– So far this month, 105 TDs, 234 NOSs, and 234 NODS. I have never seen Notices of Sale equaling (or exceeding, as they did for a while this week) Notices of Default. Did the memo go out and the banks are getting ready for a Summer Inventory Clearance Sale? Just a gut feeling looking at the NODs – the number of upper end properties seems to be declining. Are there work-outs happening?
– "Nob Hill in ArrowCreek" went TD today. It was purchase for $1,750,000 in October 2005 ($1,499,500 new in September 2003), and bought by the bank for $873,000 with no other takers. The amount due at sale on the first was $1,172,607, with a myriad of second, third, etc. loans. The former owner appears to be living in Florida now.
– Remember the R & B property in Verdi that was approved for 660 units and appraised at $40,000,000 before the foreclosure? It came back to the market at $M or so, reduced to $7.M, and then "make an offer"? It just sold for $1,050,000 (though I don’t think the water rights were included). This is the new reality for Reno developers- if they bought property post 2003, it cannot be economically developed with out a foreclosure or major loan restructuring.
– More than half of the Townhouses on Holcomb have now closed escrow, and the model is on the market. Average price has been about $162K on a project that had $500,000 aspirations. Still, good to get people into the neighborhood and the potential of squatters reduced. Do you think the developer was paying the ADT fees for those security systems? There was no electricity to the units!
– The West Street Market’s future is up for debate Monday at 3 PM at City Hall. There are tons of issues, but the bottom line is that the Market is running at at least a $185,000 annual deficit. Rent is about $150K a year, so even if rent were free, the Market would be losing money (though the tenants all say they are doing great). Will the City Council acting as the Redevelopment Agency find it is cheaper to close the Market (and face termination charges and lawsuits from the tenants) or find a new vision for the project, which will actually cost money to achieve? It will be a nail biter, and a good meeting to attend if you care about downtown.
– Competing with you Business Partner for a Short Sale – 510 and 520 Crystal Park is an odd story of partners who live next door to each other. Access to the properties is through a RV storage lot with junk yard dogs, down a half mile dirt road, arriving at 2 relatively new custom homes on the river. The trip is worth it – the location is amazing. 520 caught my eye when it was reduced from $1,700,000 over a million dollars in one fell swoop, then reduced again to $535,000, and i t is active pending loan. 510 originally listed at $1,200,000 and is currently accepting offers at $549,000. The business these folks run puts custom license plates on their vehicles, so I recognize them . It is somewhat disconcerting when you recognize the truck next to you at Scolari’s as someone you are researching for a post, and someone who won’t be living on the river in the near future.
FreeDog! These are just some things that caught my eye this week. What have you seen that makes you go "UUM"? Anyone interested about what is up on Canyon Drive?
Ralston
“510 orginally listed at $1,200,000 and is currently accepting offers at $549,000.”
According to DonC, this house is 30% undervalued. Hard to explain why it is not being “snapped up”, being that it is 30% undervalued and all.
But then, it’s hard to explain why there are any houses on the MLS at all without offers, being that every house in Reno is 30% undervalued.
earnest learner
anyone bothering to read any of DonC’s posts is silly. The guy doesn’t live in Reno, is probably in the realty business, and has said some of the stupidest things ever posted on this blog.
Do like me and ignore the guy, or continually submit yourself to frustration.
OBTW, judging by how often he posts here, he’s probably currently unemployed. Not the sort of fella I need to be taking advice from. FWIW…
MikeZ
I’ll bite: What is up on Canyon Drive? And why should we be interested?
smarten
Sorry guys. I disagree with your criticism of DonC. Earnest Learner states “the GUY doesn’t live in Reno” and “judging by how often HE posts…HE’s probably currently unemployed. Not the sort of fella [one] need[s] to be taking advice from.” Well one could have said the same thing about Mr. BB [a HE] and you guys would have been coming down on him/her like a ton of bricks! If it was good enough to take advice from Mr. BB [an out of the area probably unemployed gardner who didn’t even take his own advice], then it’s equally good enough to take advice from someone like DonC. If advice shouldn’t be taken from either, then why the hell were so many of you enamored by the former?
The fact of the matter is Mr. BB was a one trick pony. Yeah, he was right ONCE. But you know, so was I and a whole lot of other people I know. The problem is we were ALL [including Mr. BB] 3-4 years TOO EARLY. And that made ALL of us [including Mr. BB] WRONG [because even a broken clock is ultimately right at least once a day].
