Not that all the upper end properties in Incline Village are all starting to look like the lower end properties at Woodland Village, but the NODs this last week or so are worth mentioning:
– 517 Fairview went NOD on a $4,800,000 loan on a missed March 2008 payment. This is Reynen of R&B, so it has been tied up in BK court for a while.
– 951 Divot when NOD on a $4,100,000 loan with an October 2009 missed payment.
– 831 Lakeshore went NOD on a $2,400,000 loan with a October 2009 missed payment.
– 592 Dyer went NOD on a $1,00,000 loan. Sorry, no photo on the Assessor’s site. Purchased for $940,000 April 2003. Missed October 2009 payment.
– 361 Country Club went NOD on a $965,000 loan with an October 2009 missed payment.
Except for Reynen, these are real time new defaults in the over a Mil strata in Incline. I’m interested in what conclusions you readers will draw.
lurker
Looks like all the nice places in IV haven’t been snapped up yet! There’s still time for all those millionaires who thought they missed their chance.
Divot and Lakeshore look grand, but I could even be happy in the Country Club bungalow.
It’s encouraging that we’ve seen quick action by the banks on most of these. This market isn’t going to get healthy until the zombie homes are cleared and sold.
On the other hand, all these might just end up in the shadow inventory….
Rubinconer
The notion that Incline Village is immune to the economic forces that are enveloping the rest of the country is pure, unadulterated crap. The notion that somehow Incline Village, and the people who own properties there are different, or special, or somehow above it all, is pure unadulterated crap. This is only the beginning. Believe me, there are many more IV NODs about to come online. Everything, and I mean everything, in IV will be worth less in two years than it is today.
The bigger they are, the harder they fall. And they WILL fall.
smarten
I think all this demonstrates is IV is not immune from the economic forces affecting the residential housing market anywhere. The first three properties represent the upper end of the IV market; certainly way, way out of most of our price ranges [including me]. I find the property on Fairview interesting for two reasons. First, the engineer who designed it is the same engineer who designed our IV home. Stated differently, we have a very similarly appointed home with half the square footage; no elevator; not as commanding a Lake view; but purchased at 30% of the cost. Second, about 8 months ago the caretaker sold off [on craigslist] all of the designer furniture in the home. I was the lucky purchaser of the media room’s theater chairs. Very nice construction but it’s not worth $5M in this market [and it has been for sale for sometime at $5.25M].
Divot isn’t worth $4M+ either – another example of excessive overbuilding in a less than upscale location. The builder got caught in the melt down.
Lakeshore looks interesting in that it’s on the Lake side of the street [a great neighborhood]. I’ll have to drive by and see if it has Lake access but at $3M+ and a close to $3M loan…
The other two properties are “ho-hum” and underwater. They’re underwater because prices have already dropped markedly – in these cases to levels lower than the mortgages thereagainst. Examples of over-encumbering; nothing out of the ordinary for Reno/Sparks.
I don’t know what else to conclude from these NODs other than that these lenders aren’t giving their defaulting mortgagors much rope before filing NODs. Sorry, I certainly don’t conclude IV as a whole is finally starting to feel Sparks’ pain and massive NODs involving quality properties is just around the corner.
skeptical
“Sorry, I certainly don’t conclude IV as a whole is finally starting to feel Sparks’ pain and massive NODs involving quality properties is just around the corner.”
Kind of a dangling modifier there, but I take it you mean massive NODs in IV are NOT around the corner.
Well, the beautiful thing about it is that time will tell. I do know one thing — a certain regular on the blog called the bottom for IV in July 09. Obvious to everyone now that that was not it.
I guess if you call the bottom enough times, eventually you’ll be right.
smarten
I believe it was May of 2009 Skeptical. And it was for a strata of the market not represented by any of these NODs. And it was based upon conventional resales; not NODs.
So for example if Fairview goes to trustee’s sale; reverts to the senior lender; and is resold as a REO for let’s say $3.5M; the fact the amount owed under the mortgage in default totaled $5M, will be meaningless insofar as a market bottom is concerned.
And FWIW, last year roughly 16% of all conventional sales were REOs. Not exactly Reno/Sparks’ 75% figure. If/when we get to 75%, we’ll have something to talk about.
As I’ve commented before, one can’t call a market bottom nor top unless one defines his/her terms. I’ve defined mine. What’s your definition since it’s so “obvious” to you we’re not there?
BanteringBear
I wish I could short YOUR house, Smarten. I’d do it in a heartbeat.
skeptical
“…it was for a strata of the market not represented by any of these NODs. And it was based upon conventional resales; not NODs.”
…and it was for houses with brazilian cherry flooring, not walnut. And they had to have jacuzzi tubs, as well. And my bottom was only for houses with a lake view, or some claim thereof, with mature trees in the front and back yards. Also, the neighbors gotta be nice. Can’t have bad neighbors at the bottom of the market….
