You can tell I do crosswords. No one else would use that word, ever.
Believe it or not, resale REO units are moving at the GSR. 1774 was originally $258,062 and went for $39,000. 1880 was originally $227,296 and went for $30,000. 2337 was originally $261,538 and went for $25,000. 2461 was originally $359,545 and went for $37,000. I don’t get the game plan here. With all the fees and assessments, it looks like the units have significant negative value.
2 of the Toscano townhouses on Dickerson have also sold. 1960 went for $155,000 and 1970 for $150,000. These were originally in the $395-$425 range, and are an interesting and scary comp for the Lofts on Holcomb.
The RGJ runs an article about Sparks’ reluctance to annex property significantly east of their current municipal boundary in the canyon the same day the developer gets hits with a $15M NOS. Dumb luck or research? Remember, it’s Sparks…….
Silver Creek Apartments Condominiums in the northwest are becoming the new Smithridge. The original $225K units are now selling in the $90s and below. The speculators are giving way to investors, because these cash flow at the new selling prices. Fleur de Lis, Tanamara, and Falling Leaf are also experiencing increases REO sales at whopping decreases.
Are there any developer model homes NOT for sale right now? It is a sign that they don’t plan to build these kind of homes again, and are moving on to a new business model. There are some stellar deals to be had if you want to be the proud owner of the last of the McMansions. But laminate is the new granite! Be wise.
If you like good sourdough, make sure to check out the new outpost of Raymond’s on North Virginia between 2nd and 3rd. They asked me if I could wait 10 minutes so that they could finish off a fresh baguette for me. The ride home the with that aroma filling the car was pure blissful torture.
941 is the tax code for Quarterly Employee Tax Withholdings. If I were working for one Incline/Reno real estate agency, I’d have a lot of questions for my employer about the IRS tax liens for nonpayment of Q4 2008 and Q1 2009 employee withholding taxes.
Grand Wazoo
“941 is the tax code for Quarterly Employee Tax Withholdings. If I were working for one Incline/Reno real estate agency, I’d have a lot of questions for my employer about the IRS tax liens for nonpayment of Q4 2008 and Q1 2009 employee withholding taxes.”
Another Hall of Fame entry. Mike, when the Reno RE meltdown is all said in done sometime in 2018, we’re going to have to build a bigger building just for your contribution.
Fantastic!
Reno Ignoramus
2018?
Wazoo, you have always been quite the optimist haven’t you?
Grand Wazoo
“Delayed Foreclosures Stalk Market”
From todays WSJ. I guess the new RE editor at the RGJ didn’t catch this phenom:
Debra and Arthur Scriven were served notice in June 2008 that their mortgage lender, a unit of Citigroup Inc., was preparing to foreclose on their home. Fifteen months later, the Scrivens are still in their home near Columbia, S.C., and battling to stay there, even though a dispute with the lender over how much they owe prompted them to stop making regular payments last year.
Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. While that buys time for families to work out their problems, some analysts believe the delays are prolonging the mortgage crisis and creating a growing “shadow” inventory of pent-up supply that will eventually hit the market.
The size of this shadow inventory is a source of concern and debate among real-estate agents and analysts who worry that when the supply is unleashed, it could interrupt the budding housing recovery and ignite a new wave of stress in the housing market.
“There’s going to be a flood [of bank-owned homes] listed for sale at some point,” says John Burns, a real-estate consultant based in Irvine, Calif. When that happens, Mr. Burns believes, home prices will fall further, particularly in markets with large numbers of foreclosures. Overall, he expects home prices to decline 6% next year.
Ivy Zelman, chief executive of Zelman & Associates, a research firm based in Cleveland, believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble “a fire hose or a garden hose or a drip,” she says.
Analysts who track the shadow market have focused primarily on the gap between the number of seriously delinquent loans and the number of foreclosed homes for sale by mortgage companies. A loan is considered seriously delinquent, which typically means it is headed to foreclosure, if it is 90 days or more past due.
As of July, mortgage companies hadn’t begun the foreclosure process on 1.2 million loans that were at least 90 days past due, according to estimates prepared for The Wall Street Journal by LPS Applied Analytics, which collects and analyzes mortgage data. An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn’t yet acquired the property. The figures don’t include home-equity loans and other second mortgages
Moreover, there were 217,000 loans in July where the borrower hadn’t made a payment in at least a year but the lender hadn’t begun the foreclosure process. In other words, 17% of home mortgages that are at least 12 months overdue aren’t in foreclosure, up from 8% a year earlier.
Some borrowers may be able to catch up on their payments or receive a loan modification that helps them keep their home. There has also been an increase in short-sales, transactions in which at-risk borrowers sell their homes for less than the loan amount, with the lender’s approval. In some cases, lenders have decided not to foreclose because the home’s value is so low. These factors could mean fewer foreclosures.
Foreclosed homes are partly responsible for the recent increase in home sales. But foreclosures also push down home values. According to Collateral Analytics, a housing research firm, homes that have been foreclosed on typically sell at a 10% to 50% discount.
For now, the delays have led to what is probably a temporary drop in the supply of bank-owned homes in California and other places where investors and first-time home buyers have been competing for bargains. In Orange County, Calif., the number of bank-owned homes listed for sale dropped to 322 in early September from 1,404 in November 2008, according to Altera Real Estate.
But the number of foreclosures is expected to increase in the fourth quarter as mortgage-servicing companies determine who is eligible for a loan modification and who isn’t. “We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running” for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to “abnormally low” levels in response to government efforts to stem foreclosures, she adds.
For the Scrivens, legal battles have complicated the process. Ms. Scrivens says Citigroup recently offered to modify their loan, but she and her husband rejected the offer because they objected to some of the conditions. A hearing on the foreclosure case is scheduled for Wednesday in a Kershaw County, S.C., court.
