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NODs fell to 639 from 710 in April and 998 in March. NOSs fell to 582 from 637 in April and 794 in March. TDs fell to 327 from 348 in April and 284 in March. When you factor in that May had only 20 business days vs. 22 in April and 23 in May, things remained essentially static this month. If you like the pretty graph, you can find it here.
What happened on the courthouse steps this week? Of the 147 scheduled Trustee’s Sales, 42 went back to the bank, 80 were postponed, 22 were canceled, and 3 sold to third parties. inclinejj sends me weekly summaries of the Trustee’s Sales he follows in various markets, and this week’s numbers in Reno, as sad as they are, still show a much greater percent of sales actually closing in some manner than his figures. Or who knows, maybe it was a lucky week for the banks?
Montage closed 4 all cash deals this week, and there is talk that the first offerings are selling out rapidly.
I scan the NOSs daily looking for a couple properties I track. Somersett NOD 11/9/09, still no NOS. Belli Ranch NOD 8/14/09, still no NOD. Spy Shop guy NOD 8/14/09, still no NOD even though a negative Certificate of Mediation was recorded 1/10/10. Dant house with a 2/4/10 NOD based on a 9/1/08 missed payment actually sold as a short sale a month ago for $625,000.
There were a couple notable NODs filed this week. LW D’Andrea LLC (AKA Lennar) received a whopper. Original loan was $40,500,000, and they missed their required principal reduction to $30,000,000 on 3/4/08 and another to $25,000,000 on 9/2/08. As far as I can remember, this is the first case of a national player going into default rather than through an alternate resolution process (deed in lieu, short sale, modification). Any yet Lennar is still buying property. Bless the LLC structure!
The second notable NOD was Magnolia Village LLC. Missed payment on their $17,200,000 loan due 10/6/09. This is the development at McCarran and Lakeside, with allegedly one of the highest volume Starbucks drive-th roughs in the nation. This was the successful property that launched The Magnolia Group on their road to ruin. National companies were locating here, and the tenant imporvements exceeded anything I was doing in SF at the time, but the rents just never justified the investment. It was the "Reno is World Class" porject.. Wrong, as it turns out.
So what are you thinking this long holiday weekend?
skeptical
And for those of you hoping that the market would finally correct itself, with prices bringing health and stability back to the real estate market sometime in the next year or two….don’t hold your breath.
Time to kick the can at least a few more years down the road:
http://www.nuwireinvestor.com/articles/financial-reform-bill-now-includes-3-billion-in-homeowner-aid-55277.aspx
“The Senate passed the Restoring American Financial Stability Act last week, approving a new program that would reduce mortgage payments for the unemployed.
The program would provide $3bn from the Troubled Asset Relief Program (TARP) to lend up to $50,000 to unemployed homeowners, who could reasonably resume making payments again within two years”
Perhaps the permabulls are correct. Once again, the prudent bail out the reckless. Pardon me now, while I go vomit…
inclinejj
So much for a recovery on the local Reno Market huh?
bob_c
going to be a boring decade for reno home prices,
but if you live here—you can find the home you
really want
MikeZ
RE: “things remained essentially static this month.”
Heh. ANOTHER month of stability.
MikeZ
[skeptical] “hoping that prices bring stability back”
My goodness. STILL in denial?!
Price stability has been here for TEN MONTHS now.
LikeBigBottoms
Actually,
I would call it a bottom….
http://www.zillow.com/local-info/NV-Reno-home-value/r_13478/#metric=mt%3D19%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D13478%26el%3D0
DonC
I’m thinking that “Shadow Inventory” is mythical and hoping that there is a faster work through for commercial loans than for the residential. And of course that everyone has a great weekend!
skeptical — As one of the prudent I’m not offended. What’s the big deal? Unnecessary tax breaks for big oil companies may bother me. Counterproductive incentives given to agribusiness bother me. Government created monopolies bother me. This, not so much. (And given the size it’s hardly worth considering much less making yourself sick over).
inclinejj
Not just Reno. Things are tough all over!!!
http://www.newsobserver.com/2010/05/28/504370/hue-condo-sales-stop-no-units.html
inclinejj
http://blogs.wsj.com/deals/2010/02/11/lennars-sweet-land-deal-is-the-fdic-bullish-on-commercial-real-estate/
Maybe the FDIC made them write 1000 times.