Seriously, Smarten, it’s great how you just cancel out NODs, as if they don’t count (especially ones that are resold at $1.5M discounts from remaining loan value.) Cool. Sure does make things easier when foreclosures have no effect on resales. That’s neat. You ought to be a real estate agent (apologies to the ethical agents out there).
So, what are my terms for calling the bottom? It will be that point in time when we look back at the data and see rising median sales prices, rising PPSF, and increasing demand. In other words, market price stability with improving economic conditions ahead. Might not happen for 10 years, or it might happen next year. Unfortunately, bottoms can only be seen in hindsight, otherwise everyone would be buying at that point.
(OBTW, Zillow lists IV PPSF at $327 in May 09 sloping continuously down to $268 in Dec 09 (except for small blip up in July). I hope all concerned can agree that that most certainly was not a bottom. If you disagree, I would like to sell you a few IV properties at May 09 prices, if you are interested….)
inclinejj
If you take a look at the lenders in IV-Crystal Bay over 1 million loan amount you see a lot of Washington Mutual.
Stated income loans. Easy cash out. Falling Values.
I ran a search of the loans in IV & Crystal Bay last year and came up with some interesting information.
The loan split was pretty close to 50-50% Fixed vs Adjustable.
With falling values and jumbo loans very hard to get(otherwise you have to qualify full documentation) I would expect to see more high end IV & Crystal Bay properties go into foreclosure this year and next..
Also when the Neg-Am loans start to adjust the higher end market might have serious problems
smarten
So Skeptical, first you agree with me that if you’re a prospective buyer looking to purchase in a specific price band, the median sales price and PPSF for the market as a whole is of limited relevance to you. And then you fall back on the same old garbage argument to define a market bottom. I disagree and I’ve shared my reasons why.
You make generalized statements about the IV SFR market, and then fail to back them up with actual data [Zillow trends or Zestimates are not data]. So to respond, I’ll share some data.
1. Unit sales for 2009 versus 2008 were up 9%;
2. The median sales price at the end of 2009 was down 10% from 2008 [it was down about 20% from IV’s 2007 bubble highs];
3. The average PPSF at the end of 2009 was $343, down from $429 from 2007; and,
4. Active listings at the end of 2009 were down 21% from the end of 2008.
Let’s look at January of 2010. The median sales price increased to $1.075M; the average PPSF remained steady at $337 [based upon actual sales and not Zillow’s figures based upon whatever]; the number of sales were up 16-2/3% over January of 2009; 58% of all sales were in excess of $1.075M; and, active listings were down another 21% from December of 2009.
Although one month does not make a trend, a rising median sales price; a PPSF remaining fairly steady; increased sales; and falling inventory; all at the seasonally slowest time of the year; you do the math [but it comes pretty close to your definition of a bottom].
Of course all of this data is only marginally relevant if: you’re not looking to purchase at either the bottom [for January, under $653K] or top [for January, over $3.75M] ends of the IV SFR market. But since you want to lump everything together, that’s what I’ve done!
So now you tell me: what relevance to median sales prices or PPSF do the five properties the subject of Mike’s post have? The answer is nothing. Now if these NODs actually go to trustee’s sale [and remember, most don’t]; revert to their lenders; and/or are conventionally [re]sold; then and only then will the data go into the general mix [and if they do, it’s likely the median sales price will increase from where it currently stands]. But not before.
So your spouting off as to the state of the IV SFR market as a whole, is nothing more than a bunch of hot air. When you have some cold, hard data to share, come back and talk to us.
Now just so that we’re clear,
1. I never said that the IV SFR market as a whole had recovered;
2. I never said that since May of last year the market has done anything other than scrape the bottom;
3. I never said that IV SFR market would be immune from a double bottom;
4. I never said that IV was immune from foreclosures nor short sales;
5. When I spoke of a bottom last May, I was not speaking as to the market as a whole – I was only talking about the SFR segment priced at around $1.5M [and mostly new construction] that had come down in asking price by some 35%-40%;
6. And if you will recall, I was one of the first on this blog to suggest that PPSF was a more accurate means of determining a property’s real value in this market.
smarten
Hey IJJ, when you did your search last year of loans against residential properties in IV/CB [Crystal Bay], didn’t you conclude that about half had no mortgages thereagainst? If not, do you recall what the percentage actually was? And in comparison, do we have any comparison numbers for Reno/Sparks?
The reason this piece of data is important to the current discussion is because it’s pretty difficult to have a NOD recorded against your property when you don’t have a mortgage.
BanteringBear
Check out this bank owned listing right around the corner from you, Smarten.
