NODs totaled 576 In December, virtually unchanged from 567 in November and 578 in October. NOSs totaled 689, down a bit from 715 in November and up from 578 in October. TDs totaled 262, up around 15% from 225 in November, but down significantly from 376 in October. The updated chart is HERE – clicking on it will bring up the monthly data through the magic of Word.
So how did the 2010 totals stack up? There were 8504 NODs filed in 2010, down in the 20% range from 10,305 in 2009, and nearing the 6555 filings in 2008. 2007 saw 3072 filings. 7213 NOSs were filed, up about 10% from 6480 in 2009, and up from 5411 in 2008 and 2900 in 2007. TDs totaled 3399, virtually unchanged from 3361 in 2009, and still way above the 2744 2008 and 777 2007 filings. Monthly and annual totals can be found HERE.
My gut? We’re halfway home now. Weekly sales on the courthouse steps are only clearing about 25% of the properties – the rest are Postponed and Canceled, only to return or enter the shadows. NODs are definitely trending down, and I don’t see the systemic spread into the high end homes that the RGJ alluded to today. If you were to base your market assessment on the condition of the new listings, virtually all of which have been REOs or Shorts the last few weeks, you would get a pretty distorted view of things.
The banks seen to be losing patience with early stage developments and are moving more into the foreclose process. I talked about Sonoma Highlands earlier. Quilici and Santerra went NOD. I’m working on a story about the entire Western Gateway development for later, but these are the 2 properties East of 80 when you arrive from California and are actually driving North towards Boomtown. Mortensen was going to be a R & B 668 unit development just West of Sierra Canyon, and it is currently at auction (w/ Pulte rumored to be hot in the action). Branch Bank is finally moving in on Upstream (though holding off on Rancho San Rafael). Ever heard of Monterey Park Place? It is the empty lot in the middle of the commercial development SW of Robb and Mae Ann, and was going to be a mini Village from Monterey Development, who also saw the Vue get a NOD this week (even though they have sold off the next phase of development). North Valley Development has a lot of dirt in the foreclosure process up North.
Don’t forget to check out REreno once in a while. There are some things unfit for RRB posted there, additional detail on some posts you read here, and often working papers for future postings. See the Somersett post for an interesting update.
So, are we half way home moving beyond this foreclosure mess?
Martin
Are we half way home in terms of all the foreclosures that will be commenced as a result of the bubble and its collapse? (Note there have been about 28,000 NODs starting with 2007) . We may be.
Are we half way home in terms of all the NODs and NOSs being finally processed out by TD or other resolution? I don’t think so. Of those 28,000 NODs since 2007, well more than one half are MIA and unaccounted for. There are thousands and thousands of people who have not paid their mortgage in over a year and still firmly planted in their houses because the lender has not moved past the NOD/NOS stage.
MikeZ
Peter Schiff has a pretty good track record on housing … and he thinks:
http://www.businessinsider.com/peter-schiff-home-prices-2010-12
Dec. 30, 2010
Here’s Why Home Prices Have To Decline At Least 20% And Probably More
…
RangerRoy
If we are only half way through the number of foreclosures that are (will be) filed, then we are looking at 56,000 NODs before we are done?
Astounding.
bob_c
mike z— obviously you disagree w/ that article…..nowhere have i seen you
forecast an additional 20%+ decline w/o an unexpected event
bob_c
Guy,
How does the market ‘feel’ to you? I could poll full time real estate brokers, but
most might lie.
skeptical
MikeZ,
Since there’s an apparent bit of role reversal here, I thought I’d chime in.
Reno (and NV in general) has worked off much more of its bubble than just about anywhere else in the US. In fact, Reno is back below its long term trend (esp. when you consider inflation).
Just compare Reno to anywhere you wish on Zillow’s tool. I think that the additional 20% that Schiff says needs to be worked off is in places like Boston, NYC, San Diego, and elsewhere.
Still neutral. Plenty of good deals out there at/below median. But I’d be remiss if I didn’t add that there are still plenty of delusional sellers.
skeptical
Forgot to mention, Bill Ackman provides the counterpoint to Schiff. Not picking sides:
http://www.businessinsider.com/bill-ackman-ignore-plummeting-house-prices-and-real-estate-doomsayers-houses-are-now-a-screaming-buy-2010-12#
Waldo
As we begin 2011, there are about 15,000 houses that are in the foreclosure process. 15,000 houses that have had a NOD recorded and that have not been cancelled nor have they been processed on to a trustees’ sale.
This is a dark cloud that hangs over any market recovery and makes it difficult to say we moving beyond the “foreclosure mess.”
MikeZ
Bob, my opinion changes as new data arrive. At present, I agree with skeptical that this area has deflated much of its bubble. I just don’t see $80/sq-ft as possible for Reno/Sparks.
Regardless, Schiff’s analysis is still cause for concern, but (again) I agree with skeptical that its cautions apply more to those regions that have resisted a return to their long-term price trend lines.