I promise to pay, this time!
SmartMoney
Prices are falling faster during the first five months of 2010 http://www.housingtracker.net/asking-prices/reno-nevada/ then during the first five months of 2009. Makes me wonder what some people on this board consider price stability.
Sully
DonC; I’m thinking that “Shadow Inventory” is mythical…
Great opening, but the punch line needs some work. Stand up comedy is a tough act.
SmartMoney
Gotta love Steve Wynn http://www.cnbc.com/id/15840232?play=1&video=1506508223
MikeZ
[DonC] “I’m thinking that “Shadow Inventory” is mythical…”
On the subject of shadow inventory, the permabears are almost certainly right. The inventory math shows a large number of units in the shadows.
But it also seems that the banks are doing a good job of rolling this inventory out into the market in a steady, controlled stream to prevent any market price shocks.
MikeZ
[SmartMoney] “Prices are falling faster during the first five months of 2010…”
Read the fine print, those are asking prices.
BanteringBear
MikeZ posted:
“My goodness. STILL in denial?!
Price stability has been here for TEN MONTHS now.”
Can somebody please explain to me how prices could be construed as “stable for 10 months” when the bottom in the median, THUS FAR, of $167K was not reached until January 2010, a mere four months ago; a number which is 10% lower than prices were only 8 months ago, and a 17.5% decline YOY? Something is telling me that MikeZ failed remedial math, amongst other things…
MikeZ
[Bear] “Can somebody please explain to me how prices could be construed as stable for 10 months…”
Sure … I’ll try, but you may be unreachable. I think your mind is made up, in spite of the data. Observe:
https://renorealtyblog.wpengine.com/2010/05/april-median-sold-price-units-dom-and-sqft-2.html
Apr 10 $178K $103/sq-ft
Mar 10 $176K $100/sq-ft
Feb 10 $170K $101/sq-ft
Jan 10 $167K $97/sq-ft
Dec 09 $177K $101/sq-ft
Nov 09 $175K $103/sq-ft
Oct 09 $180K $103/sq-ft
Sep 09 $186K $103/sq-ft
Aug 09 $180K $104/sq-ft
Jul 09 $180K $103/sq-ft
Looks pretty stable to me.
[Bear] and a 17.5% decline YOY?
Check your calendar, and I think you’ll find that 10 months is not yet a year.
BanteringBear
Oh, so MikeZ conveniently ignores all peaks and valleys in markets. Along those lines of thinking, the DOW Jones Industrial Average has been stable for 3 years. Riiiiight…. That sort of nonsense may fly in REIC circles, but not the real world. The numbers show a $167k median in January, the lowest median price yet in this market correction, which was a 17.5% drop YOY as compared to the previous January. There’s been no 10 months of stability. Put down the bong.
smarten
Mr. BB asks “can somebody please explain to me how prices could be construed as ‘stable for 10 months’ when the bottom in the median, THUS FAR…was not reached until January 2010?”
Well I gave you the answer a couple of months ago Mr. BB. Either you didn’t listen or you have your own agenda to the contrary and you’re in complete denial. January was an ABERRATION! Weren’t you one of the several who said that one month does not make a market? Well, one month DIDN’T! To the contrary, for the last year the SFR median sales price [which I find interesting you now seem to admit IS a barometer of “the market”] has moved with the narrow range of $170K-$180K, but for January which dipped a couple of thousand dollars. You’re going to find the same when May’s numbers are reported in a couple of days; and according to your soulmate skeptical, that will also be the case when June’s numbers are reported. I don’t know where you do your shopping for vegetables [your backyard?] but where the most of us do, it’s called stability.
smarten
P.S. Mr. BB –
I guess using your reasoning, we should say that the SFR market broke to the upside in September of last year because for one month, the median sales price spiked to nearly $186K? Or that that spike proves the SFR has not been relatively stable for the last year.