593 Tyner Way – Incline Village, NV 89451
Beds: 3 Baths: 3 Sq. Ft: 2721 $495,000
This is a lake view house, ASKING $181 per square foot. And, you think this doesn’t affect the value of your house which, in your opinion, has bottomed in price? Wow.
BanteringBear
Smarten posted:
“When I spoke of a bottom last May, I was not speaking as to the market as a whole – I was only talking about the SFR segment priced at around $1.5M [and mostly new construction] that had come down in asking price by some 35%-40%…”
This is a completely bogus statement. The idea that homes “priced at around $1.5M [and mostly new construction] that had come down in asking price by some 35%-40%” had/have bottomed, which conveniently means your house and not much else, is delusional. I cannot understand how someone who appears to have some smarts and common sense can draw such a conclusion. You’re cherry picking data, Smarten, in order to try to manufacture a bottom on your own house.
smarten
BB, you’re a smart guy. 591 Tyner Wy which is next store to 593 Tyner Wy just sold last month for $1.075M. Now why do you think 593 can be had for less than half the cost of 591? Do you really, really think the two homes have anything more in common than that they share adjacent lots on Tyner Wy?
If you saw 593 Tyner Wy in person [it’s one of those octagon configurations with a shed roof], even you’d likely conclude it’s probably a tear down. So yes; if you’re looking for a piece a dirt to build on that is up on Tyner Wy with a Lake view, I agree that 593 affects the value of all similar properties. But otherwise, not.
I can point to a number of non-tear down homes in the lower Tyner subdivision which have sat on the market for well over a year and are somewhat similarly priced. How about 657 Tyner Wy [MLS #936718 (3/3 – 2,000 sq. feet)] priced at $750K; 733 Dee Ct [MLS #938193 (3/2 – 2,517 sq. feet)] priced at $799K; 578 Valley Dr [MLS #938878 (4/4 – 2,874 sq. feet)] which I recall seeing a price update the other day that had this priced at $865K, I believe; 675 Tyner Wy [MLS #937349 (4/2 – 2,216 sq. feet)] priced at $899K? The only conclusion I draw from any/all of these listings, is that they can all be purchased for hundreds of thousands of dollars less than the current IV SFR median sales price. Why does anything in IV sell for in excess of $1M given these so called “comparables?”
If you’re going to make conclusions about the state of any residential SFR market, IMO they need to be based upon sales data. I believe Guy provides very good data for Reno/Sparks. Skeptical provides none for IV. I’ve shared some for IV. You’ve pointed to an IV tear down [which BTW is not a sale].
FWIW BB, Tyner is not “right around the corner” from me unless your idea of “right around the corner” is anyplace within the geographical confines of IV [which as you know, isn’t that large a community]. As I think you know, in IV you can have two homes, side-by-side, that differ in value by $1M or more. It’s not like Damante Ranch where you have a subdivision consisting of hundreds of homes which are all pretty much comparable to one other. Perhaps that explains the difference between 591 and 593 Tyner?
skeptical
Smarten,
Obviously a nerve is getting hit. Your somewhat emotional posts on the state of IV RE communicate something to me that your words do not. You, too, see the possibility that IV could take a giant hit this year.
It’s all speculation until the data is in. Let’s re-engage on this in the autumn and see who was right.
Meanwhile, I will give you this. You’ve got a fantastic property in Lake Tahoe. You’ll be able to pay it off irrespective of what happens to the general RE market. Doesn’t get much better than that. Hats off to you on that one.
inclinejj
y IJJ, when you did your search last year of loans against residential properties in IV/CB [Crystal Bay], didn’t you conclude that about half had no mortgages thereagainst? If not, do you recall what the percentage actually was? And in comparison, do we have any comparison numbers for Reno/Sparks?
The reason this piece of data is important to the current discussion is because it’s pretty difficult to have a NOD recorded against your property when you don’t have a mortgage.
Smarten
Yes, Off the top of my head I believe it is more then half of the properties in Incline & Crystal Bay SFR, 2-4 unit and Condo’s.
BanteringBear
Smarten-
Just because the Tyner property sports a metal roof, and a funky architectural style does not mean the quality of construction is substandard. You cannot call it a “teardown”, giving zero value to the structure just because it doesn’t meet your pretentious criteria for sufficient or desirable shelter in Incline Village. While it may not be aesthetically appealing to you, it does offer 2721 square feet of heated indoor space with on a VIEW lot larger than yours in Incline Village for $181 per foot, a steal compared to the $433 you paid.
TD
Any thoughts on the value of the 3 IV homes that are going to foreclosure auction soon. 851, 855, and 857 College Drive I think are the addresses.
Looks like about $5.5 Million is the note amount.
Rubiconer
Skeptical, there is a reason Smarten does not like Zillow. According to Zillow, Smarten’s house has dropped $117,500 in value since he bought it last July. 8% drop. In 6.5 months.