Well now doom and gloomers like Mr. BB are WRONG. If you believe the facts and data [and Mr. BB told us he did], the residential housing market has probably stabilized. Yet the tune of so many of you hasn’t changed. Even if my assessment is wrong, just like the broken clock, it really isn’t because next month or next year or 3-4 years from now, ultimately, I will be proven correct. Now if people like DonC and I will have been TOO EARLY in our assessments, just like Mr. BB, ultimately, we will be proven right. At that point will any of you be saying “yeah, that DonC guy really nailed it [or was clairvoyant] when the sentiment of almost everyone else is bearish?” Didn’t think so.
The point is that contrarians like DonC who back up their opinions with facts should be treated with the same respect as those who preach to the choir [and back up their opinions with facts]. Just my two cents.
GrandWazoo
Speaking of downtown, according to the Downtown Dude’s blog, Silver Peak at the corner of Sierra and First are threatening to leave if they can’t come to a better lease agreement with the city, who owns the building. That would be way beyond a shame, the restaurant anchors that business area and keeps things lively, such that “lively” is downtown these days.
Norton
I’m sorry, but DonC’s constant blather than Reno houses are undervalued by 30% is just nonsense. He refuses to acknowledge what everybody knows about the market in Reno, that it is a bifurcated market. Yes, there are low end condos now selling for $40K that are undervalued. But DonC likes to say that the whole market is undervalued. Nonsense. There are hundreds of overvalued houses still sitting on the MLS over $350K.
Ralston is right, if the whole market is 30% undervalued, why are houses languishing on the market month after month after month in the over $350K segment?
BanteringBear
Still green with envy, huh Smarten? Some things never change. The facts are that my predictions have rung true, and just last year I opined that you would be slaughtered on you IV purchase, and I promised to revisit the situation when it materialized. You paid $1,500,000 for a house which I said would ultimately be worth $750,000 on a good day when the market bottomed. Go back and look it up.
The fact is, you were wrong on your market call, and you just got taken to the woodshed on that purchase, as the scenario I presented has rapidly taken shape. YOY, median single family prices in IV are down 47%. Yes, 47%!! You went on record calling the bottom last year. You were WRONG. You’re not long on credibility, just hot air.
Lastly, since you’re making baseless assertions about the financial situations of people you know nothing about, I’ll go ahead and throw something out there myself. You cannot afford to live in Incline Village, and that’s why you have a $900k mortgage. My extended family paid cash for their residences there. It seems you stretched as far as you could to finance a shelter you have no business being in, and are likely no different than all of the over-levered borrowers we read about every day in the paper. I’ll be on the lookout for the NOD on your abode in the next few years. After all, it wouldn’t be your first foreclosure.
smarten
Ha, Ha Mr. BB. Knew you couldn’t stay away.
You’re so full of hot air, you don’t know if you’re sucking it in or out.
First let’s talk about SFR median sales prices for IV [if you look closely you’ll see Sue Lowe’s numbers include PUD/townhomes]. At the end of last year it was $1.1M. The last I heard for the end of March of this year, it was $925K. Hardly something other than a “slaughter.” You’re statement as to a Y2Y drop of 47% shows how unknowledgeable you are. In the first quarter of 2009 non only were there an unusually small number of SFR sales [I think 11], but there were an unusually large number of sales ABOVE $2M. There were all the new, distressed, builder sales of high quality homes which were getting picked off the vine. Thus even though the SFR median sales price at the end of 2008 was about $1.2M, it had ballooned to a deceptive $1.45M as of the end of the first quarter of 2009. People like you who didn’t know would say that the market had “tanked” by the end of the year dropping to a median sales price of $1.1M. But people like me who knew what was really going on would say the market was flat.
Second, as I’ve always said, the median sales price as a whole for a market is barely relevant if you’re interested in a particular segment. In my particular segment, there are only three somewhat comparable properties for sale [I say somewhat comparable because I wouldn’t live in the neighborhood] – the three new REOs on College Ave. we’ve spoken of before on this blog. All three are listed at in excess of $1.5M, and all three are “smoking deals” or “won’t last long” according to local agents. So where’s the slaughter?