It feels funny agreeing with skeptical, and I imagine he feels the same way. 😉
MikeZ
RE: Bill Ackman provides the counterpoint to Schiff.
Ackman cites a variety of reasons, including low interest rates, significant declines in property values, and the potential to get cheap government loans in support.
“Low interest rates?!”
That’s ridiculous! That’s preposterous! He’s an idiot! He’s a realtor shill with a hidden agenda! Low interest rates are juicing the market!!
Giggle.
Reno Ignoramus
Skep, it seems to me that the problem with relying upon the long term trendline is that the long term trendline has been forever impacted by the Biggest Bubble in History (in which Reno fully participated). I’m not sure that past measures are a very good predictor of the future anymore. The bubble produced massive seismic shifts in the real estate terrain in Reno and the old maps are not accurate any more. We have never been here before. There has never been any time in the history of the Reno real estate market when there were some 15,000 properties (more or less) in some state of foreclosure. This is new terrain and we are trying to make up the maps as we go along. I don’t think we know what is around the next bend.
With the median SFR down 52% from the bubble high, sensible opinion would suggest we may be through the worst of it. But 15,000 houses in foreclosure limbo has to be some cause for pause.
Happy New Year to all.
skeptical
RI,
Well put. I believe that the story of the Reno RE market for 2011 will be what happens with those homes in some stage of foreclosure.
The quickest resolution would be if the banks just put them up on the auction block and let them go to the highest bidder, however low those bids might be. Then, the homes could be bought by financially stable owners. Health would eventually be restored to the market.
The trouble with that, however, is that if the banks unloaded, they would have to realize substantial losses on their loan portfolios, instead of marking loans in default to previous, bubble values, and thereby propping up their balance sheets.
One parting shot for the New Year. I will most likely buy a house (or a few houses) in Northern Nevada in 2011. The time to buy is when there is blood in the streets, not when euphoria reins supreme. As I have been the perfect contrarian indicator previously, I would advise caution to any other potential buyers….
smarten
I cannot believe I’m reading the following words from skeptical: “I will most likely buy a house (or a few houses) in Northern Nevada in 2011. The time to buy is when there is blood in the streets, not when euphoria reins supreme.” I think skeptical has started partying a bit early! Or as some might say, it sounds like he has moved to the dark side. Welcome to the party!
Martin
And MikeZ putting up a link that says houses may fall another 20%??
Maybe its a New Years Eve masquerade ball……….
inclinejj
Nevada 14.3 percent unemployment. Does anyone thing housing is going to get better over night??
A very large very well capitalized shopping center developer once told me. If you can buy it for under todays replacement cost you got a good deal. That makes so much sense no matter what the market value is, the bricks and sticks are still worth something and you have to pay people to put houses, buildings up.
2011 and 2012 should be excellent years to pick up properties that break even or cash flow.
Move to Reno?
I hope that we have reached the bottom because I’m in the process of buying a house (foreclosure) in Henderson, NV. $103 a sqft. Sold in 2004 for $635k, buying for $345k. gated community of 74 houses, quarter acre lot, one story. 5 bedrooms, 5 baths, gourmet kitchen, tons of tile. 3400 sq ft. Deals like this are on the market for only a few days. paying cash.
inclinejj
In your 74 unit subdivision how many houses have been foreclosed on. I always tell people buy when you buy and sell when you sell. If you try to chase the very bottom or top of the market you will always miss it.
If your ok spending $345k all cash do it.
I don’t know anything about the Henderson Market but I would say its a safe bet you can not rebuild the house today on 103 a sqaure foot
Move to Nevada
Quite a few houses have been foreclosed upon although trying to find accurate information requires a lot of digging. I imagine that many more houses in that subdivision will be returned to the bank. However, the market seems able to absorb them and I doubt that prices will drop much further. The important thing is the individual house. There are only about 9 houses in that subdivision that face south and that was important to me as was the fact of having no neighbors behind the house.
Paying cash was a no-brainer given the very much reduced closing costs and the fact that the money-market interest rate is so low. Anyway, I will be selling my Maryland house next year for about the same amount so in effect I’m just swapping one house for another.
smarten
Congratulations MTR –
Hope your intended purchase goes smoothly. Cannot believe so many posters on the RRB are now talking about making [or having actually made] a purchase given all the negative we’ve been hearing here for how long?