Martin
Some very good comments were offered by Smarten on this blog before he bought his house. Since then, he has lost his objectivity. Now, he has lost any semblance of being able to speak about the IV market without justifying his purchase and trying to convince himself, and everybody else, that he made the right decision.
skeptical
Choice Supportive Bias:
In cognitive science, choice-supportive bias is a tendency to retroactively ascribe positive attributes to an option one has selected.
For example, researchers have used written scenarios in which participants are asked to make a choice between two options.
Later, on a memory test, participants are given a list of positive and negative features, some of which were in the scenario and some of which are new. A choice-supportive bias is seen when both correct and incorrect attributions tend to favor the chosen option, with positive features more likely to be attributed to the chosen option and negative features to the rejected option….
(source: wikipedia)
billddrummer
To skeptical,
That’s the same definition my Logic textbook had.
billddrummer
But back on topic, to a degree–
Whether smarten feels obligated to defend his purchase isn’t material to the discussion here, in my opinion. What’s most meaningful, in my view, is that properties at IV are declining in value.
IV properties were supposedly insulated from the larger forces acting on less rarified markets, but if houses in the Hamptons aren’t selling at their asking prices, why would anyone think that homes in IV would sell at theirs?
At some point my ability to service a mortgage will rise along with my credit score, and prices will drop to the point where it makes economic sense for someone like me to purchase again.
Now, I don’t know when that will be, but it makes sense to me to rent for now. Perhaps another 2 years, but then again, why saddle myself with a mortgage at 59 years old?
I’d rather travel anyway.
muttbag
FYI
http://realestate.yahoo.com/promo/americas-most-troubled-luxury-neighborhoods.html
smarten
I apologize to the blog for going off on a tangent. Yes, I lost some of my objectivity and for this quite frankly I am embarassed. In the future if we can stick to discussing the market, as opposed to smarten’s particular purchase, I would appreciate it [and as a result, likely won’t become so defensive]. Thanks for your cooperation.
That said, the IV market data I provided was accurate to the best of my knowledge, and I believe objective. Just for giggles, I did a quick search of all the IV SFRs for sale priced between $1M-$1.5M [which many around here regard as the pricing “sweet spot”]. I came up with only 28 offerings. And when you throw out the geographically undesireable ones, IMO there’s not really a whole lot to choose from.
Guy Johnson
Just received these year-end stats from one of our Chase agents from Incline Village. The numbers show total number of sales in 2009 as well as proportion of distressed sales.
Homes
total sold: 89 (distressed 14%)
bank-owned: 7
short sales: 6
Condos
total sold: 69 (distressed 20%)
bank-owned: 6
short sales: 8
PUDs (free standing condos and town homes)
total sold: 24 (distressed 17%)
bank-owned: 2
short sales: 2
SkrapGuy
“why saddle myself with a mortgage at 59 years old?”
That is a damn fine question, billd.
One of the best questions ever asked on the RRB.
skeptical
Skrappie and BillD,
Not necessarily just a single off-the-cuff remark, either. BillD is perhaps representative of a whole generation of boomers asking themselves the same question.
So, pile the demographic issue on top of all the other headwinds discussed on this blog.
Smarten, this blog would be less rich without your insight. I took a few cheap shots. I apologize. You’ve forgotten more about IV real estate than I’ll ever learn. Looking forward to hearing more insight from you going forward.
Riley
A damn fine question indeed. The willingness to become a debt slave is one of those things that wanes as one ages. Especially when one considers that the housing market is going to have the wind in its face for years to come.
Reno Ignoramus
When you are 29 you can recover from a financial misstep. When you are 59, you need be a LOT more careful. I agree that billd’s question is far more than just some offhand throw out. It speaks to an issue with profound implications for the housing market, and the larger economy going forward.
And as for Smarten, I have to agree that you have lost some of your bearings since you bought. But just get them back, and keep on contributing here. I can remember when you and I and BB and Allen (can we ever forget Allen?) and Lindie had some of the best conversations on this blog. Maybe it was easier back then, because we were able to talk about things for the first time. But those were some gooooood threads.
Sully
smarten, are you still wanting to sell that house in SJ? If you are, I need a way to contact you for details etc.
smarten
Thanks Skeptical and RI –
I agree with the comments to Billddrummer’s insightful query. This is a question I was recently asking myself.
So why saddle yourself with a 30 year mortgage at age 59? A bit of a contrarian view.
1. Because the odds are you won’t have to pay it off [you won’t live long enough]; the ultimate “walking away” play [sorry, I just couldn’t resist].
2. Social security if you were never planning on surviving on social security alone. When you’re in your thirties you rarely think about actually being able to realize social security. But when you’re 59, it’s just around the corner [assuming Congress doesn’t move to close this “loophole” (which I don’t assume BTW)]. Depending upon what you’ve put into the system, who knows; you may be able to realize enough extra income to cover your mortgage payment?