Third, it’s been almost a year now and NOTHING has sold in SFR that I/my wife would rather have purchased at our price point or below. Stated differently, no buyer’s remorse here Mr. BB while you’re still looking for that mythical 10 acre parcel in Eastern Washington that you can purchase at an unrealistic price you’ll never see.
Fourth, doing my taxes as we speak. Guess what? Because of the first time homebuyers’ income tax credit, we’re getting a $9K tax refund! How about you Mr. BB?
Fifth, I don’t know what you’re talking about when you make the statement I am making baseless financial assertions about people I don’t know, but FWIW, I missed my refis by about a week [because of the blip upwards when the Fed stopped buying sub-prime MBS (which BTW, have no bearing on FNMA or Freddie Mac purchases/guarantees)]. Had they gone through, you would have seen that my $900K mortgage [actually, closer to $890K because of principal paydown] was now $417K, 30 year fixed, at 4.75% or lower. Keep checking the records Mr. BB because that’s eventually what you’re going to see. And when you do, are you still going to be of the opinion I purchased more than I can afford?
No while you were spewing more hot air, some of us were able to take advantage of massive price reductions; historically low interest rates; and an income tax credit to boot! No, in hindsight my market call wasn’t a mistake – it’s people like you who have missed the boat! Good job Mr. BB.
BanteringBear
Pure BS, Smarten. That’s why I’ve grown tired of arguing with you. You wouldn’t know a baseball bat if it cracked you upside your thick head.
The FACT of the matter is, the median price in IV is $775,000, which includes ALL sales of SFR’s. That is 47% less than last year. Even ignoring that massive decline, the fact remains that you paid DOUBLE the median for your house which is, honestly, nothing special. You got slaughtered, but you’ll never admit it because you’re a narcissist.
You posted:
“Stated differently, no buyer’s remorse here Mr. BB while you’re still looking for that mythical 10 acre parcel in Eastern Washington that you can purchase at an unrealistic price you’ll never see.”
Umm, that’s WESTERN WA, not eastern WA, and prices on land have come down dramatically. Not only are you wrong on details about me, but you don’t know jack about the land market in WA state. You are a fool of the highest order.
BanteringBear
I won’t be contributing to this blog much anymore because, quite frankly, I’ve tired of arguing with you and a few others. But, I will certainly pop in from time to time to discuss the disappearance of your (phantom) equity. It’s a subject that warms my heart, and I just couldn’t resist rubbing a little salt in the wound, especially since you are so desperate to manufacture a floor in your own house value, and fight tooth and nail anyone who disagrees with your foolish utterances.
Despite the nonsensical blather you continue to post on this matter, anyone with even a modicum of common sense recognizes the folly, especially when backed up by numbers and facts. On that note I am off to enjoy the glorious weather, heartened by the fact that I don’t owe $900k to a banker. Au revoir!
skeptical
One cannot trumpet a bottom call based upon a roughly flat median over the last several months and simultaneously dismiss a 50% decline in one’s neighborhood as irrelavent. FWIW…
bob_c
start trying to NOT root for others demise and
see how the world starts looking a little brighter
hope everyone prospers!!!
MikeZ
[Hoping to turn this BACK into an informational thread]
RE: “Anyone interested about what is up on Canyon Drive?”
What is up on Canyon Drive? And why should we be interested?
nomanis
MMA matcheup this weekend at the Reno Events Center – “Yard Boi vs. Dis-barred Lawyer”. The purse is a Smithridge condo.
I’d buy a ticket for that one.
Walter
“The purse is a Smithridge condo.”
I am laughing my ass off, nomanis. Great call.
DonC
Norton – If you understand statistics then you’d understand how “a market” can be undervalued or overvalued. If you don’t then you you won’t. What the statistics are saying is that the houses that have sold (not listed but sold), taken as a whole, are 30% undervalued by historic norms.
Keeping this fact in mind, perhaps you can answer your own question of how “if the whole market is 30% undervalued, why are houses languishing on the market month after month after month in the over $350K segment?” If you still can’t get your head around it, here’s a hint. Ask yourself what would happen to the market’s valuation if those $350K properties were suddenly selling like hotcakes at their list prices?
DonC
Smarten – There is the old saw about there being two types of people who predict market trends. Those who know they don’t know and those who don’t know they don’t know. Ba ha ha ha ha ha ha! The fact is unless you’re Cassandra it’s impossible to predict a market, especially in the short term.
