“Reno Home Owners Get Equity Boost”

I haven’t heard that in a while. Nevertheless, piece of good news.  As foreclosures have gone down:

“During the second quarter of 2012, 49.2 percent, or 46,070 residential properties, were “underwater,” owing more on their loans than what their homes were worth, according a report released Wednesday by data provider CoreLogic.It was an improvement from the first quarter, where 51.8 percent, or 48,534 homes, were underwater.”

Perception is a mighty thing.  And I can tell you from a local’s perspective that people are hoping more than fearing the market. Breath of fresh air as the last five years has been chalk full of depressing news.  “Shouldn’t you be against good news as your site is about foreclosures?”  Funny. No, I’m a realist and we need all the help we can to help locals get more jobs.

Good thing housing sector is on the precipice of a complete recovery (cheap homes have been in demand since 2010) it’s my hope this will lead to more construction jobs which is one of the backbones our the Reno economy.

More on the RGJ article:

“For more than two years, Reno-Sparks has struggled with half of the market hovering around 50 percent negative equity.”

According to Realty Trac, a trusted foreclosure data source, Nevada’s foreclosure rate is falling.

WASHOE COUNTY: 359, down from 1,053
CLARK COUNTY: 2,236, down from 8,246

And yes, pessimistic real estate pundits are correct in saying that “a drop in ranking is a result of new legislation, not a healthier market.”

“Passage of Assembly Bill 284, which required stricter documentation during a foreclosure, and the National Mortgage Settlement settling robo-signing allegations against the nation’s five largest banks have restricted the amount of distressed property filings.”

But I’m starting to wonder that even if foreclosures starts coming in droves again, wouldn’t we have enough demand to absorb it? Well, perhaps not in the high end market. But still, there’s so many buyers out there, most especially foreclosures, that buyers are now routinely making $10,000 and over offers on asking price.  Welcome to the shaky market recovery.

Well oiled investors are privately contacting me asking if I have any inventories of short sales and foreclosures.  Even in 2005, this never happened to me.

More from the report:

“In Washoe County, one in every 515 homes had at least one foreclosure filing. It is a 17 percent decrease from June and 66 percent from the same time period a year ago.”

“Nevada also saw a significant decrease in the number of bank repossessions, plummeting 71 percent in July from June.”

“It could mean more foreclosures are in the pipeline, according to the RealtyTrac report.”

Make your due diligence and act accordingly.  But personally, I have been starting to hope more than than fear.

Ever wonder why there seems to be no available homes in Reno anymore?

Consider this: In June 2011 — just last year — we had 406 Notice of Defaults recorded. This June we have 83. On dollar amount the difference is $189 million. That’s the difference in price volume decline from last year’s NOD’s to this year. Which makes me wonder, it’s not like there were fewer homeowners defaulting on their loans. Where are those homes? Why is it not being sold in the market?

Here’s a complete picture Reno’s dramatic decline in foreclosures:

Now, it’s anybody’s guess what the heck is happening behind the scenes — why inventory is so low that it is now measured by days rather than months.  Remember that old nerdy term ‘Months supply of inventory’? If this continues we might find that word extinct in the Reno lexicon.

My guess is the banks are experimenting in better ways to profit from thousands of foreclosed properties under their coffers. Meaning, there has to be some kind of paradigm shift where banks view these homes as something they could benefit from not just get rid of (e.g., 2007-2010).

There are growing evidence that this is where they are headed:

NPR’s Banks as Landlords

“Across the country, big banks and other large investors are buying up tens of thousands of foreclosed rental properties. “

“The sheer volume is overwhelming, Leonard says. The Oakland city attorney says foreclosed properties are being bought and sold so quickly, it’s hard to know whom to hold responsible for what. The banks don’t return calls made by the city, officials say.”

NY Times Bank of  America Tests Rental Program:

“Bank of America said Thursday that it would offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead. The program highlights how investors are increasingly interested in becoming landlords on troubled properties.”

Hey folks,

Just wanted to give a quick rundown on the latest local headlines related to Reno’s distressed housing market.

With the Reno housing market taking a much needed boost (sales, price are higher from last month but still a bit lower compared to last year.) What’s good now is any good news will only help the housing market in Northern NV recover.  I believe we are at a precipice of a market recovery.  Probably just starting out but it sure looks like the worst is over. Historical analysis backs this up as real estate recession typically lasts no more than five years.