3. If you’re still working at age 59 and have accumulated an IRA, you can start withdrawing without penalty. It’s amazing how that extra couple of hundred dollars/month can relieve the pressures of let’s say, property taxes.
4. I haven’t explored this option myself, but the reverse mortgage. Although my gut tells me it’s a bad deal, if your idea of estate planning is spending it all prior to your death, this may be a means of taking on a big mortgage without ever having to pay it off.
Change your mind?
smarten
Sully, contact Mike or Guy – ask them to forward me you’re e-mail address.
65 woo
First off, love this blog, required reading for me. I know, I do not contribute but I do not live in the area and have to relie upon others observations.
Second, why take on a mortgage at a mature age? All of our situations are different. As a fiscal conservative I have a paid for “modest” house in the bay area so I will be looking for a second/vacation home in the area’s this blog refers to. My thought is that I will need a tax deduction for my projected retirement income stream. The government gives and it takes so I will take advantage what it offers.
Third: The area’s price drop while a bummer for most people will be a good thing for me. I realize that I am in the minority here.
Tom
Smarten, your advisor is right about the reverse mortgage scenario being a bad deal. I have yet to find a reverse mortgage scenario that is economically sensible for seniors who are estate planning clients. This is a technique which plays well at seminars by those promoting it, and on their charts, it starts out okay. But once that snowball has rolled a while, it then consumes equity with a vengeance. The month additional cash flow most illustrations project for this technique is fairly small, unless the clients are very elderly. The monthly payments are based upon an extrapolated loan amount calculated with a joint lives survivorship actuarial estimate, plus a safety longevity factor of a few years, in case a healthy survivor outlives the statistics. Then compounded interest is formulated in on the growing balance.
Thus like my old Pappy, a field player at the craps table at Harold’s Club, who doubled his bet on every second losing roll, after a few plays with such a “system,” the accumulated total losses needed to be covered on the next bet to break even plus a few bucks, becomes huge. With the RM, the loan plus interest on the interest grows and the balance increases, cutting further into equity to be left at the end. The projected end point also needs an equity cushion left to secure the lender’s position. If both spouses live to their expectancy plus 5, the lender still makes money. If they die sooner, the lender is rewarded better. Some proposals have an assurance feature in case of very premature demises, but as in Reno, all the odds favor the house.
For some couples, who otherwise would have only distant relatives as estate beneficiaries, perhaps it doesn’t matter how costly those funds work out to be, but for most seniors, they will find it is a very expensive form of borrowing. It also doesn’t project will if there is a pre-existing debt on the property, which affects the aggregate loan-to-value ratio. They calculate that ratio using the present loan balance on the existing mortgage, but with the estimated date of second death + x years balance on the proposed RM. Thus to make any significant monthly payment come out of the calculation, the equity needs to be very substantial for a couple who might be about 59. If they are in their 70s, it works better.
Reno Ignoramus
A NOD has been recorded on the property at 4271 Dant in Reno. This will have meaning to long time readers of this blog, such as BB.
Once again, it looks like that the “hostile pessimists” on this blog have been proved right, although it certainly did take quite a while for the inevitable to happen with respect to this property.
BB called this one.
smarten
Thanks for the heads up RI.
But what exactly qualifies for “hostile pessimists on this blog [to be]…prove[n] right” on this board? Is it that no one should purchase anything [especially with a mortgage] because if one does, he/she is eventually going to lose his/her property by way of foreclosure? Is it that those who purchased during the bubble are not going to be able to wait out any housing recovery because it’s many years off? Is it that anyone who suggests anything positive about the market is going to be rewarded with the loss of his/her property? I’m not trying to pick a fight – I’m just trying to understand what you mean by pessimists being proven right?
I don’t think Allen ever predicted there would be a housing recovery in the short term. Yes he had his home for sale at what BB and others felt was a delusional price. But I don’t recall anyone predicting Allen would be rewarded for pricing his home delusionally with foreclosure. Is your “proven right” comment meant to show that if you’re a seller who prices his/her home delusionally, you’re going to be rewarded with foreclosure?
I don’t think there’s any “proven right” here other than that if you’re a seller and you price your property delusionally, it’s not going to sell. Allen overbuilt for the neighborhood at the height of the bubble and got caught in the crossfire as so many others were [like Diane]. My recollection is that Allen was actually living in the home while it was for sale and represented to the board that if it didn’t sell for his price, he would continue to live in it and simply wait out the market. Either he has chosen to walk for financial reasons, or he has had financial problems which no longer make waiting out the market a possibility. I find either alternative to be sad as I enjoyed Allen’s contributions to the blog.