On the other hand, you’ve been pretty accurate both on the downside and (I think) on the upside. Perhaps you haven’t been exactly right on the timing, but no one is right about the timing unless they’re lucky. And to get the timing right at the top and the bottom you have to be double lucky. The best you can hope to do is to get the trend right at something approaching the right time. So let’s give BB his due.
There is BTW a lot of empirical evidence that people are overly influenced by recent information. As applied to housing prices, on the way up everyone was overly influenced by rising prices — making it hard to fathom falling prices — and now people are overly influenced by recent falling prices — it’s hard for them to believe that prices will turn up again. Not terribly logical but it’s the way humans are wired.
smarten
Begone Mr. BB –
No one needs you. I know of no other poster on this blog who has ever rejoiced in the misfortune of others [even innocent others] as you. Congratulations [hope you’re proud of yourself]. And remember, what goes around comes around. Actually if you think about it, you’re another Derrick. First you declared to us that you were leaving, and then just like Derrick, you just couldn’t stay away. You would have been more of a man if you had just stayed here and taken the heat after opening your mouth one time too many.
Just so the record’s straight, here are IV first quarter statistics from a third party: http://solirealestate.com/Repository/1/3/7/0/1/4/137014/9c1714fc-7da2-47cc-a462-710c04537e24.pdf .
For SFRs [NOT including PUDs], first quarter Y2Y unit sales are up 33-1/3% [from 15 to 20] and the median sales price closed at $925K [just as I represented] and NOT the $775K as Mr. BB MISrepresented. So get your facts straight Mr. fella!
Yeah, the SFR median sales price Y2Y is down from $1.9M. Except the IV SFR median sales price for ANY year, has never, NEVER, been remotely close to $1.9M! Even at the height of the bubble in 2007, the IV SFR median sales price closed at [only] $1.2M [ http://www.insideincline.com/archive_news_letter.php ]. So let’s see where it is over a year’s worth of sales [a meaningful number], rather than isolating a quarter when for the reasons I shared, the numbers were skewed [remember, for 2009 as a whole, the IV SFR median sales price was $1M ( http://tahoehomesblog.wordpress.com/page/4/ )]. I thought a smart guy such as yourself would have seen through Sue Lowe’s propoganda intended to make the less knowledgeable think sales prices had come down more than they really had to convince those on the fence that now is the time to buy. But you got sucked in because you were so busy slapping yourself on the back to understand the reasons why.
There are people in life who do, and people who bloviate. When you’ve actually done something, come back and talk about it. I’ll go out on a limb here and suggest that resuming sessions with your therapist might be a good place to start.
SmartMoney
When bubbles collapse, prices always end well below fair value. I would expect prices at least 50% below fair value at the bottom. 30% would be getting off way too easy.
Norton
Ahh, DonC, so now we are just talking about the houses that have sold as being undervalued. Not every house on the market. That’s a bit of a change in the rhetoric.
As for “what would happen to the market’s valuation if those $350K properties were suddenly selling like hotcakes”….
What would happen to the crime rate if frogs had sidepockets and carried weapons?
What would happen to air safety if cows could fly?
Houses listed at $350K selling like hotcakes…..flying cows…….what if what if what if…..
Martin
DonC, what “historical norms” are you referring to when you say that the houses that have sold are 30% undervalued?
Do you have a reference for that you could refer me to? What is the base line criteria in support of that conclusion?
I know a local realtor who is saying the same thing. When I asked him what criteria did he rely upon, he said houses are now 30% off of their highs. In other words, this guy is using the top of the biggest bubble in history as his “historical norm”. I trust you are not doing that.
Thanks, in advance for your reply.
Sane Economist
@DonC,
Seriously, you really need to review your statement about housing being undervalued by 30%.
Go back, reread that statement.
It really is asinine.
DonC
Norton — Not to put too fine a point on it, but the received wisdom is that you can’t value a market based on sales that HAVEN’T OCCURRED. The thinking has been that it’s impossible to place values on transactions of stock, houses or other things when the ask and bid prices were some distance apart. Apparently you have magical powers other mortals lack. Or perhaps you just have insights previously unknown. In the latter case you might want to inform the Nobel Prize Committee because Merton and Scholes won a Nobel Prize for something not half as slick.