MikeZ
[Bear] “Oh, so MikeZ conveniently ignores all peaks and valleys in markets.”
Nothing was ignored. The winter months are historically lower volume, with corresponding drops in median price. The 09/10 winter was no different.
MikeZ
This question is directed at those here who don’t yet acknowledge price stability in the Reno real estate market:
Based on: https://renorealtyblog.wpengine.com/2010/05/april-median-sold-price-units-dom-and-sqft-2.html, May ’09 was $175K, $102/sq-ft.
May ’10 data will be available soon. If May ’10 comes in at $175K/$102, or perhaps better, would that be evidence of price stability?
And if not, what would be the reasons why it’s not yet evidence of stability?
smarten
MikeZ asks “if May ’10 [median sales price/price per sq. ft] comes in at $175K/$102, or perhaps better, would that be evidence of price stability?”
Of course not! Why?
Let’s see…BP wasn’t able to stop the oil leak in the gulf.
Dennis Hopper died [I’m sad about this one] and his passing hasn’t yet been assimilated into the Reno/Sparks residential real estate market.
Or how about unemployment hasn’t come back down?
Or how about May’s numbers are skewed because of the first time homebuyers’ tax credit? Wait until July’s numbers.
Or how about I’m a patient man; I’m waiting for May 2011’s [or 2012’s or 2015’s or 2025’s] numbers when I’ll ultimately be vindicated.
Joe
It’s sort of funny to see you guys blasting the only guy on here that predicted the median to go as low as the 160k’s a couple years ago. At that time you thought it a rediculous idea. So even if the median price has been stable, are the bulls out there saying that the market is stable? With the thousands of homes asking more than the current median, and having to reduce asking prices constantly, I don’t think those sellers would call the market stable. Median price, sure, but how much does that matter? In 2005 anyone could look at the monthly numbers and give the same definitiion you’re giving: stability. It’s easy to read some monthly numbers. Understanding what’s really going on and the reasons why is much more valuable. That’s why many of us didn’t buy during the boom years. According to the “stable” median price at that time, 2005-2006 would have been a great time to buy, right?
Joe
Sorry, one more comment. Some may think it absurd to not use median sold price stability as the indicator of the real estate market stability. For me, I’ll see market stability when I stop seeing price reductions every month on properties I’m watching. Sure every now and then one of the properties will disappear from the mls as sold, but often within a couple months the same model, different house will appear and be listed for $50k less. When I’m fairly certain that if I spend $350k for a house, it’s not going to be “worth” $280k 6 months later, that’s when I’ll buy. And sorry, but 10 months of consistant median sold price does not tell me when that time is. So I continue to watch the properties, new listings, reductions, etc. And I see anything but stability. But for others who believe that median price stability = market stability, well then no wonder you’re so happy…we’ve reached market bottom!
smarten
Joe said “I’ll see market stability when I stop seeing price reductions every month on properties I’m watching.”
So what are the rest of us supposed to do Joe [is this another one of those “I’ll know it when I see it” litmus tests]? I thought we were supposed to be relying upon objective data and with all due respect, your evaluation of market stability is too subjective for many; especially if their price strata isn’t your $350K.
MikeZ
[Joe] “For me, I’ll see market stability when I stop seeing price reductions every month on properties I’m watching.”
Help me understand your position: How does what a seller chooses for asking price correlate to market stability?
bob_c
“same model comes on for 50K less”
i watch the new listings daily for a relative seeking a good current price and in my unscientific way i do NOT see similar properties
at reduced prices.
we will get another dip IF peoples ‘wealth effect’
gets hit too much harder than recently.
that will be your chance to the THE bottom, if that event occurs….otherwise the bottom were some of the ridiculously low distress sales mid last year.
bob_c
ok bantering bear carve me up!
no more fighting, i’ll take the bear to the GSR and get him smashed at the buffett w/ $3 all you drink beer
smarten
Don’t mean to rag on you Joe but you said that you’ll “buy…when [you’re] fairly certain that if [you] spend $350k for a house, it’s not going to be ‘worth’ [$70K less]…6 months later.”