BanteringBear
Nice work, Reno Ignoramus. I haven’t looked into Allen “I’m a good fisherman” Murray’s boat anchor lately, but figured this was coming soon. It was obvious, to me, years ago.
To refresh your memory, Smarten, I posted that Allen Murray would need to get real with his pricing, or he would ride the market all the way to the bottom and I would post his NOD to the blog. Go check out the posts from early 2007, and you will find that I did, indeed, “predict” this outcome.
BanteringBear
Here’s and exchange with Allen Murray from a thread “REO Sales- Waggin’ the Dog” April 28, 2008:
Allen Murray: “Us sellers just need to buckle up for a while. I know this slow market has hurt me. So far I have sold my Rolex Daytona, my ‘66 427 Corvette convertible, and my 502 big block crate engine that I had planned for my ‘50 Cadillac convertible, and one of my work trucks. I’ve also gone back to work.”
BanteringBear: “These don’t sound like the words of someone who can actually afford a “million dollar house” – but more like those of someone under severe financial strain. I never did buy into the notion that you “don’t need to sell”, Allen – because your house wouldn’t be on the market it you didn’t.
You stated that when you first listed your house, you looked at the recent sold comps as well as listings in order to determine your price. That was a year ago. Since prices have fallen substantially, have you looked at recent sold comps and listings, including the short sale a few doors down in order to accurately re-price your anchor? Methinks the answer is no. You’re another seller who’s “riding the market down”.
If I had to guess Allen, I’d bet that you’re just another contractor who’s over levered in real estate. You got caught up in the euphoria, and are now stuck servicing the debt on your most expensive build to date. Unfortunately, you’re not alone – so perhaps your over-inflated ego may not be bruised beyond repair.”
Allen Murray: “However, it is my belief that fancy ads don’t sell houses, price is what sells…Also, I was pretty much joking about selling my stuff off and having to go back to work, I just wanted to get a rise out of BB and it worked…”
BanteringBear: “Nice try Allen, but I don’t think you’ll convince anybody with that load of BS. Those big egos sure have a way of getting in the way, don’t you say? I’ll be the first one to post your NOD to the blog. Warren Buffet once said “You never know who’s swimming naked until the tide goes out”. In your particular case, we don’t have to wait.”
I was only wrong in that I should have said “Reno Ignoramus will be the first one to post your NOD to the blog.”
Reno Ignoramus
Smarten:
Allen was the one who first used the term “hostile pessimists” to refer to me and Lindie and BB. So it is his phrase, not mine.
In this particular case, I said that Allen’s house would never sell for the over $1 million he once had it listed for. He took it personally, and replied with the pejorative moniker. He said it would sell fot that. So in this case, as the house, still unsold after having been reduced to the 600s, now rides into foreclosure, it turns out that the “hostile pessimists” were right.
That’s all.
All the other attributions of what the statement means are creations of your mind, not mine.
smarten
Thanks for the clarification guys. I actually remember the exchange between Allen and BB – I just don’t remember the blow-by-blow and BB’s NOD prediction. So it was that prediction, rather than something else [creations of my mind], that BB was proven right on. And BTW, I haven’t looked at the actual NOD but I’ve heard, FWIW, that the default goes back well over a year.
Now BB, how do you find these past posts? I can’t believe you go into the archives and look for blog by blog by blog, but is that what you do? Or is there some other more efficient search technicque you can share that might help the rest of us see what we said two years ago?
Thanks.
skeptical
The search function on the site is worthless. For example, I was trying to find the thread quoting Starwood resorts CEO Sternlicht about their plans for the Corus properties (e.g. Montage).
You would think “sternlicht” would be a pretty unique and effective search item. Well, not so. I get the “sorry, no record found” for just about everything I try.
other times I get a result, but it’s some ancient thread that is unconnected to my query.
Guy, anyone, are there tips to using the search? Boolean logic seems also ineffective. Any way to upgrade it with an off-the-shelf word search engine off the web?
Meanwhile, I fully enjoy some of these “throwback” quotes. Makes for entertaining reading at the least.
Reno Ignoramus
skeptical, you are right that the search function on this blog is worthless. And that is really too bad. Because there have been some absolutely great threads, and great discussions, and great one-liners over the 4 plus years.
At this point I know we should be grateful to Guy (and Mike) for keeping the blog going at all and not expect upgrades. But, man, it would be fabulous if there was a way to search by phrase or name.
DonC
I’d say that everything points to 2010 being a bad year for higher end homes, and I doubt IV will be an exception. The lower end seems to have shaken out but the higher end has a way to go, so we may see rising medians sales prices and lower volumes. (I wouldn’t want to short Smarten’s house though, you can get a good or bad deal on a given house in any market, and he seems to know what he’s doing).