Martin — I’ve posted the cite to this study many times but here it is again: http://www.ihsglobalinsight.com/gcpath/ValuationReport4Q10.pdf
FWIW the market isn’t off 30% from the highs as your realtor friend has mentioned. Using this study’s methodology, which has proved robust over time, the Reno housing market was overvalued by almost 50% at the end of 2005 and is currently 30% undervalued. That’s a much bigger drop than 30% from the highs.
With respect to your question of how historical value is calculated, as laid out in the report, the methodology ties prices to incomes, interest rates, and population densities. It then adjusts the results by other factors, such as the fact that in some markets housing is persistently more or less expense than you’d expect. Another check on valuation is to weigh individual markets against the total housing market. But you can read more about this for yourself.
Sane Economist — Thanks for pointing out how asinine it is to say that, when the P/E ratio of the Wilshire 5000 is 10, the stock market is undervalued from historic norms by 30%. That’s your point, isn’t it?
smarten
To follow up on DonC’s point, how could the Reno/Sparks residential SFR market have been so grossly [50%?] overvalued at the bubble high but for lower sales that HADN’T yet occurred? What was the logic supporting that view? Was it opinion or fact and if the latter, exactly what?
Whatever your answer, if it were sufficiently valid for you Mr. BBs out there to predict massive devaluation three years ago, why isn’t the same methodology valid today?
We can disagree all we want upon others’ OPINIONS, relying upon each of our particular methodolog[ies] of choice.
My personal simplistic view is that the residential sales market, like many other types of life events [like the tide], experiences highs and lows just as a pendulum swings. Generally, the pendulum OVERswings in both directions before it settles into [let’s call it] a comfortable trading range. Perhaps this is what DonC was referring to when he cited others as being of the opinion that the Reno/Sparks residential SFR market is currently 30% undervalued?
I’m not saying I agree with DonC’s views re: undervaluation, but to call his views asinine? Come on people.
geopower
I’m guessing what Mike’s getting at on Canyon drive is that there are three houses- 2 short, 1 conventional and a lot for sale in a section of town that has low historic turnover, good views, outside the city limits, with relatively high demand and prestige. And the prices are starting to drop much closer to in line with the lower end- 309, 340 and 459K. 459 is still pretty high, but since they owe 544k plus whatever fees since the last payment was 2/09, I guess they’re trying to keep the bank happy. I can’t imagine it’ll sell at that given the neighbor’s comps, admittedly on less nice homes. It looks like the valuation in the neighborhood is headed back to the 350K they paid for it originally in 2001. Too bad about the ARMs and refis every couple years.
So, good spot Mike, this looks like it may be the start of the capitulation of the high end. Of course, there are still vacant lots a few blocks up listed at $1M, but once these sales go though, they’ll have a pretty hard time explaining to buyers why it would be worth that given the comps.
Sully
smarten, first of all – the 30% undervaluation is not Dons’ opinion, he just seems to agree with it. Secondly, the numbers produced by this report do not agree with Guys’ numbers that he posted under median sold prices.
The only other market I can relate to (San Jose) has much closer data. So, for the most part, I’m thinking this report came out of the NYC,NY office of IHS Global and was written by some jackass looking out the 7th floor windows and daydreaming while compiling this report.
Thirdly, it appears the author is using 2002 as his base year for comparing values, etc. In 2002 the unemployment rate was around 4% – fast forward to now at 13+%.
If anything the valuation (again for the under 350K market should be near zero or nor greater than -5%). The over market is probably closer to +30%.
Now while my research is BS, according to Don, IHS Global is top of the line. Go figure, I live here, but some donkey in NY can trump my calculations simply because?????
Sully
…and before you ask. My estimate on the over 350K market is based on listing prices. I have never heard of anyone successfully buying a house that has already sold! That’s also why I used the word probably.
Sane Economist
I don’t understand the logic of calling homeprices as under/overvalued.
If you buy a house in a normal arms length type
transaction, then the price you pay is the new market price.
It’s called price discovery and it is the very essence of a free market system.
I think people like DonC get confused by this.
Prices are always set at the margins.
Of course everybody forgets this when prices rise so meteorically as they have these past 5 years.
But it’s the same process on the way down.
The only people who I know who use terms like “undervalued”, are people who have vested interests, like realtors and underwater homeowners. Enough said.
DonC
Sully — You’re absolutely right it’s not my opinion — I’m just citing the Global Insight report.
You’re also right that I find accepting the report’s conclusions entirely reasonable, absent any cogent evidence to the contrary. Global Insight is the world’s largest economic consulting firm, with over 600 economists and trained staff located in 13 countries. It also has a major client list and bills almost $100M a year, so presumably businesses find its consults useful.
