You’ll see in the chart below that August’s number of NOD’s have jumped back up to erase any question about July’s surprising drop. As my contact at Ticor expressed last month “notice of default stats for July was a fluke.” In fact, at 1,067 NODs filed for August (btw, that’s over 50 per business day!), this number may represent a slight over correction.
At any rate with the new $50 additional recording fee imposed for Notices of Default (see New Foreclosure Procedures), the county may have identified a new source of revenue – an extra $53,350 in recording fees generated in August alone.
Refi’s took another big drop in August. Down 27% from July’s refi’s and off 39% from June’s number of recorded refi’s. However, August refi’s still outpaced last year’s August refi’s by 35%.
Both Resales as well as new home sales remained absolutely flat month-over-month with 637 resales and 78 new home sales recorded in Washoe County for the month of August.
As always thank you to our friends at Ticor Title for these charts.
click on the charts below to enlarge
ursula
50 a day? Incredible!
CommercialLender
Looking at the 2nd chart, you’ll note each August/Sept is the pinnacle or start of decline of both existing sales and new sales. This year was no exception, but this spring the gov’t propped the market via low rates and homebuyer tax credits. Therefore, it may be poised for an even bigger drop this fall/winter. I’m with Carole on the ‘September’ post that these reductions in values via REO’s, et.al. are what the market needs to correct itself, but ouch will it be painful this winter. This chart is likely to drop dramatically.
With ‘new’ sales such as they are, I’m not surprised Silverwing and others are fire-selling units. Let’s see if they actually take the offers at ‘auction’.
billdddrummer
To CL and Ursula,
The Silverwing website said that the units were previously $293,000.
I don’t know how many people bought at those prices, but there were a fair number of nice cars in the condo section of the development (as opposed to the rental section). I realize a nice car in the driveway can mask a financial train wreck in the living room, but at the peak of the boom, nearly anything was possible.
In addition, there were 327 TDs filed during the month of August (16 a day). If NOD volume holds through the end of the year, and the 3:1 ratio stays intact, there will be another 1000+ homes in REO inventory by 12/31.
And with 220 bank-owned homes sold in August, it looks like that inventory is still rising, not falling, to the tune of more than 100 homes/month.
I wouldn’t want to be a seller from now until next spring.
Sully
Guy, no matter which chart you click on, you get the bottom one! Can this be fixed.
Guy Johnson
Sully,
Ooops. Thank you for bringing it to my attention.
I have now corrected it.
– Guy
SmartMoney
Looking at the August NOD’s, it looks like when all is said and done this bubble will end like all bubbles – that is with prices well below fair value. Feel sorry for all those that bought in the spring of 2009.
billdddrummer
To SmartMoney,
I feel sorrier for those who bought in the spring of 2005.
SmartMoney
Very true billdddrummer. It just seems as if there was a lot of “bottom fishing” in the spring of ’09.
Reno Ignoramus
Guy, I believe that the new $50 fee that has been tacked onto the fee to record a NOD is specifically earmarked for the foreclosure mediation program. The county does not get to keep that money.
The foreclosure mediation program is going to generate quite literally, between Washoe and Clark counties, over a $1 million in just a few months time. We are witnessing the birth of a new government bureaucracy, right before our eyes.
Guy Johnson
Good point, R.I. Thanks for clarifying.
john
feel sorry for those who bought in spring 09′?
please give me a break we can’t all be prefect bottom callers like you douchebags..
besides I’m willing to bet many of those buyers are first time buyers with plans to stay in the home for a very long time..
spring 2009 is a hell of a lot better than spring 2005!
Grand Wazoo
As a Certified DoucheBag (just ask my bidness associates) who moved here at the height of the bubble and did not buy a house, let me tell you Sir that I take great exception at being lumped in with all the douchebags that did!
CommercialLender
Wazoo,
John = Apple = Derrick = et.al. = the total jackass who’s harrassed everyone on this blog for way too long. Best to ignore.
Grand Wazoo
CL – I know, hence my snarky response.
You didn’t take my post seriously, did you?!?
🙂
WorriedGuy
Hey John,
Just another 50% decline to go into Q3-2011
Homes in Reno are still way overvalued relative to income-savings. And yes that is relevant as the debt bubble is shutting down.
Enjoy the ride!
DonC
Monthly unit sales may be flat, but if you look at a 3-4 month average, the number of sales hasn’t been this high since 2006. Obviously some of the inventory is being absorbed. The question would be whether the increased absorption rate is sufficient given the supply. The answer would have to be negative.
Given that the next wave(s) of foreclosures should involve option arms and higher priced homes, the “average selling” price may go up. Seems like the lower end of the market has bottomed. No?
Finally, buying this spring or now doesn’t seem crazy. It’s difficult to time a market, and given how site specific real estate is, perhaps impossible — you can get a bad deal or a good deal on a house anytime.
The contraction is over and the debate now is the shape of the recovery — V or U or something else. I don’t have a crystal ball, but I’m becoming convinced we may get a surprise on the upside because of severe inventory shortage and the recovery may be V shaped. That view is not consensus, which is more for a wide U shaped recovery.
Having said this, commercial real estate still has a long way to go. My impression is that this area is still quite the mess.
WorriedGuy
Have to disagree. We are not even close to the bottom of this debt contraction. Did you see the consumer credit numbers last week?
billdddrummer
With respect to volume:
It will be interesting to see whether volume falls off a cliff when the tax credit expires.