Nevertheless, you made the following statement: “paying cash was a no-brainer given the very much reduced closing costs and the fact that the money-market interest rate is so low.” Although an all cash purchase may have made your intended purchase easier, with your permission I would suggest you look at securing a mortgage [even if it’s too late for a purchase money one, a refinance after acquisition]. Some of us on this blog have talked about the historically low mortgage rates we’ve seen over the last year. Although rates have spiked nearly 1% in the last two months, some of the commentators I follow are predicting a drop in rates [maybe the last one] within the next 3 months. If you’re poised to take advantage of a rate drop, you could be a big winner [on at least two counts (your purchase and its financing)]. Even if you’re able to sell your home in Maryland and use the proceeds to replenish your $345K all cash purchase, in this environment, I personally would rather have $621K in the bank [80% of your $345K purchase price ($276K) plus $345K from your home sale in Maryland] plus a $276K 30 year fixed rate mortgage at 4.5% or less [$1.4K/month P&I]! For the first time ever a barrel of oil is selling for more than $90 on January 1, and we’ve already heard on this blog how much the cost of food has increased over the past year. It won’t be too long before a 4.5% fixed rate mortgage will look like the deal of the century [and you’ll be kicking yourself in the rear for not having taken advantage of it (if you don’t) when you had the opportunity]! And at that point you should be able to realize a heck of a lot more of a return on your stash of cash than 4.5% [actually, you don’t even need to realize a 4.5% return once you factor in the income tax benefits of mortgage interest]. Just my two cents.
Move to Reno?
Smarten, I thought long and hard about the valid points you made. However, 46% of all home buys in the Las Vegas valley are for cash, and the banks would rather accept a lower cash offer than a higher mortgage one. Figure I saved about $10k in closing costs doing a cash deal. At any rate, I hate being in debt and the bottom line was that it was an emotional decision.
smarten
MTR –
I assumed you secured a better deal because your offer did not include a financing contingency. However, that doesn’t mean you’re precluded from securing purchase money financing. And even if sufficient time doesn’t remain to secure such financing, that doesn’t mean you’re precluded from “refinancing” after closing [although there may be guidelines which prevent such a refinance for a minimum of “x” months after going into title (I just don’t know)]. No one likes debt but $1.4K/month for $276K cash doesn’t seem to shabby to me. And I don’t understand the $10K in added closing costs [$4oo for an appraisal, $400 for processing/underwriting, $100 for credit/tax service, $350 for a lender’s title policy (just guessing here), no origination fees and no additional escrow fees…where’s the $10K?]. Actually, purchasing a lender’s title policy at the same time as an owner’s costs a good amount less than purchasing a lender’s policy after the fact. In any event, just a suggestion. Let us know how things work out after you’ve closed.
MikeZ
Smarten, I thought long and hard about the valid points you made. However, 46% of all home buys in the Las Vegas valley are for cash, and the banks would rather accept a lower cash offer than a higher mortgage one.
It’s been my understanding that a pre-approved loan guarantee is just as good as cash, for any home purchase, even for a short sale.
Move to Reno?
Just wondering, guys, but why are 46% of the sales in LV for cash if financing is so great?
While a mortgage pre-approval is necessary, the bank still retains the right to decline a loan based on the appraisal of the house.
Most mortgages require mortgage insurance which is 1.5% of the loan. Points are running about 1.25% Add in mortgage origination fees, state transfer taxes, etc, and one starts to talk about some serious money. Anyway, I can always go the the VA for a mortgage for the full amount if I ever need the cash or see some serious inflation happening. Right now, the banks want to move fast on their repos. They even agree to pay all of the State transfer tax.
smarten
MTR [or should we now call you Move to Las Vegas?], I assumed this purchase was for a new principle residence. Was my assumption wrong? If it was, why are you making an investment purchase which in all likelihood, cannot cash flow [are you banking on appreciation]?
Assuming your purchase is for a new principle residence, I think some of your mortgage cost assumptions are wrong. For instance, 1) most mortgages [especially 80% LTV ones] do NOT require mortgage insurance; 2) many mortgages do NOT require origination fees/points unless you want to pay down your interest rate [which I was not suggesting]; 3) mortgage origination fees [which are generally the same as “points” unless you’re talking about what many refer to as garbage fees] shouldn’t total more than $450; 4) you will have to pay for an appraisal, however, it shouldn’t cost more than about $400; 5) you have state transfer taxes whether/not you secure a mortgage, so it’s not really a “financing” cost [and besides, you’ve suggested your seller has agreed to pay these taxes]; and, 6) I don’t know what you mean by “etc.” other than possibly a $200 escrow fee, $100 worth of recording fees and a $12 credit report fee. So you see, we’re really not talking about “some serious money” when we talk about mortgage costs. And why would you want a VA mortgage? These mortgages are primarily for veterans who require purchase money financing [which you don’t require] and don’t have the necessary down payment [which you do have]. Although I don’t follow VA mortgage rates, I doubt they’re lower than conventional rates/terms.
I can’t explain why 46% of all sales in Las Vegas are for cash other than to speculate that perhaps 46% of all sales are distress and existing/former lenders won’t accept offers which include a financing contingency [especially given many lenders are now taking 90 or more days to approve/fund mortgages]. But again if you’ve got the cash and don’t “need” purchase money financing, why not seek that financing after you close on your intended purchase? That was my point.