In the course of its normal business it has produced a housing report. The report rests on a firm theoretical basis and has proved robust over a number of years. Moreover, as Smarten points out, in past years Global Insight has not only agreed with those who had contended that the Reno housing market was in a bubble, it has provided quantitative support for this position. Finally, it has made its predictions public and before the fact, so the report isn’t some hack that gins up numbers to fit events.
That report now finds that the market has corrected and that rather than being overvalued the Reno residential housing market is now 30% undervalued. What are we supposed to do? Ignore this report and adopt the random opinions of random guys on the internet who are always of the opinion that the sky is falling? Or should we dismiss it on grounds that it’s asinine or otherwise unreliable because someone from NY worked on it. You tell me.
BTW, if you read the report, which you don’t appear to have done, it will answer your questions about methodology. I say you don’t appear to have read it because your conjectures about how under/over valuation is calculated completely miss the mark. (There is no “baseline” year and the unemployment rate is irrelevant because it factor is accounted for in family income).
Also, I never said your “research” is BS. The fact is I haven’t ever seen it because you’ve never chosen to share it. However, without being disrespectful, most people would find that a valuation model, which has proven itself over time, and which has been authored by the largest economic consulting firm in the world, to be credible.
Sully
Don, I for one don’t find it creditable for the Reno market. However, I did say the San Jose market seemed to be fairly close.
What I did say was some jackass in NY looking out the window while compiling this report was wrong!
Simply put his methodology, which appears to be the same as people estimating the median income here, is off.
DonC
Sane Economist — I didn’t know you were such a fan of Alan Greenspan. He of course was of the opinion that you could not identify when things were under or over valued.
While you and Alan can claim that any market price is as good as any other market price, that all market prices have equal amounts of downside and upside, and that buying a house in 2005 gave you as much upside as buying a house in 1995 or 2009, I think not. Yes Virginia there is a Santa Claus, and yes Virginia there are asset cycles and bubbles. Buying stocks when the P/E is 10 has a lot more upside and is a lot less risky than buying stocks when the P/E is 35. And buying houses when real estate is 30% undervalued by historical measures has a lot more upside and is a lot less risky than buying when its 50% overvalued by those measures. It’s just the way it works.
DonC
Sully — OK, I don’t know a lot about Reno. I do know that the Global Insight Report is quite accurate for where I am. So if you say it’s also accurate for San Jose that’s 2 of 3.
My guess is that if we looked at individual houses in Reno we might not not disagree that much. Right now I’m not finding a lot of attractively priced houses in the price ranges I’m looking as compared to last spring. The sellers all seem to think that the rent/buy ratio should still be above 20 and that “their house” deserves a 20% – 30% premium as compared to what recently sold in their neighborhoods.
Not sure I’d want to be a real estate agent at the moment. (Not sure I’d ever want to be one but particularly not now).
Sully
Don, the second paragraph, if I’m reading it correctly, is exactly what I’m finding and trying to say.
billddrummer
To Mike McGonagle,
I tracked the same stats that you did (although I didn’t dig as deeply into the minutiae of loan amounts).
Since I’m in the commercial world (mostly), I’ve been struck by how few commercial NODs have been filed so far this month, especially in comparison to March. Does that mean banks are attempting to work with commericial borrowers?
It does seem to me that lenders are trying to clear their books of dead property. Whether they are doing it to support the community or to heal their own balance sheets is immaterial, in my opinion. As long as it’s happening, it is a ‘very good thing,’ as Martha Stewart would say.
Does anyone have an opinion about the state of the local economy?
It seems to me that traffic has increased over the past 6 months, both auto and truck traffic. Another thing–it seems that there are more working vehicles–construction supply trucks, pickups with workers inside and tools in back–than there were last year at this time.
And if you recall, the weather was better last spring than it has been thus far this year.
Some restaurants appear to be getting busier.
Retail stores now have cars in their parking lots, and people appear to be buying things again.
Has the recession eased in Northern NV?
Sully
billd – I would surmise this is pent up demand. After about two years people tend to start buying needed items. Also, the last 3 weeks I’ve been to the Atlantis (lunch) and Peppermill (breakfast) and did not see a crowd, actually thought it was only 25 – 32% filled. I have seen more construction traffic though.