Using this litmus test, isn’t this exactly what a few of us did 6-12 months ago and notwithstanding, Mr. BB and several others were all over us for our stupidity?
No; you can’t wait until you’re fairly certain that your mythical $350K house won’t be worth $280K in six months. You must wait until you’re fairly certain it won’t be worth $160K in six months [because $70K’s just not enough of a cushion with continuing unemployment; increased foreclosures; all that shadow inventory; etc., etc.]! And guess what? Using this test, IMO you’ll NEVER find what you’re looking for. Sorry.
Sully
smarten, I don’t think anyone is arguing with the points you make, however there are other issues some people seem to be concerned with, hence:
Phase 1 – real estate implosion. This ship has sailed.
Phase 2 – collapse of the economy or Great Recession. This ship is still loading, but getting ready to sail.
Phase 3 – Sovereign Debt Crisis spreading to the U.S.
This is the one that I fear the most. Its uncharted territory for the U.S. The brainless idiots in Disneyland East have managed to muddle us through so far with all the new attractions in Fantasy land. But the blind leading the deaf will not prevail for long.
This, I think, is a very compelling reason for statements like the one Joe is making. I have no idea if this will even happen, but my lack of faith in the leadership this country has had for the last ten years doesn’t hold much hope for better future results.
And yes, maybe some will never find what they are looking for, however it will not be the first time that happened.
MikeZ
re: Sully
And in a few years, when there is no “Great Recession” in the USA and when the “Sovereign Debt Crisis” is merely another speed bump in our economic history, what then? What will be the new, urgent crisis of fear?
It seems to me that some people (not necessarily directed at you, Sully) seem to live in a constant state of fear, that our society and economy are about to collapse … and they believe this IN SPITE of the most relevant economic data (e.g.: GDP has turned positive now for two quarters, job losses have abated, etc).
I just don’t understand that behavior.
Sully
Mike, re read my comment, every word this time around.
smarten
I agree MikeZ.
And as I’ve said before, let’s assume [for purposes of argument only] that the country is going down the drain and the end is near.
What will be the value of your currency sitting in the bank [because cash is king]? What will you be able to purchase with it?
So compared to a stupid purchase on real estate [that’s arguably worth as much as the currency you used to pay for it], what’s really the difference between the two?
Hey Sully – when you referred to “Disneyland East,” were you referring to the one in Paris?
Sully
No, the one in DC
Sully
BTW smarthen, you also appear not able to read correctly. I agreed in principle to what you have been saying regarding Phase 1 and 2.
Phase 3, which is not upon us and maybe never will be, is a possible scenario. Those buyers in the higher end of the market (400K and price range) are in no hurry. It’s not a tortoise vs hare race it’s a tortoise vs snail race.
The amount of inventory in that range vs the potential number of buyers leaves no one in a mad rush to buy. They might even be using the color of the walls as criteria, as there are so many to choose from. However, even if the criteria is waiting for the moon to turn pink, it doesn’t matter. There will not be any pressure for these buyers and waiting to see how the debt crisis plays out will be no lost opportunity for these buyers.
My point is I can see why some people are not comfortable backing up the truck and loading all you can get onto it. However, since the median income vs median price is in line with a more normal market, waiting for something in this range doesn’t make as much sense.
I’m not creating these phases, they are doing that all by themselves.
Sully
for some reason (400K and to the moon price range) did not print correctly.