• Obama heads to Reno to tout housing refinance plan

“The lawmakers argue that their bill would help Fannie Mae and Freddie Mac, which have received more than $188 billion in taxpayer assistance, as well as save money and reduce the number of defaults. “

“The rates for 30-year and 15-year fixed mortgages fell to fresh record lows this week. The 30-year loan rate ticked down to 3.83 percent, the lowest since the 1950s, while 15-year rates, a common loan used for refinancing fell to 3.05 percent, another record. “

• Obama pays house visit to Reno couple

“The reason for the president’s visit was to highlight problems with mortgage refinancing and to urge Congress to do more to help homeowners.  Many families, like the Kellers, are struggling to refinance their home because they owe more than their home is worth. The Kellers purchased their $168,000 home fourteen years ago, yet now it is only worth $100,000.”

• Foreclosures Continue To Hold Down Las Vegas Home Prices

“Even with the latest increase, to a median of $127,900, Las Vegas homes are selling for bargain prices to those who have cash or can obtain a mortgage.

And that’s the good news.

‘On a square-foot basis, we’re probably one of the best deals in the United States right now’,”

Been reading about this topic lately how institutional investors (backed by venture capitalists), are buying homes for cheap, dressing it up for up to $30,000 and renting them out in the hopes of someday unloading them when the market picks up.  Sounds like a good idea to me.  And many have said this is good for the market, probably one of the reasons why a local market can hit bottom.

Why? They slurp up huge inventories and in a way creates a false but real competition against normal buyers, like first time buyers and individual investors.  Here’s what’s happening to Phoeniz, Arizona:

“By purchasing and holding tens of thousands of existing homes, investors have created a demand where little had existed. They’ve also drastically reduced the inventory of homes for sale and helped boost prices over the past six months.

That’s good news for homeowners, but investor groups’ dominance in buying up the supply of existing homes has alarmed some lending institutions and frustrated countless Phoenix-area residents attempting to buy homes for themselves and their families.”

But some people are worried about this trend, especially the mom and pop buyers who has to compete against these investor’s deep pockets.  Huh. Maybe that’s why it’s getting harder to get homes here in Reno, maybe we’ve been secretly infiltrated?!

Yea, that’s kind of a bummer for the little guy (me included as I plan to buy a rental soon).  But I can’t say what they’re doing is illegal.  This kind of fish net investing have already alerted authorities  Here are more excerpts from the article (and yes, they have invaded Nevada):

Government-sponsored loan guarantor Fannie Mae was the first bank-owned home seller to express concerns about the destabilizing effect investor dominance in the housing market could have on local communities. In response to those concerns, Fannie Mae created and has been pushing a program called First Look, which prohibits investors from bidding on Fannie Mae-owned homes for the first 15 days after they are listed for sale.

In Nevada, the state hit hardest by home foreclosures, the prohibition period for investors is 30 days.

I wonder if the above statement was talking about Vegas. No, no, no I take that back I remember talking to an agent who was the exclusive agent for an investment fund scooping up hundreds of properties, but they difference is they’ve been flipping the property..”no waiting” apparently is their game.

So buyers be aware, know that competition just got tougher.  Be smart.  Be decisive when you find the foreclosures you like.

Reno Business Report 2011

Stumbled upon university’s impressive Economic Review from UNR’s College of Business.  So I browsed through and found some interesting stuff:

• Reno-Sparks Employment (non-farm): September 2011– 12.6% / August 2011–13% / September 2010–13.9%

• Employment decreases: Construction–12,400 jobs / Professional and Business Services–7,600 jobs / Manufacturing–3,900 jobs

• Washoe County Notice of Default(I think it’s better if I show you the image):

Washoe Notice of Default

• Median Sales Price Short Sales: $132,000

• Median Sales Price Foreclosures: $116,450

• Median Sales Price All Homes: $135,000

• Greater Reno-Sparks Median Home Price: $150,599

• Highest Median Price Per Square Foot: New Southwest

• Latest Reno-Sparks Apartment Vacancy Rate: 5.38%
• Average Rent: $840/month

I wonder...when Reno's Foreclosure...

Evening folks! I wanted to browse through some of the newspaper headlines regarding Reno’s foreclosure market.  The big news is foreclosures are down but still tops country..something like that. Oh well, we’ve been seeing this trend for a few years now; usually Florida, California, Arizona and Nevada Battling it out at the top hardest hit states in the country.

• “Nevada foreclosure rate down, but still top US”

(This article largely tackles Las Vegas, which is in worst shape than Reno)

“…Foreclosure activity is down 52 percent from a year ago.”

• “States with Highest Foreclosure Rates Among Bank Deal Holdouts“

“More than 6 percent of Nevada housing units had at least one foreclosure filing in 2011, the nation’s highest rate, according to RealtyTrac.”