If the recession was over do you think Reno would be worring about laying off another 200 more people?
smarten
Billd –
As you may know the new Ritz-Carlton Highlands opened on Northstar’s ski mountain this last December. A recent article in the RGJ quotes the general manager as stating occupancy has been beyond their projections. Last week we rode up the gondola with several RC guests who told us they thought the hotel was at 100% occupancy [remember, this is now low season after Easter]. And last week some friends of ours attempted to make dinner reservations at the RC’s signature restaurant, Manzanita, and couldn’t get a weekday table until 8:30 P.M. When they arrived, they found the restaurant full!
Also rode up a chairlift with a Northstar worker who said busines has been up, substantially, for the Resort this season.
IMO you don’t spend $250+ for a hotel room nor $65+ for dinner in a recession.
billddrummer
smarten,
Good point. It seems that people will spend for a superior value proposition.
And to Sully,
I didn’t say the recession was ‘over,’ but that it seemed that it had ‘eased.’
There is a difference. “Over” suggests things are improving. “Eased” suggests things are deteriorating less slowly than before.
I believe there’s still a long way to go before we can say that the recession in Reno is ‘over.’
But from smarten’s comment, it may be that higher income people are starting to feel better about their financial situations.
Which will eventually trickle downward to others. Resort workers and wait staff will get more hours and better tips.
My next door neighbor found a warehouse job that requires him to work 7-10 hours of overtime a week.
He was working as a pizza delivery driver last fall.
His income has nearly doubled in less than 6 months.
To use a cliche, we’re not out of the woods yet, but I think there’s a clearing up ahead.
Sane Economist
@BillD,
one interesting phenomenon that seems to be emerging is the uptick in consumer spending as a result of non payment of mortgages.
Turns out that last month, strategic defaulters spent $3.5 billion on discretionary spending while they wait out their eviction orders – which itself has now increased to record levels.
On average, strategic defaulters have an extra $1100 at month’s end. So it’s not surprising that consumer spending is again inching upwards.
So homeowners are still using their homes as ATM’s.
Sully
billd, I didn’t mean to use the word over. Its becoming a force of habit because of some reports coming out. What is good news is that the former pizza delivery driver has doubled his income. Maybe those 350K+ houses will now start to move. 🙂
A tad off the subject:
http://www.marketwatch.com/story/homes-are-cheaper-but-not-necessarily-affordable-2010-04-12
geopower
I can’t comment intelligently about the tourism or construction markets, but geology is a relatively big industry in northern nevada. From my group of associates, I’d say appropriate jobs around here are still pretty hard to come by even with an advanced degree. I know a number of people who were looking here but ended up taking jobs in California or Colorado instead, and a number more who are checking in with me every month or so about any potential openings where I work. I know the one industry isn’t an index, but since we’re all sharing anecdotes…
@SaneEconomist: interesting observation of the consequences of the long foreclosure process. You don’t think the folks on Canyon Dr. who’ve been living rent free since Feb ’09 have been saving up that money for their eventual move?
SkrapGuy
Diane Cohn stopped paying her mortgage last April. So far, all that’s happened is a NOD last November. No NOS to date. Diane has not been living in the house, but she could have been and if she was, it would now be a year of mortgage free living.
This is not the least bit uncommon now. There are no doubt hundreds if not thousands of people doing this exact same thing right now in Washoe County.
Carlin
Hell, I work with three people who stopped paying their mortgages last Spring. One in March, one in April, and one in May. Not one of them has yet received even a NOD. One of them just went out and bought a new Honda Accord for cash. They all sort of snicker at those of us who have this silly notion that people ought to pay their debts.
GreenNV
geopower, you summed up my thoughts about Canyon Drive perfectly. There are holes showing up in what appeared to be stable, old money neighborhoods. And there are more in that neighborhood. 5100 Eldorado just got snapped up as a TD for $510,000. Purchased for $860K in May 2005 and $470K in August 2001. Lots with tear down houses were going for $650K back in the day.