Citing customer privacy, a Citigroup spokesman declined to comment specifically on the Scrivens situation. “Our priority goal is to keep distressed borrowers in their homes and out of foreclosure, when possible,” he said.
Reno Ignoramus
I think we have shadow inventory and shadow-shadow inventory.
Shadow inventory is all the houses that the debtowners are in default on, but upon which the bank has yet to record the NOD. I think by now we all know somebody who stop paying the mortgage many months ago and still has had no NOD.
Shadow-shadow inventory are the houses that have had a NOD recorded, have not had the NOD cancelled, but are lost somewhere in the process and yet to show up as a TD. I estimate there are about 6,000 of these properties in Washoe County right now.
I suppose only the Shadow knows how much shadow and shadow-shadow inventory there is out there. Could be more than 10,000 properties just here in River City.
The future of the housing market hangs in the balance of what ultimatley becomes of all these properties.
Karen
I work at a small business here in Reno. One woman bought a house in 2007 with nothing down and is now about $150K upside down. Another man has a daughter who got married two years ago and who bought one of those Silvercreek condos. It is now worth about 40% of what she paid for it. Another man bought a house in Double Diamond in 2006 and is about $175K underwater. This is in an office of 7 people. As of today, all these people are still paying on their mortgages. But I notice more and more conversation now about maybe walking away. More and more uncertainity about whether it makes sense to continue to pay a mortgage on a house that will never get back to even.
If my little workplace is in any way representative of the larger picture, this real estate market could be in for some very serious turbulence in the months and years ahead.
Martin
So maybe there is a third category of shadow-shadow-shadow inventory?
These would be the people what are still paying their mortgage even though they are hundreds of thousand of dollars upside down, and may decide at some point that it makes more sense to just mail in the keys.
CommercialLender
There’s the shadow-shadow-shadow-shadow-inventory (4), too. That’s the REOs already foreclosed on but not on MLS. Then there’s the shadow-shadow-shadow-shadow-shadow-inventory (5)as well, that’s the homes developers want/need to build but can’t until they have it pre-sold. Don’t forget the shadow-shadow-shadow-shadow-shadow-shadow-inventory (6). That’s the normal person like me who wants to sell, knows he cant, so is forced to sit it out until its again a normal market. Shadow-shadow-shadow-shadow-shadow-shadow-shadow-inventory (7) is all the investors who bought recently who have no plans to hold long term and will sell as soon as its advantageous. Shadow-shadow-shadow-shadow-shadow-shadow-shadow-shadow-inventory (8) is all the move up buyers who currently can’t but need/want to as soon as the time is right.
Hmmmmm
bob c
karen,
here in san jose,ca i think nearly every employee
at our company is having real estate troubles
they keep it as mum as possible and feel guilty
(some took out huge home equity loans of their
bubble equity)
my guesstimate:
5 OK owned longer term and didn’t pull out equity
5 out of their houses
10 inevitablely prob lose home, but hang in there
5 hopelessly underwater–in denial–working
out new terms with banks
so if i believe my own numbers, they indicate
the shadow-shadow-shadow phenomena
and i totally agree that there are those that
have equity and want to move, but “will wait
until market comes back”
sounds bleak…….but geez it seems there
is some substantial bottom fishing …..who
are the buyers? if one wasn’t to talk about
the real estate problems here in san jose;
you could not see any other evidence it exists
(there are few listings—is everyone waiting?)
inclinejj
941 is the tax code for Quarterly Employee Tax Withholdings. If I were working for one Incline/Reno real estate agency, I’d have a lot of questions for my employer about the IRS tax liens for nonpayment of Q4 2008 and Q1 2009 employee withholding taxes
Word on the street also is 941 guy/RE Company has been placed in NOD on the company headquarters bulding.
smarten
But IJJ, few at that firm [or any real estate firm for that matter] are “employees” subject to withholding. Most are indpendent contractors subject to their own estimated quarterly withholding.
And insofar as the San Jose residential real estate market is concerned, I hear it’s going gang busters at the low end. Now maybe it’s all that under $624K [or whatever the conforming loan amount maximum is for Santa Clara County] purchase money financing. Or maybe it’s the $8K first time homebuyer’s income tax credit. But I hear multiple offers are becomming the norm.
Oh CL. Remember when I was sharing the details of my Incline Village home purchase and I pointed to the similar home [but less square footage, older construction, not as high end, etc.] next store which was for sale for $400K more than my purchase price? Just after my purchase closed escrow, the sellers of that home were forced to drop their sales price by $200K. Then close to 60 days ago, those sellers found a buyer and the home went into escrow. I now understand from the listing agent that the sale is definitely going to go through – maybe by tomorrow but if not, definitely before the end of the month.
So I asked the agent what the sales price was going to be [knowing full well he wouldn’t tell me]? When he didn’t, I asked if it were going to be more or less than my sales price? His answer was “you’re going to be very happy” [I’m guessing $100K more].
If we measure market value by truly comparable [remember, there were only 10 Incline Village SFRs in August] sales, then…
I’ll keep you posted!
CommercialLender
Smarten,
Given how hard you worked to get the very best deal at that particular point in time, you would deserve the value pop that sale will bring you if it closes. Good luck!
billdddrummer
To CL,
There’s more. Shadow-shadow-shadow-shadow-shadow-shadow-shadow-shadow-shadow (9) for people who bought houses after the peak with an Option ARM (perhaps out of foreclosure in 2007), and watched helplessly as their value dropped but their payment rose after the teaser period ended. Now they can’t sell, can’t refinance, and can’t afford the new payment either.