With respect to credit contraction:
People don’t seem to have an appetite for borrowing, and are content to pay down what debt they do have. Although home equity loan totals seem to be replacing credit cards in people’s balance sheets. (That is, for those who got HECLs before values crashed.) For the others, it’s holding to the status quo. Job uncertainty and rising unemployment are primary factors in consumer caution, I think.
With respect to inventory:
Shadow inventory is an unknown, and there are still many thousands of properties on the MLS that have almost no chance of selling this year. When there are over 3 years of listings in the $500,000+ range, you know there’s a problem. And that’s just on the properties on the MLS. I believe there are another 2,000 units floating around out there that no one has counted yet.
bob c
fellow persons,
i’ve only been following reno real estate for
a few weeks to familiarize myself for when i
can actually move there and check the galena forest listings daily—–stuff is moving there
blue gulch road went today—one on joy lake road
a few days ago and one in st james went, also
the cottage in montreux will sell soon
my take: the low end of the super desirable areas
are moving (there is only one forest in reno)
the generic mcmansion might still be tough to sell, but its value relative to the best neighborhoods may be more compelling
bob c
the zillow comps from march-april 2009 appear fire
sale lows (stock market crash spillover)
are we looking at the same data on the high end
property? or maybe its just the galena area
Sully
bob c; have you actually been to Reno?
bob c
many times, but never looked at real estate
or even thought about it when there (most
of my family lives there)—i can see the trend
in guy’s stats (thats concrete) and the
overhang of the unresolved montage (et al)
issues…….it just seems from numerical basis
that galena area is holding up (thats the area
i’m interested in)
if you wanted a galena property..what would be your approach?
WorriedGuy
Bob C,
The home on Joy Lake Rd. is still active and is a mess by the way. The home on Blue Gulch needed some work done to finish off the remodel. A lot of the frenzy going on in the last few weeks is folks trying to catch the tax credit and FHA madness. The solution is to use the same methodology of bogus loans once again. This will only exacerbate the foreclosure spiral in the long term. I was hoping for 2011 to be the real bottom, but now maybe 2013 thanks to this imbecile policies of the Feds.
bob c
so 425 was ‘too high’ for blue spruce
and 333K on joy lake 6 months ago was a fire sale
as well as the 420 on austrian pine
the new listing on joy lake at 420K reflects
the percieved pricing strength of this mine rebound
is it fair for me to say that galena has had a rebound—however short lived it may be and that
the ‘fire sale’ is delayed?
that galena may be defying the trend and it would be wise to look elsewhere for a bargain?
any other areas that you would recommend that
are in neighborhoods on the upswing—-my premise
is that the mid priced tract homes will become
decaying neighborhoods and too be avoided at
any cost
Sully
bob c; not sure what you call mid priced tract homes. But there are several areas in Sparks I found to be nice. Wingfield Springs, Vineyard are two examples. They both have HOA’s.
For the most part I agree with your assessment that mid priced tract homes will become decaying. I have noticed several, but then again I have seen others that seem to be holding up nicely – even without an HOA.
I would guess you need to look around, most realtors will steer you in the right direction (Guy for example); so next time you come up give him a call. 🙂
MikeZ
Just another 50% decline to go into Q3-2011
Impossible.
WorriedGuy
How is that impossible? Today’s FHA loans are now going to add to defaults going forward. Nothing has been done to stop the process of bogus loans that resulted in this mess in the first place. Now, they are just adding to the future stock of future foreclosures. Bottom probably won’t be reached ’til about 2103 due to these misguided ‘quick fix’ policies. The market needs to cleanse itself out of the debt and overstock of inventory. Prices need to meet incomes, which has not occurred yet.
GratefulD_420
bob C –
You are wrong in your claim that Galena Forest has been immune or “defying the trend.” Galena Forest has been decimated throughout this whole downturn. They were once selling undeveloped lots for $420k+ / acre. Now you can purchase one of the smaller less quality homes on an acre for $400+k. Larger quality homes for $500 to $600k.
You are correct though about Galena’s uniqueness in Reno. If you want to live in the Sierra’s and feel like your in the Tahoe forested mountains.. Galena is the closest and only place in Reno to do it. So you will have to pay more per sq ft and quality than you would get in a Reno track home… but you are paying for the forest, streams and prestige. If you just want more house.. then buy one of the S Meadows, Toll Brother homes originally listed @ $800k now at ~ $470k.
p.s. – I can’t wait to see if one of the two St James short sales listed at $499k actual are approved and closed. That will set some new standards!
billdddrummer
People forget that FHA has been around as a first-time homebuyer option since the 1940s. The low down and non-credit scored underwriting was perfect for first timers with limited savings but steady income. (My first home loan was an FHA deal, and I refinanced out of it 4 years later to get out of the PMI.)
The problem I see with FHA loans now is that the stigma of defaulting on your mortgage isn’t the same now as it was a generation ago. Back then, people would do almost anything to keep up with the mortgage. Now, just walking away is a viable option.
As in the past, the primary reasons people default are ones that have always been the primary reasons: Illness, divorce or separation, or loss of income. Now, with unemployment rising and spotty healthcare coverage, financial stress is rising among families, no matter who they are, no matter what economic strata they’re in. Add in the lack of remorse for a borrower who elects to walk rather than tough it out, and you will get higher defaults.
I’m not pointing fingers at people who choose the ‘jingle mail’ route. As I’ve commented before, the sharp pencil of budgeting sometimes trumps the desire to take the moral high ground.
But before painting all FHA borrowers with the ‘potential defaulter’ brush, consider what I see happening every day.