In my little corner of the world (ironically the only subdivision bb ever praised!), 5 of the 65 homes have seen foreclosure activity. 3 have gone to Trustee’s Deeds, and it took 8, 17, and 20 months from the date of the missed payment (the 8 month was private money). All three moved out well in advance of the TD. Two others here missed May 2009 payments and received NODs, but no NOSs yet after close to a year. They are still living the vida loca mortgage free, paying their HOA dues and property taxes, knowing the odds are they have at least another 6-8 months on the gravy train. These aren’t bad people, and both would probably deed in lieu in a second – they know they screwed the pooch and would just like to get out of their situations and start over. But they are not dumb people, either. Even if their homes move to NOS standing, their chance of postponement is over 90%. So they honorably squat.
inclinejj
What I did say was some jackass in NY looking out the window while compiling this report was wrong!
The same jackass’s came up with the 1% option arm and told lenders to fund as many as they could and Wall Street will buy them all!!!!
The markets will not come back until capital comes back into the markets.
Keep in mind that FHA will also need a bailout w/i the next 2-3 years.
I was in IV from Wed till Saturday at 8pm. Everyone I talked to said Business was Dead. Raley’s, Village Market, Hyatt, all dead!!
geopower
Mike,
there was also 4695 Canyon, sold REO for 340K 2/1/10, 3/2, 1.3 acres. Bought in 2006 for 735K, foreclosed in 2009 for 440K. I didn’t tour it, but I think I remember the listing saying it needed work. I think that was the price point the two closest are comparing to. One properly priced sale and the neighborhood comps drop, unrealistic conventional sales become realistic short sales, and we actually start processing the inventory.
I think going forward there will be some good value for the right buyers in this neighborhood. And for full disclosure, I’m in contract on something similar right now. So depending on your perspective, I either have a vested interest, or I’m putting my money where my mouth is. If the rest of you feel you must, feel free to commence ad hominem attacks and further discussions of who is an idiot for buying or not buying, though I’d prefer to have some more input on actual sales and listings. And I look forward to being able to discuss my purchase in more detail once I close.
smarten
Congrats geopower. Hope your escrow goes well and you choose to share your details once your close.
Sully
geo; there’s a large price range on that street. 200 – 700K. Must be a lot of custom houses. I do see that some were built in the mid 70’s. Only thing I would tell you is to watch for aluminum wiring. Other than that, if you’re happy go for it.
Rory
The best thing I read in this thread? Bantering Bear won’t be posting much anymore. Music to my ears!
People who are either bears or bulls 100% of the time, regardless of market changes or conditions, are useless. BB, is useless. Crawl back into your dark cave already!
geopower
Couldn’t resist putting together a little more data on past and current listings in the Canyon Dr. area- I limited to outside the city limits and HOA, and not up on top of the hills. I’m sure prices in the hills will cave eventually, but they haven’t shown much yet. Within that area, solds show quite a bit of range in ppsf- under $100 to over $200. Current listings seem to be aimed around $170-185psf.
address sold? date price area land ppsf
4125
Hackamore y 3/11/10 185k 2239 54885 83
4695
Canyon y 2/1/10 340k 2428 60471 140
4755
Canyon y 5/14/09 775k 4212 54885 184
5100
Eldorado y 3/25/10 510k 3172 39639 161
5155
Ross y 6/26/09 367k 3516 27442 104
4325
Ross y 3/5/10 412k 3100 48787 133
4250
Hackamore y 4/30/09 350k 1711 40075 205
4195
Juniper Ck y 11/24/09 567k 3550 39204 160
5301
Canyon y 5/20/09 200k 1702 36683 118
4305
Canyon n 188k 0 36154
4375
Canyon n 525k 0 60112
4885
Canyon n 309k 1768 16552 175
3874
Zoe n 280k 1617 56600 173
685
Juniper Hill n 1195k 0 230432
5045
Canyon n 340k 1844 71438 184
5050
Canyon n 459k 2525 26571 182
4385
Bridle n 585k 2892 46173 202
I haven’t paid much attention to the prices in south reno, but I would imagine if there is a comparable area in town it’s the big lots with water rights south of S McCarran and west of Virginia. Anybody down there see a similar trend?
skeptical
Ritz Carlton Northstar is in the foreclosure process and was issued a Notice of Default by BofA. Reportedly, it is $18M in arrears on loans of up to $157M.
Smarten, you had nice things to say about this resort on 12 Apr. You stated, “you don’t spend $250+ for a hotel room nor $65+ for dinner in a recession.” Well, I guess you’re right, because apparently not enough people were spending $250/room and $65+ for dinner.
Mike McG,
Would love to hear any dirt you can dig up on this one. Certainly doesn’t bode well for IV real estate, FWIW….