r e n o . r e a l t y . b l o g

The number of homes listed for sale fell in November. A 7.6% decrease from the preceding month. And though the decrease can be attributed to seasonality factors (i.e. many home Sellers take their properties off the market during the holidays), year-over-year, the number of homes listed on the MLS in November 2007 was down 13.9% from November 2006.

The number of houses sold for November was down 13% from October. Again, this is mostly due to seasonality factors (i.e. Buyers are too busy shopping for holiday gifts to be shopping for houses). However, the October to November decrease was not as pronounced as last year’s 22% decrease, or 2005’s 20% October to November drop.

Despite the positive spin, the fact remains that only 229 homes sold in November.  But with a median sales price of $288,195, a slight increase over October’s median sales price, that’s two months in a row of median price increases.  Similarly the median For Sale price has also increased for the second consecutive month.  Has the market begun a turnaround? Not likely. Two months does not a trend make. But the numbers were not expected, and interesting to note nonetheless.

Month and Year	# Homes For Sale	Median Asking $	# Homes Sold	Median Sold $
Nov 2007	4,600	$339,000	229	$288,195
Oct 2007	4,978	$338,000	263	$287,000
Sept 2007	5,126	$335,950	269	$285,000
Aug 2007	5,592	$339,898	348	$295,000
July 2007	5,564	$340,000	351	$295,995
June 2007	5,518	$344,900	345	$300,000
May 2007	5,269	$347,500	412	$295,250
April 2007	4,995	$349,900	378	$296,000
Mar 2007	4,730	$349,000	373	$294,900
Feb 2007	4,475	$345,000	312	$285,000
Jan 2007	4,882	$347,000	324	$280,000
Dec 2006	4,718	$348,545	337	$290,000
Nov 2006	5,344	$349,900	318	$300,000
Oct 2006	5,760	$349,900	409	$299,900
Sept 2006	6,072	$352,948	385	$299,900
Aug 2006	6,347	$355,000	372	$306,650
July 2006	6,407	$359,900	411	$322,900
June 2006	6,439	$359,900	463	$325,000
May 2006	5,954	$364,900	425	$316,000
April 2006	5,201	$363,999	412	$316,000
Mar 2006	4,898	$365,000	434	$328,000
Feb 2006	4,400	$369,900	321	$317,000
Jan 2006	4,245	$370,000	325	$325,000
Dec 2005	4,040	$375,000	385	$319,900
Nov 2005	4,432	$376,448	443	$331,000
Oct 2005	4,694	$376,700	559	$335,000
Sept 2005	4,567	$380,000	603	$336,500
Aug 2005	4,370	$385,700	695	$334,950
July 2005	3,860	$387,000	677	$345,000
June 2005	3,411	$384,500	607	$335,000
May 2005	3,113	$375,000	717	$326,000
April 2005	2,808	$365,000	650	$315,000
Mar 2005	2,611	$350,000	660	$309,000
Feb 2005	2,198	$348,250	411	$301,000
Jan 2005	2,078	$349,000	381	$295,000

Note: The median table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, NV and Sparks, NV. Residential data includes Site/Stick Built and Condo/Townhouse. Data excludes Manufactured/Modular. Data courtesy of the Northern Nevada Regional MLS - December 2007.

Get it while it's hot: this nearly 1900 square foot home shows like new. Nice upgrades, single story, fully landscaped, very low maintenance. The price is down to $265,000 $255,000... not a short sale. These sellers are simply realistic about current market conditions. Go ahead, make an offer.

I attended my first probate sale last week.  I was representing the buyer in the purchase of an estate sale being administered by Washoe County.  The process, though fairly straightforward, was interesting.

My buyer and I found the property listed on the MLS.  It was a distressed property in Sparks, described as an “estate sale – subject to court approval and the court bidding system.”  For my client, who was looking for a project to rehab, this property fit the bill nicely.  We examined the property, performed our due diligence, and ultimately made a rather low offer.  However, the Washoe County Administrator, who was representing the estate, promptly rejected our offer.  Undaunted, my buyer presented a new, higher offer one week later.  Again, the offer was promptly rejected.  No counter.  No explanation.

