildlife. Some opportunities missed, that’s for sure.
Downer posted:
“BB -I hear this a lot where I live – if you hike a ridge for the last few years or picnic on an open meadow, people seem to feel entitled to continue this use – despite the fact these areas are privately owned and you’ve been fortunate enough to use them for free.”
Wow, it seems you’re under the impression that all land was created private. In your world, there must be no such thing as land auctions, let alone zoning laws, or entitlements. You have absolutely no clue what you’re talking about. You don’t even live in Reno, or know where I used to hike (I never even went into detail), but made false assumptions with absolutely zero knowledge. How foolish of you. Know the subject matter before you open your pie hole.
Furthermore, you’ve gone out of your way on more than one occasion to announce that you don’t read my posts. While I never believed that for a second (for obvious reasons), you should try to at least practice what you preach.
billddrummer
To CL,
I think it’s a function of all the things you mentioned. Banks are finally staffed up to handle the massive number of defaults, they don’t want to keep the properties on the books any longer than necessary, and are getting tired of booking expenses to maintain the properties so that some value can be preserved.
I, like you, think the moratoria on forclosures ended in February/March, so this uptick isn’t related.
On your other comment regarding the death of the mortgage broker: Less competition means higher prices for consumers. It’s a shame, and as you rightly point out, will lead to higher rates, fees and (even) tighter underwriting standards.
Not a compelling argument for a rebound in housing.
geopower
Tom said :”isn’t it better to allow building on 1+ acre lots rather than pump up the density to four or five small houses on each of those lots? I think if something is going to be developed over there, the less density the better. Less traffic, water and power needs, less burden on schools, less noise.”
While this might seem to be the case intuitively, low density housing in fact produces a much higher impact in terms of utility and service costs for the city. Consider that the amount of housing necessary is dependent on the number of people living in the area (now that speculation by absentee landlords seems to be declining with their retirement savings.) Those same number of people can either live closer together or spread out. Spreading out requires more pipelines, more roads, more miles driven to get places and thus more traffic. Kids have to be driven to schools instead of walking or riding bikes. In the absence of a deliberate move by the city to institute an Urban Growth Boundary or similar, people will just keep building outward at the edges instead of infilling the vacant lots within the city that already have roads and utilities. What you are saying when you say that big lots protect an area from traffic, noise, crowded schools, etc. is that that burden gets shifted elsewhere within the city.
I’m not trying to say big lots are evil- I like my space and privacy as much as the next guy- but don’t try to justify them as better for the city. They’re a luxury, one that many of us aspire to, but with a cost.
Tom
Geo, with that type of argument–perhaps logical from the viewpoint of the region seen as a whole –the Los Angeles County Supervisors and City Councilmen are increasing density here, allowing large apartment buildings to be built on land not previously so zoned, and making single family living on large lots soon to become a relic from the past, in many areas. The justification is making room for the ever-growing population, which in actually amounts to a redistribution of resources to empower higher density living. The better alternative would be to discourage higher density living. We don’t have a water scarcity problem, we have a density and water reallocation problem.
DownButNot Out
BB – once again you let the facts get in the way with your preconceived notion of what’s right.I wrote:
“BB-I hear this a lot where I live – if you hike a ridge for the last few years or picnic on an open meadow, people seem to feel entitled to continue this use – despite the fact these areas are privately owned and you’ve been fortunate enough to use them for free.” That is what’s called my experience and opinion with this type of usage. Not false assumptions on where you may have hiked.
As to owning in Reno – so that is now a prerequisite to writing in??? My son goes to UNR, and we have a deposit on property there.I’m a season ticket holder to the Aces.I have a business in Carson City and for years we have looking to relocate to Reno on a permanent basis. That’s opening ‘my pie hole’?
Lastly, anyone that reads me knows I read your posts. Are you just getting this?
BanteringBear
Downer posted:
“BB-I hear this a lot where I live – if you hike a ridge for the last few years or picnic on an open meadow, people seem to feel entitled to continue this use – despite the fact these areas are privately owned and you’ve been fortunate enough to use them for free.”