Joe
I agree, Sully, and I believe you explained your view better than I did mine. And don’t worry MikeZ, I’m not one living in a “constant state of fear”. In fact I’m quite content and optomistic about many things. Several years ago I lived in central america for a couple years among an economic standard of living WAY below what I’ve seen anywhere in the U.S., and yet the people seemed to be much more happy and content with life than many U.S. citizens. So I should probably clarify my previous statements about not buying just yet. It’s not from “fear” of losing $70k in equity after 6 months, but rather I believe that a year from now $350k will buy more than it will today, for reasons I stated. I’m not trying to be greedy, I don’t need or want a big luxurious house. I just would like a little more yard space than most of the lower priced homes have. So I’m very content waiting, and if I’m wrong, I really don’t think I’ll lose sleep over it. BTW, I’ve made Reno my home where I’ll be raising my young family and living for many years to come, so I have only the best of hopes for Reno and it’s future.
DownButNotOut
I agree with Sully that there is something to be said about whether the most recent problems afflicting this country, and the world spell some kind of long term disaster for us. If it weren’t for the fact most people I respect and listen to believe the American spirit will overcome any darker outcome that might occur, I would seriously begin to hunker down.
But what I’m finding is now is the time of opportunity. Run when others walk, walk when everyone is running. It took me literally years to figure out that statement. And then apply it to what I do.There are a lot of opportunities in Real estate right now. And in other places.
Sully
Down, I agree with you regarding the American spirit when applied to entrepreneurs. However they need a free market in order to function effectively. As long as the government continues with its intervening, there will be limited upside in this area.
If the government ran Silicon Valley, we would still be using vacuum tubes and only now thinking about incorporating transistors. So until the government gets out of the way and lets someone else that knows what the hell they are doing lead, I will continue to have little confidence in a short turn around time frame.
MikeZ
Joe, I’m still interested in hearing your explanation:
Help me understand your position: How does what a seller chooses for asking price correlate to market stability?
dopey
MikeZ,
Lemme give it a try.
A seller’s asking price is predicated upon a variety of factors:
1) Comparative market analysis – a comprehensive look at what the market should bear for comparative properties. This is the seller’s guess at the value. This guess is a reflection of the strength of the market.
2) Realtor advice. See above, as well as (hopefully) professional insight as to what price point will sell in a reasonable amount of time. Again, a reflection of market strength.
3) Market feedback. In other words, if the asking price is too high, a motivated seller will have to adjust lower.
Many are still in denial, meaning asking prices are too high in some areas: Somersett, Arrowcreek, Montreux. The decrease in asking prices means a dissipation in denial, but also lower prices for prospective buyers, which, ultimately, is a good thing for the market.
I infer from your questions/remarks that you believe asking prices are irrelevant. Could you please explain that logic?
Joe
I couldn’t explain it any better than that, so I’ll say dido to what Dopey wrote. I’m also interested to hear your response of how asking prices are irrelevant. Also, I hope you’re taking into account that your statement of “what the seller chooses for asking price” is not entirely true in this market. Even above $400k there are many homes listed for a price set by the lender as an attempted short sale, so it really isn’t the seller’s choice is it? I have an idea of what your response will be, and I think we’re debating more of a difference in definition of the word stability, which, as Smarten alluded to, can be quite subjective and too broad. I’m still curious to hear if you really think asking prices are irrelevant to evaluating a real estate market.
GreenNV
Particularly at the high end, I tend to ignore asking price when assessing “value”. Two properties listed near me about 3 years ago, both at about $1.2M. The first was probably worth it (at the time) – just a few years old, high end finishes and construction, 3/2.5 3219 SF plus more in the finished walk out basement, killer views. It took a year, but if finally moved at $1,150,000. House 2 is 20 years old, well maintained but original, 3/3 3246 SF plus more in a finished basement, spectacular landscape. It never should have been $1.2M, but ego dictated the price. It has slowly been reduced to $799, then had a quick, decisive reduction to $649 a few weeks ago. It is now in contract – at $570,000 as a standard sale. Both sellers are in the construction industry, if that means anything to you.
Before house 2 went into contact, house 3 hit the market aiming to compete with it at $640,000. 4302 SF 4/3.5, remodeled kitchen and baths, zero curb appeal, realtor owned. The abandoned log cabin is right next door certainly not improving property values (log cabin is down to $530K, after someone did a pretty serious due diligence, and either walked or low balled). There is NO WAY house 3 will break $500K based on the house 2 comp.