At this point I made a call to the listing agent to obtain some feedback.  I was told that when a property winds up in probate, it is the County Administrator’s duty to maximize the proceeds to the estate.  The first step performed by the Administrator is to get the property appraised. That appraised value becomes the amount for which the property is listed on the MLS.  There are probably many factors that go into the Administrator’s decision whether to accept or reject an offer.  Not the least of which is the number of days the property has been listed.  We were told that because this was a newly listed property, the Administrator was probably going to stick very close to the appraised value.

Although my client was eager to pick up this property, I convinced him it would behoove him to wait a month or so before we made another offer.  A couple weeks later we were at it again.  This time around we, at least, received a counter offer from the Administrator.  After carefully considering the counter offer my client accepted.    

With the vast majority of residential real estate transactions, upon acceptance of an offer: the property is taken off the market; escrow is opened; and the transaction proceeds through the terms of the contract and to the closing date and at the sales price specified in the offer. 

Probate sales, however, do not follow this path.  Upon acceptance of an offer, a court date is set in order to publicly announce the sale of the estate and to allow for any other interested parties to bid on it.  This of course meant that my client, the buyer, might not be the buyer after all.  He, in effect, had simply set the starting bid.

The court date can be as quickly as two weeks after acceptance, or, as was the case with our transaction, six weeks from acceptance.  In Washoe County sales of probate properties are held every Thursday morning precisely at 8:30 AM.  The properties to be settled on that date are announced individually, briefly described, and then opened for public bidding by the Probate Judge.

The way the bidding process works is that the first bid, known as the “upset bid”, is set at $5,000, or 5%, above the current accepted offer price, whichever is less.  After the upset bid, subsequent bids occur in $1,000 increments. 

The entire process happens very quickly.  And all sales are final.  Therefore interested parties are advised to have conducted their due diligence and viewings of the property prior to its court date.  [Btw, all documents (appraisal, preliminary title report, etc.) relating to a particular property are a matter of public record and are freely accessible well in advance of the date of the probate sale.]

At the close of the bidding the high bidder has 14 days to close on the sale of the property.  The buyer may finance his purchase, pay cash, or whatever.  He simply must close within 14 days.  If the buyer fails to close within the allotted time or cancels escrow, he forfeits his earnest money deposit and additionally is responsible for court costs and possible damages.

For our day in court my buyer and I had discussed a bidding strategy as well as his upper limit.  We arrived to a crowded court room and hoped for no other interested parties in attendance.  As we sat waiting for our property to be called, my client grew increasingly anxious.  We occupied ourselves by pointing out various people and speculating on whether they might be interested parties or not.

Finally, our property was announced.  The Probate Judge read the case number, gave a brief description of the property, stated the current offer price, and then stated the amount of the upset bid.  The Judge then deferred to the County Administrator to give a more detailed account of the property and its condition.  After that, the Probate Judge asked if anyone in the court was interested in placing a bid on the property.

The next few seconds were excruciatingly long.  After of few moments of complete silence in the courtroom the Probate Judge announced the sale of the property to my client.  Needless to say he was very relieved to not to have had to bid up the price of the property.  We exited the courtroom feeling as though we had won some great contest.

As I said above I found this probate property listed on the MLS.  This was one of several properties that the listing broker, Estate Realty, currently has listed.   Our friends at Estate Realty provided the list below and have allowed me to post it here.  Give me a call if you’re interested in learning more about any of these properties.

Sales remained steady through November, with overall activity off 46% from the year prior. Meanwhile, the median sales price increased slightly to $285,000. Months supply of inventory in the $500K-$1 million range is still two years, with nearly five years supply in the $1-2 million range and an infinite supply of homes over $2 million due to yet another month of zero sales. Full report.

Here’s a site that shows the return one can expect from various remodeling projects.  The 2007 report was recently compiled and this site is loaded with that report’s data.  You can see at figures the national level, or drill down by region (i.e. “Mountain” – see graphic below), or even download specific city data (however, for Nevada, only Las Vegas city-level data is available).

Overall, this is a very informative site with thorough explanations of the data. 

source of graphic:  http://www.costvsvalue.com/mountain.html

Once in a while I take the weekend off. What really happens is that I go into a near zombie state, OD on Tivo'd HGTV, TLC, Style, Bravo, Fine Living and Travel Channel programs, while simultaneously catching up on a week's worth of RGJ reading and numerous industry publications.