• “Good News, Bad News…”

“Even with that drop though, Nevada is still leading the country in foreclosures for the 61st straight month.”

And for the Silver State’s Biggest (and juciest) News of the Week (kind of still related to foreclosures)….

• Nevada Partnership Gone Sour

“As the housing market exploded in Nevada in 2004, Thomas Seeno, of Alamo, bought half interest in Wingfield Nevada Group, a conglomeration of business enterprises developed by Whittemore valued then at more than $500 million, according to the suit.”

Comparing Reno to other Real Estate Hard Hit Cities

Came across a highly informative post today comparing “underwater cities” — areas with negative equity.

Let’s start with a clear definition of “underwater”:  Negative Equity.  It is a house where value is less than what’s owed on the mortgage.  If I was to sell a house at negative equity it would look something like this:

• Money owed on the principal: $200,000
• Current value of the house: $130,000
• Negative Equity: $70,000

The above chart shows Reno as one of top cities with the most negative equity.  (Quick rabbit trail: This is the first time I saw the fundamental “negative difference” in our real estate markets between North (Reno) and South (Vegas) — Reno: 55%, Vegas: 73%.)

Some excerpts from the above post I found interesting:

• The above map clearly shows where the real negative equity is.  The entire state of California and Florida is virtually in a deep negative equity position.

• The worst market in terms of negative equity is Las Vegas.  Nearly 73 percent of all loans are underwater!  This is simply incredible.

• The total property value of mortgaged Las Vegas property is $73 billion.  At the same time, there are $96 billion in loans outstanding on these locations.

• Negative equity is the aphrodisiac to strategic defaults and more foreclosures.  Given the above data and the research on negative equity, we can expect foreclosures to be dominated by these markets.

NV law AB 284

(Note: Notices of default are the first step in the foreclosure process and can be filed after a borrower is three months late on a mortgage payment.)

Watch video explaining the AB 284 from “default” and the possible consequences of this bill (I don’t agree with his conclusion but he explains the issue well)

Just read an article at RGJ that NOD (notice of default) dropped significantly due to a new Nevada law.   This is the law that the article is talking about:

Nevada Law AB 284

“This law mandates stricter recording requirements for foreclosure filings, including the recording of assignments with the county; disclosure of the full name and addresses of the mortgage note holder, deed of trust beneficiaries, servicers and trustees; and prohibition of using subsidiaries as trustees.”

In a nutshell, the law includes measures to prevent robo-signings and requires foreclosure-related filings to include the names and addresses of the mortgage note holder, deed of trust beneficiaries, servicers and trustees.

Full Report: Assembly Bill No. 284 — Assemblymen Conklin, Horne and Kirkpatrick

After the law was passed, default filings fell significantly — before AB284 came into effect early last month, NODs surged from 427 in July to 642 in August and 612 in September as filers tried to beat the deadline.  No surprise there as banks tried to file as much cases before the law was put into effect.

The steep decline in NOD filings in October likely indicates the difficulties banks are having in complying with the new recording requirements, Giles said, a Reno lawyer that specializes in mortgage defaults.

“It has become really tough to do a foreclosure since the law changed,” Giles said. “Now they have to put together all these materials that they didn’t have to before and I think they’re having trouble doing it. There may even be cases where they don’t have the information or materials they need at all.”

Banks are making sure that they cross their “t’s” and dot their “i’s” because the new law makes misrepresentations in foreclosure filing information a felony, said Reno lawyer Greg Jensen. Gone are the days when they can attend foreclosure mediations and lie about being the owner of the mortgage note without serious consequences.

The widespread fear is that this law will lead to increased “shadow inventory” where distressed properties are in “hiding” and not yet released in the market — like a overflowing dam, many fear that this will only prolong the Reno real estate market recession; worst, flood the market with a huge inventory .  That could happen, but what’s important right now  is financial institutions being held accountable as more and more NODs were being sold pennies to the dollar, that leads to borrowers being harassed.

Let’s take a look at the foreclosure data for the second quarter of 2011.  Boy, does time fly.

The numbers you see in this post largely came from College of Business at UNR.

Foreclosed Homes — 2nd Quarter 2011

Reno: 532

Sparks: 231

Incline Village: 12

Foreclosed Homes — 1st Quarter 2011

Reno:  465

Sparks:  214

Incline Village:  13

Foreclosed Homes — 2nd Quarter 2010

Reno:  470

Sparks:  222

Incline Village:  11

Summary: just when you think the Reno-Sparks real estate market is getting better — comparing  first quarter 2011  to second quarter 2010 — the latest quarter report comes up with significant increase.

Washoe County is still on a downward trend.