It’s quite clear what you meant. You were assuming I was using private lands as my own, while you had absolutely no idea what you were talking about. It’s spelled out for the whole world to see. Alas, it’s the same old story with you, Downer. Spout a bunch of nonsense, then try to separate yourself from what you said. Where’s your spine?
CommercialLender
Good God, BB, give it a rest, who freakin’ cares?! Some lament open space, some lament simpler lives back in the 50’s, some lament [fill in personal opinion here] — all a matter of personal opinion, not reason to jump all over people. This blog is so much more informative when the personal jabs are left off.
Fact is, for years and years now, like it or not, builders built crammed, overcrowed communities on ever smaller lots and heretofore sold them. Now, well, we will see if the next real estate cycle produces 3′ set backs or larger lots.
Happy Father’s Day weekend, all.
billddrummer
The new NOD list came out today, $36.8 million in default notices filed on 139 properties. The largest one is a $1.5 million deed on the Econolodge at the corner of 6th and Wells.
It sold for $3.1 million in 2006. Perhaps this is the first of the interest-only deals that were set to fully amortize or reset after 3 years.
More to come.
BanteringBear
CommercialLender:
If you don’t like it, gloss over it. This guy’s had a hard on for me ever since he showed up on the blog. I’ll continue to call him out on his BS. Happy Father’s Day!
billddrummer
More on the EconoLodge:
There’s a $957,000 second behind the first that’s in default, in favor of the SBA.
GreenNV
The Village Shopping Center at California and Keystone (Booth) got a $6,650,000 NOD today. WFB financed 100% of the 9/06 purchase price. The center does not include the Long’s / CVS, which is corporately owned. Previous sales of $5,850,000 in 11/04 (I think these folks did the exterior upgrade) and $2,200,000 11/97. Looks like they may have to bump the rent on the Saturday Farmer’s Market.
For you IV folks, Campbell Court (851, 855 and 857 College Drive APNs 124-082-16,17,18) received a $4,876,089 NOD. These are 3 brand spanking new spec houses. Any comments on the properties?
BanteringBear
“The Village Shopping Center at California and Keystone (Booth) got a $6,650,000 NOD today. WFB financed 100% of the 9/06 purchase price.”
So, Wells Fargo went all in on The Village? HAHAHA! Coincidentally, Wells Fargo did NOT pay back the TARP, yet they were long considered one of the healthier banks. I do understand, though, that paying back the TARP is probably just a temporary move so that the greedy pukes can get raises and pay massive bonuses, then jump back on the government teat. I’ve been voicing my opinion liberally and rather loudly that the banks who pay back those funds should be disqualified from any further assistance. Should they come crying back when the situation turns out “worse than expected”, I’ll be the first one to grab a pitchfork.
Are there still people who honestly believe that this crisis is waning? Residential defaults in Washoe County are at record levels, and now the commercial defaults are really picking up steam. Reno is getting absolutely throttled, and the situation is worsening.
smarten
Wow GreenNV, I had no idea that the three new homes on Campbell Court received a $4,876,089 NOD. No idea why they were built in the first place – geographically undesireable [no views, no golf, no privacy, no location, location, location] on relatively small lots yet listed for in excess of $2M/each. Good luck!
They’re located across the street from another questionable development; Incline Creek Estates or “ICE” as they’re disaffectionately referred to. $1M+ PUDs that are going nowhere.
As I’ve said before, a whole heck of a lot of inventory but considering its pricing, it’s by-and-large all crap.
FutureRenoHomeBuyer
BB,
Hope you are right. Hope to buy our dream home in Reno in the next year or two. Hope to pick up a $650k+ “bubble price” home for $300K or less. I wish no pain or hardship on homeowners facing foreclosure. If capitalism is to be allowed to work, however, many will have to face the consequences of unfortunate financial decisions in 2006 and earlier. FWIW.