One such publication recently featured an article written by real estate guru, Walter Sanford. His 12-step process for dealing with changing conditions ended with this: "Get ready for the bottom of the market. You know what it looks like. It is when you can put 10% down on a piece of property. With a 40% expense factor, you can break even with a fully amortized loan."

What do you think? Is that really what the bottom looks like?

What's in and what's out with buyers for 2008? Sellers take note... OUT = Unrealistic, pie-in-the-sky pricing, double-digit appreciation, vacant homes and option arm lending. IN = beautifully staged interiors, pet showers, elevators, down payments and double-digit depreciation. read

Lisa Fleck, our local representative over at IndyMac reports: "The OFHEO announced that the Fannie Mae conforming single family loan limit will remain at $417,000 despite a decline in real estate values. The maximum conforming loan limit is based on the October-to-October change in the average house price in the Monthly Interest Rate Survey of the Federal Housing Finance Board (FHFB). The FHFB reported the decline in the average price was $10,685 or 3.49 percent, from $306,258 in October 2006 to $295,573 in October 2007. The combined two-year decline is now 3.65 percent. All other Fannie Mae limits remained unchanged."

Our good buddy Mike, AKA Downtown Makeover Dude, is on fire with news and commentary on what's happening in the world of downtown development. Despite the current downturn in residential real estate, major developers continue to quietly invest in our humble downtown, assembling parcels for redevelopment, proposing high-dollar retail plans to the city, even bringing  baseball to Northern Nevada... (now if only someone could throw in a year-round ice rink. That would really make my day.)

Housing Market Screws Teachers and Government

NHAB Names Nation's Most Affordable Housing Markets

Easy Money, Risky Loans Drive Losses

Mortgages, Drugs: What's the Difference?

Forget Incentives, Just Slash Prices

Lyon County Developers Ask for Mercy

A History of Housing Values

Nearly 16% of Homeowners Have Negative Equity

Lenders Holding Lots of Property: What Next?

"Short Sale" Among Top Searched Terms at Inman Wiki

It's a Long Way Down According to Robert Schiller

What's the Big Deal? Just Another Day of Voodoo Lending...

Foreclosures Suck

Mortgage Issues Looming

DR Horton Predicts 2008 to be Worse than 2007

Real Estate Confidential: Today's Reality

What if Freddie Mac Became Insolvent?

Recession in America?

Fiddling Fools?

Quote of the week from a Las Vegas homeowner: "Putting your home on the MLS and expecting a sale is like watching dinosaurs dodge asteroids," Steve Rohl said.

And now for a moment of self promotion... did you see the KREN 10 o'clock news last night? They did a little warning piece on renters unknowingly renting from landlords in trouble and interviewed moi in the process.  A bit part, but renters, beware.

Also, ever wondered what that $100 million will buy you up at Lake Tahoe? Take an MSNBC video tour of my broker's Tranquility listing to find out...

Heard on the Street: I've been collecting these tidbits for weeks and make no claims whatsoever as to their accuracy. However, they do sound credible...

"Sunset Bluffs is the 41 unit development between Somersett and Mogul. Looks like it is tubing. Work seems to have stopped again, no more marketing, and 11 contractors have filed liens.

"Somersett's back door is moving along. Curbs are now poured all the way to parallel to 80, and work on the final section to old US 40 (now W 3rd Street) is accelerating. At the base, you are going to get a Shell gas station with mini-mart and restaurant, courtesy of the guy who owns LST trucking.

"Ground zero = townhouses around Smithridge. 53 on the market right now. They got up to $225,000 or so at the peak, were all at $180,000 a few months ago, and are now nearing $160,000.  Tons of TD's.  This was truly entry level stuff, so it's really too bad. Still, the vast majority are going TD not due to resets, just stupid purchases.

"The average loan foreclosed on in a TD has been about $290.000 but seems to be trending up. Definitely more pricey Wingfield and South Meadows properties showing up.

"It used to be that at least 40% of the NOD's were on obvious investors. It's closer to 10% now. A lot of the speculators have been flushed from the market, and a lot more of the hurt is falling on local owner occupants. 

"Most of the NOD loans are from 2005-06, but I'm seeing more really old '90's loans going bad.  HELOC as death.

"Tracking NODs to TDs is too hard, but NOS to TD is pretty easy. Six months ago it was about 25%, now it is over 60% and heading up. No more than 20% of the NODs are due to rate resets.