And there is house 4 just outside the gates to this subdivision. Mike thought about doing a post just on this listing. It hit the MLS at $495K, and was reduced to $475K even before the for sale sign hit the yard. For the last few months, the asking price has been reduced $1000 every few weeks to keep it “fresh” on the MLS. I don’t know if the strategy was from the owner or agent, but any aware buyer would put on the brakes with this sort of activity. Just reduced to $449K. The REO house across the street sold a couple months ago for $220,000. Not a comp, but a general “aura” for the neighborhood.
So from where I live, asking price has no statistical value what so ever.
Joe
Fair enough. So would you consider where you live a slice of a “stable” market(asking prices aside)?
bob_c
if the assumption is depression….. why even discuss real estate?
dopey
GreenNV,
Au contraire, mon frere…
Asking prices have loudly heralded a decisively declining market in your neck of the woods. I dare say that the declining asking prices of which you speak tell the whole story.
From 1.2M, down to $649k, only to be sold for $570k. If that is the example to irrefutably prove that asking prices are irrelevant, I must be dopey-er than I thought. That notwithstanding, let’s get back to the original point. GreenNV’s tragic tale is anything but evidence of a “stable” and healthy real estate market.
I pity the fool who got that “bargain” two years ago for $1.15M. But Smartypants and his little henchman the “Z” man will no doubt find something to cheer about in your narrative….or, they just won’t comment at all…..
Sully
Regarding the govt’s ability to run things, I was reading an article and this part of it struck me as par for the course regarding taxpayers funds:
The government is the nation’s biggest holder of REO. M says the government owns 80% of the properties he deals with.
M says it’s really hard selling houses right now. It’s the government. They drag their feet on every sale and no one makes decisions. He made a sale last week. He said it took 18 months for the deal to close.
Then there are the checklists. The government uses a bureaucratic process for managing its property. Every time you miss one of the “boxes,” the deal gets delayed another six months. M told me he recently got an e-mail from the Department of Veterans Affairs asking him to “winterize” all their properties. They wanted him to pour anti-freeze in all the toilets and insulate all the windows. They were going to pay him $300 per house.
“I told them to use some common sense. This is South Florida. Their houses don’t need winterizing. They didn’t care.”
As an after thought, I wonder if they even bother to do the same in Montana! 🙂
DownButNotOut
I read the other day that the government was responsible for the majority of the newly employed, what with the census hiring and all. Apparently work 1 hour or more your counted. If you come back next week and work again your counted. and so on. I also read some amazing figures ( I can’t remember the exact number) of the the percentage of people that make their living being paid by the government.
It reminds me of the saying that ‘the government cannot give away anything that it doesn’t take from someone else’.
DonC
Sully — Get off the idiotic anti-government rants. In case you missed it, capitalism failed and the financial markets collapsed. That’s why the government intervened. Also, in case you missed it, if you check the Gulf you’ll notice that private enterprise is not exactly infallible.
Trying to blame the government because lenders were so sloppy with the paperwork and did such “creative” things with loans that they can’t legally foreclose is ridiculous. The fact is that, had the financial institutions not screwed up royally, the government wouldn’t own the damn houses. And had they documented the loans in a manner even approaching a reasonable way, they could actually produce the loan documents as required by law. Talk about Keystone Cops moments.
But who knows? This may actually turn out to be an OK thing. The inability of lenders to get their acts together is providing some people with breathing room to recover (not that as soon as the borrower demands that the lender produce the note the court proceedings stop). http://www.nytimes.com/2010/06/01/business/01nopay.html?ref=us
anonymous
Never thought I’d say this, but I
agree with DonC.
The corporations and their malicious greed ought to be held to much more account than the (at times) less than competent govt.
For all those who demand no taxes regarding the state’s fiscal catastrophy, try on the lousy services and nation trailing education system for size…. Ain’t no free lunch.