NODs for September were 729, up from 682 in August and 674 in July, the highest level since March. NOSs were 725, up 40% from 519 in August and 573 in July, the 3rd highest monthly total ever recorded in Washoe County. TDs edged up to 313 from 294 in August and 298 in July. That increase in the number of NOSs is scary.
900 South Meadows Parkway #1413 in Tanamera was purchased in July 2006 for $236,000. It is a 1 bedroom, 1 bath 829 SF unit. The buyer used a 30 year fixed mortgage for $136,000 and put $100,000 and still went into default. What makes this noteworthy is that the developer, Barone-Tanamera, bought their unit back at the Trustee’s Sale for $72,251. I’ve never seen this before, or even the right of first refusal clause in many developer purchase agreements ever being invoked.
Pulte pulled a little bait and switch at Sierra Canyon this week. The way the CCRs are written, once the first house in a "Village" is completed, all the lots in that village start paying HOA dues. Pulte is running out of room in Village 9, and was facing annexing the 101 lot Village 10 into the project (the last and largest of the original Sierra Canyon project). Instead of paying HOA dues on lots they couldn’t sell, they de-annexed all of Village 10, then re-annexed only 34 lots. Good news for the developer, bad news for the HOA who was budgeting for the additional dues.
Somersett met City Hall this week, with the adoption of a new Parks Agreement for the project. As each house is built in Somersett, Reno collects a Parks fee, which is then rebated to the developer for construction of agreed upon parks and amenities. The East Park and 6 trailheads have been completed under the original agreement, but sales have not generated the funds to complete West Park and the final trailhead by the scheduled deadline. The new agreement slows down the schedule, and significantly decreases the scope of the West Park project. It now includes public garden plots, available for use by any Reno resident and not just Somersett residents.
The next day, Councilman Dave Aiazzi announced that over $400,000 in additional funding had be found for the purchase of the abandoned Northgate Golf Course. The source of these funds? The Parks contributions from Somersett residents. Last year, the Somersett master development agreement was amended, growing the project by about 15% from 2648 units to 3063. This was anticipated to increase the available Parks funding by $414,000, plus an additional $668,000 from the addition of Sierra Canyon II to the overall development. Under the revised Parks Agreement, only 52% of the parks funds generated by Somersett are guaranteed to be available for Somersett projects, with the remaining 48% available to be spent anywhere within Reno Park District #2 the council deems fit. Somersett gets denser, the park amenities are reduced, and park fees collected within Somersett will be used elsewhere. There are going to be some angry residents in 89523, as well as some very happy ones.
Raymond
Tanamera and Fallen Leaf are rivaling Smithridge for the biggest digger in condo prices. Only difference is that Tanamera and Fallen Leaf condos are fairly new and not 40 years old like Smithridge. 70% haircuts from the bubble high have become commonplace in condos all over Reno-Sparks.
As for the 40% jump in NOSs, all the way up to 725……Meaningless. Irrelevant. MikeZ assures us that the only thing that matters is the median price. The fact that banks have recorded notice of their intention to sell three quarters of one thousand houses at foreclosure sale means NOTHING.
skeptical
The great housing depression of the 21st Century continues apace. Many are still stuck in the paradigm of the market as it existed for the better part of the last 40 years. Buy the dips, they say.
We’ve hit bottom, they say. We’ve found stability they proclaim! Look, just look at the stats.
Meanwhile, the foreclosures continue. Families displaced. Children taken out of their schools as they relocate to lower rent areas.
Unemployment maintains its levels — the highest since the Great Depression. Boy, some stability.
Being a pessimist is no fun. It’s always more enjoyable to bet the pass line on the craps table. Everyone can then cheer for the shooter.
But being a realist is absolutely necessary in this environment. Headwinds to the return of a healthy real estate market in Reno? They are many:
– Continued mountains of foreclosure adding to the Everest that already exists
– Continued historic levels of unemployment
– Continued denial among sellers, whose prices remain way too high
– Continued decay of the gambling industry in Nevada (our only industry, ex mining which only feeds the desert hinterland). This decay is caused by: Indian casinos in California, belt tightening by American consumers, riverboat casinos proliferating in every state.
I spoke with a guy who has made tens of millions in Nevada real estate the other day. He witnessed the collapse of the steel industry in the mid-70’s in Pittsburgh. I figured going in that this guy must be a perma bull, as he’s made his whole fortune buying and selling Nevada real estate.
His view? He said that he saw Pittsburgh in 1975. Back then folks were talking up the RE market amid the falling prices. Gotta buy now, they’d say. Steel will come back! No way it’ll stay down forever. Well, he says Nevada looks and feels today just like the rust belt did ca. 1975.
In other words, maybe this thing will correct itself, and everything will be alright forever. Then again, maybe it won’t. Do you really want to be on the wrong side of that bet??
You won’t hurt yourself by paying rent and waiting this thing out to see what happens. Northern Nevada is a great place to live, so rent a nice big place with a creek in the back yard in a decent school district (if you can find one), and just wait it out. There’s no way you’re gonna hurt yourself by doing that.
I have no claim on the future, and I don’t know what will happen going forward, but risk aversion and capital preservation should be paramount in anyone’s mind right now.
bob_c
A key indicator i follow as to the future of our economy is the 5 year TIPS bond.
This is a bond that has a yield plus the rate of inflation. This bond hit an all time
high (or low yield) of (minus) -0.18% plus the rate of inflation. Thats right, you recieve
0.18 percent LESS than the governments oft claimed to be understated CPI (consumer price index). That means that large holders of cash (over the FDIC limits) are willing
to lose 0.18% IN REAL money terms over the next 5 years. No more ‘living off your interest’. This is a historic change and casts a shadow over all asset classes. The obvious
conclusion is that the consensus expects 5 years of going nowhere as the probable outcome. You cannot argue with this indicator. You could argue with the CPI calculation,
but that is relatively petty. The minus .18 percent speaks for itself to an intelligent person
and manyintelligent people do not know this fact.
bob_c
It be-hooves me that financial planners plug in 5-8% rate of growth on IRA contributions
during retirement planning. This verges on negligence. Your savings are NOT going to grow. Your wealth will increase only by what you EARN.
LikeBigBottoms
There’s never been a better time to buy than right now.
And, now, from our friends at the New York Times (drumroll):
http://www.nytimes.com/2010/10/03/us/03reno.html
Ursula
I’m glad this blog is still around.
It’s been an ugly ride around here in Reno since I first started reading this blog.
We are still renting after 4 years of waiting and we’d love to buy a place more than anything but the information about the true state of affairs is sobering.
Thanks for the cold splash in the face. Still we shall wait.
Skeptical
Looks like the bottom of May 2009 proclaimed by a few here on the site was not, in fact, bottom:
http://www.trulia.com/real_estate/Reno-Nevada/market-trends/#qma_median_sales_price_chart_container