"FYI, I can say by traveling daily around the country that housing is in pretty bad shape... Here is some info for you... I am in Florida this week, and just about everybody I know is in trouble to the point the Broward County Sheriff I was with today was telling me of the huge increase in crime do to people losing homes. DESPERATE MEASURES.

"My wife is in Shangahi this week, and property is 'on fire'. Their economy is burning hot. As for Detroit housing... My associate flew into Detroit this afternoon and had a gun put to his head, had his laptop and wallet stolen... The economy is so bad that the Detroit PD would not even take a police report."

I spent Thanksgiving with family in the East Bay. While there, the Contra Costa Times published an excellent series on the effect of foreclosures in some of the suburban boom areas where prices were cheaper and builders went wild. In some cases, whole neighborhoods now face empty, abandoned homes, mosquito-infested pools, squatters in the shadows, and the occasional drug dealer. Once safe suburban areas are now creepy and quiet. I haven't yet seen as much drama in any one neighborhood here in Reno-Sparks, but maybe you have.

Foreclosures Ravage Neighborhoods & Communities

Solano Buried by Foreclosures

Map of East Bay Foreclosures

Default Letter Not End of the Line

Writing About Foreclosures Wasn't Easy

I would love to see someone take that idea of the East Bay foreclosure map and make one of those for Reno-Sparks, showing red dots as current foreclosures and yellow dots as notice of defaults... because I think if you took these pre-foreclosure charts and put all that color on a map, it would really help people understand how many folks need help saving their homes and/or negotiating short sales.

Why should you care? Because letting these hundreds or thousands of homes go all the way to foreclosure carries incredibly high community costs that the articles above bring to light, not to mention personal costs for the former homeowners. We will all pay in some way.

Somewhere I read that only 25% of foreclosed homes are ever listed for sale in the MLS, which floors me... why wouldn't the other 75% try to sell first, salvage their credit and negotiate a solution with the bank? Is it fear? Denial? Ignorance? All of the above? They can't all be selling on Craiglist and eBay.

If you're in over-your-head with a mortgage, the key to resolving the situation is realism. You've got to get past the emotion, educate yourself and seriously explore every option you have... early in the game, because every month counts.

There are some good resources in town to help, especially if you need help with a short sale. Banks are notoriously difficult to negotiate with as each has its own bureaucratic maze of people, departments and processes to sort through, but this company has been doing it for years and understands how to work the system.

Did you happen to catch the ad in the Saturday Homes section of the RGJ for the house for sale on eBay?  The print ad essentially pointed interested parties to the eBay listing.

The property is a former model home in the Woodland Village Master Planned Community in Cold Springs.  The house has 6 bedrooms, 2.5 baths, a 2-car garage and 2,240 sq. ft.  It is currently listed on the MLS at $252,900.

The bidding started at $190K.  There is no reserve.  And according to the ad in the RGJ there is a “buy it now” price of $252,900.  The eBay auction ends Wednesday.

This might just prove to be a very effective way to find a buyer for one’s home.  At last count this eBay listing had nine bids.  And the current bid was up to $193,200.

I took a look at the Cold Springs market and found:

95 Active Listings
Average DOM (days on market): 103 days
Median list price of $259,900

11 Pendings
Average DOM: 132 days
Median pending price of $227,900

7 Solds in the last 30 days
Average DOM: 98 days
Median Sold price: $249,900

These numbers yield more than 13 months of inventory in Cold Springs.  The Seller of this property already has nine bids.

I’ll be watching this one with interest.  Anyone want to predict what the final sales price will be?

[Ed. Note: In keeping with perpetuating the “Some may even say this blog contributes to the so-called problem” myth Diane mentioned in her previous post, I present the following Washoe County stats.]

Our friends at Ticor Title sent me the following stats/charts to share with our readers.  Much data is contained within these but the sheer magnitude of the changes observed over the previous two and one-half years is worth a look.  I feel the most telling is the latest Notices of Default (NOD) numbers (first chart presented below).  Look at the increase in NOD from around the time median home prices peaked (July 2005) to now.  A six-fold increase!  And regular readers of this blog know that future NOD predictions are projected only to increase.

The other three charts essentially present the same data (new home sales vs. re-sales) in different ways.  One trend to note here is that which GreenNV has been predicting for a while now; that the number of new home sales will cross over and surpass the number of re-sales soon.

(Click on a chart to enlarge)