That said, I’m not sure whether the fact that many homes in IV apparently aren’t encumbered by mortgages ensures that these houses will not become distress sales. Here’s why. Personally I know of two people who are selling their houses in Big Bear. Now obviously Big Bear is not IV — it’s lower end and the skiing is not nearly as good — but it’s the closest similar area we have in SoCal. One sold because he needed to take out money to buy an urban property which he thought would be cash flow positive. The second suffered a business reversal and needed to raise cash to avoid bankruptcy. I’m not sure if either had a mortgage but if they did it would have been very small.
The point would be that, for a first home, not having a mortgage would in my mind virtually guarantee that there would not be a “forced” sale. But a second or third home is an entirely different matter. Those can be disposed of if you need to raise cash. It may be a sad event but it’s not remotely similar to selling the house you live in. Assuming that IV has a fair number of second or third homes, which I’d assume is the case but don’t really know, then given the general state of the economy my guess is that some of those will come on the market priced to move, which is going to exert downward pressure on prices given the weak demand.
MikeZ
That’s weird … my post about using Google is gone.
Ok, let’s try one more time …
Google can help you find what you want, just add renorealtyblog to your search terms.
I see 2 hits for Sternlicht: 1) 1/24/10 “Montage for $200, Alex” and 2) 10/26/09 “Montage Lawsuits.”
skeptical
MikeZ,
Good stuff, thanks. I should have already figured that Google had a solution.
My buddy shorted that stock at $350, despite my apprehensions. He got stopped out sometime thereafter…..
Still, it’d be nice if there were a field on the RRB page that would accomplish the same search.
smarten
Don C –
I think your observation re: higher end homes in general and IV in particular, is accurate. But what exactly do we mean by “higher end homes?” In IV that’s probably $2.5M and higher. Let’s take Mike’s IV NOD examples. One at $4.8M; another at $4.1M; and another at $2.4M. Let’s say actual sales at 40% below these outstanding mortgage amounts took place. Although IMO they’d all be bargains, most on this blog would complain that the “high end” still has a long ways to go. Not so IMO.
A couple of IV updates along this line FWIW. I spoke before about a $1.9M short sale at 996 Wedge Ct. New upscale construction; classic “Tahoe” style design; close to 6K square feet – what I felt was the next IV SFR “good deal” that was going to sell. Well I drove by the home yesterday and saw a bevy of activity which tells me it either has closed escrow or shortly will. I’m certain the final sales price will be at over $1.75M – notwithstanding some of the predictions on this blog.
Five IV SFRs closed escrow this last week and three of them were very nice selling for in excess of $1M: 936 Lakeshore Dr [5/4, 5,134 square feet – $2.75M]; 112 Steam Cir [4/3.5, 3,723 square feet – $1.3M (listed for in excess of $1.5M – see below)]; and, 451 Jill Ct [5/5, 5,700 square feet – sorry, don’t know the actual sales price yet (but my guess is it will probably be about $2M – it was listed at $2.2M)].
TD asked about the three homes on College Ave. the subject of a NOS. IJJ and I have talked about these homes and if they all go in a single trustee’s sale [there’s a single all inclusive d/t], they’ll probably revert to the lender. Again very high end, “Tahoe” style new construction across the street from Incline Creek Estates [the $1M+/- PUDs SE and I discussed several months ago]. Originally priced at $2.4M or so, IMO any of these three SFRs would represent excellent value as REOs priced in the $1.3M range or so.
I’m noticing another trend here in IV. Yes, it has traditionally been a second/vacation home community [maybe 75% or so of the housing stock]. But more and more I’m seeing these homes being occupied full time by their owners. I’m also seeing that some owners are relocating here and making their former second/vacation homes their primary retirement addresses. I think this is a trend that will continue.
My point here is only to report that although SFR prices have dropped in IV, sales in excess of $1M continue to march along. The consequence of there being very few well priced quality SFRs offered for sale at between $1M-$1.5M; and inventory shrinking; is that I’m seeing more sales of homes offered for sale in excess of $1.5M. What is it going to take for this community to get the message?
DonC
This has little relevance for IV per se, but this week CNN Money revisited the issue of what housing markets were over or undervalued. The analysis, done by National City Corp. and IHS Global, was last published in 2006. At that time the model predicted that almost every metro area in the US was substantially overvalued. In contrast, the new study shows that many real estate markets, including Reno’s, is significantly undervalued. Of note is that the studies seem to be robust over time.
The study’s methodology is similar to what some have suggested here: It looks at the local median income, local population density, and local interest rates, and then computes what the median house should sell for. This number is then massaged a bit by historical trends, meaning that some areas consistently sell below or above the predicted price, and the analysis tries to account for this (their example is that San Diego real estate market has always enjoyed a premium to the predicted price, which is true). You can find the results of the most current study here: http://money.cnn.com/real_estate/storysupplement/overvalued_cities/
When looking at the 2010 results don’t get overly excited by the column showing that Reno was 38% undervalued in 2006. That’s a misprint. The 2006 study actually concluded that Reno was 38% overvalued, which you can confirm by looking at the 2006 study results here:
http://money.cnn.com/2005/12/29/real_estate/buying_selling/handicapping_housing_markets/index.htm
DonC
smarten — You are without a doubt an expert on the IV market, and I am definitely not, so I’ll defer to your judgement on relative valuations in IV. My only point was that in this economy the outstanding mortgage amount for vacation homes may not be as predictive of distress sales as it has traditionally been for first homes. IOW I do believe that some number of properties in IV will come on the market simply because the owners need to raise cash. More supply generally means lower prices but the number of such sales may be too small to matter very much.
As for high end homes, I’d define that not by region but by price. IOW a $500K home in IV might be very modest for the area but I’d still call it a high end home. Certainly anything above $750K.
While I’m not bearish on the housing market over the longer term, in fact the numbers in the study I posted above suggest most markets are now undervalued, for a number of reasons 2010 does seem like it will be a very poor year for higher end homes. And I think that’s a national trend.
The other point I’d like to reiterate is that buying or selling real estate is greatly effected by the market but it’s not dictated by it. Houses are like stocks in that they’re not all the same. You can make a great buy on a house even when the market is not at the bottom and you can make a terrible buy when the market as a whole is at the bottom.
BanteringBear
You apologized for losing your objectivity, Smarten, then turn right around and post more of the same old nonsense. I didn’t believe for a moment that you’d come to your senses.
Your idea that “higher end” in IV is $2.5M and higher is absurdly delusional. With a median income of ~$65k, it’s a fair assumption that anything over $500k is “high end” in Incline Village. While your energies are focused on an extremely small segment of the market- those who can afford properties on Lakeshore Blvd.- the real story is playing out in the properties which the meat of the population can afford.
The real bubble was in land. While construction costs did rise a bit due to a surge in commodities and some temporary increases in labor rates (those have disappeared), it was the prohibitive cost of land which led to the insane price spikes. As the cost of building lots continues it’s seemingly never ending decline, all homes big and small are affected. Ultimately, when an older cabin on a nice 1/3 acre lot is priced at less than $200k, it’s impossible to justify several million for a 5k square foot behemoth on a comparable parcel. The entire market is inter-connected, which is why I have never bought into the idea of separating the it into segments, especially in a very small, toney zip code like Incline Village.
smarten
BB, I thought I was being objective. I pointed to actual sales and the trend I’ve recently seen as to the occupants of those sales. I also gave my opinion of what would be bargain prices to pay for the NODs Mike posted in excess of $1M [are you telling me that a SFR like Fairview (which BTW is not located near Lakeshore) which was worth enough three years ago to support a $4.8M loan, should be selling for $500K because that represents the high end of the IV SFR market?].
You’re flat out wrong in your belief as to what represents the “high end” of the IV SFR market. If you think $2.5M is absurd, then what do you call the three NODs highlighted by Mike all in excess of this amount? What do you call the Lakeshore SFR I referenced that sold for more than $2.5M last week? What do you call the 28 mostly “ho hum” SFR listings on the MLS currently priced between $1M-$1.5M? What do you call 591 Tyner [the house next store to your pet IV SFR] that sold last month for $1.075M? Or to ask the question in in your parlance, why would anyone pay $2.5M or more for an IV SFR when they could buy your 593 Tyner teardown for about 1/7 the cost? I would respectfully [because I respect your knowledge] counter that your $500K high end definition is patently absurd. $500K and lower is the absolute bottom of the IV SFR [as opposed to condo] market and IMO, if you think anything currently for sale at $1.5M or above will soon be selling for $500K, I’m sorry; you’ve now become the pot calling the kettle black.
Not all regions of the country, nor [Washoe] county for that matter, exhibit residential real estate sales tied to median incomes. IV is one of them. If your combined household annual income is $65K or less, you’re pretty much not an IV SFR property owner. And neither are the purchasers of any median priced [$1.075M] IV SFR [unless you accumulated all cash to make your purchase].
I’m reporting actual sales BB [and BTW, unit sales are up Y2Y so somebody is obviously (delusionally) paying]. You don’t like what the data suggests; that’s fine, you can have your opinion. But these are the facts, like them or not.
If you wanted to purchase something in IV [which obviously you don’t] for under $200K, the fact of the matter is you’d be relegated to a POS condo – probably along the lines of RI’s first Smithridge Reno condo.
By no means has IV been immune from the housing meltdown. But if you think the values of every residential community in the country are going to fall to what a family with a $65K annual income can afford to pay; I’m sorry, you’re the one who’s delusional.
That said BB, Happy Valentine’s Day.