Sierra Nevada Real Estate

Average and Median Sales Price of Single Family Homes in Reno & Sparks

January 2009 - July 2010

July Market Update

Foreclosure Activity Soars with Summer

Double Dip or Single Dip Recession or Depression? The definition doesn't seem to matter to residents of Nevada as unemployment continues it's stubborn rise. Latest statistics are being reported at 14.2% in the state. The numbers of homes being served with a notice of default in Reno/Sparks is staggering- in the last 6 days alone, 174 homes got a Notice of Default and Intent to Foreclose Notice, and 148 homes were scheduled for a Trustee Sale (Foreclosure Sale). If these numbers keep up, that translates to almost 600 homes a month receiving a Notice of Default and almost 500 homes a month being bought back by the lender at Trustee Sales.

Whether homeowners are willingly giving up their homes (so called "strategic defaults") or simply losing them to Trustee Sales, the rate of home ownership is sliding downward and projected to be the lowest in half a century within the next 24 months. in 2004 the rate was 69.4%, latest figures are 66.9% and projections (based on the number of defaults working through the system) say that number will drop to 62% and even lower by the end of the decade. Inventories are rising and time on market is increasing in our area, supporting evidence to this trend.

One in every 483 U.S. households received a foreclosure filing in May, the highest monthly rate since the real estate tracking firm RealtyTrac began issuing reports. The company said foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 261,255 properties during the month, a seven percent increase from the previous month and a 48 percent increase from May 2007. "May was the third straight month where we've seen a month-to-month increase in foreclosure activity and the 29th straight month we've seen a year-over-year increase," said James J. Saccacio, RealtyTrac's CEO.

The housing crisis is particularly intense in Nevada, as the state has lead the nation in foreclosures for 3 1/2 years straight now. With one in every 113 households receiving a foreclosure filing in May, Nevada posted the highest state foreclosure rate for the 41st consecutive month. Foreclosure filings were reported on a total of 1352 Washoe County properties in May alone. What can a homeowner do when they find themselves unable to make their payments? Foreclosure alternatives are discussed in depth on our website: Avoid Foreclosure in Nevada

The new Obama loan modification initiative (HAMP) is scant help to distressed homeowners. Neil Barofsky, the special inspector general for the government's $700 billion Troubled Asset Relief Program, in a report released April 10, 2010, states "Unfortunately, HAMP has made very little progress in stemming this onslaught (of foreclosures), resulting in only 230,000 permanent modifications initiated over the approximately 12 months of the program's existence."

What is even more disturbing is the secret formula of "net present value" used to determine whether the home qualifies for a loan modification, or whether the lender would receive more money by foreclosing. As an example, during a Nevada foreclosure mediation between a borrower and the lender, the lender informed us that the NPV of the property was $178,000 as a foreclosure, and the actual market value of this property is around $135,000. It's hard to believe that a bank would give up a profit of $43,000 in order to modify this loan or short sale this house!

Nevada legislature has made serious attempts to assist homeowners in foreclosure, by making it mandatory for a bank representative to meet for mediation with a homeowner who has received a notice of default and requests mediation. This program, while not perfect, has helped many homeowners stave off a foreclosure sale and either stay in their homes or short sell them. As of April 30, 7,915 homeowners who received notices of default have requested mediation, and 2,635 mediations have been conducted since mediations began Sept 14, 2009. According to one mediator, the disparity between the lender and the borrower in terms of information, resources, knowledge, and preparedness is so vast that it is almost a disservice to the mediation process, since homeowners are so ill equipped to negotiate with parity against their bank.

On April 5 the new Obama initiative HAFA took effect. This program is mandatory for banks which have accepted TARP money (of course quite a few have paid that all back). This program attempts to prohibit the banks from two practices which are derailing short sales; taking 6 months or more to reach a decision and approve a short sale and reserving the right to pursue a deficiency judgment against the borrower. As short sales nearly comprise half of the available inventory of homes for sale, any improvement in this process would be pivotal in stabilizing our housing market. As of August 1st, another shortcoming of the original program has been overcome, as Fannie Mae and Freddie Mac have announced their own HAFA programs.

Bank owned (REO) properties and "short sales" overwhelmingly lead the market. As of this writing, there were 3527 homes for sale listed on multiple listing service, and 64% of them were bank owned or soon to be. 64% of all homes sold in June & July were either bank owned or pre-foreclosure sales. The inventory of REO (bank owned) single family homes has increased by 81 homes to 1004 as of this writing. REO condo inventory has increased by a whopping 339 units and is now numbered at 1205. Not only do REO properties depress sales prices for resale homes, but they also "remove" the opportunity for the seller to "move up" in the market, as there is no family selling one house to buy another.

The current real estate market is extremely mixed, with (foreclosed) homes below $150,000 seeing brisk activity, many with multiple offers, and sometimes selling for more than asking price. So called "move-up" homes in the $200,000 to $800,000 range are slower to move.

The brightest sector of the real estate market is rentals. With so many homes being foreclosed on in the area, many renters as well as homeowners are losing their homes, contributing to the rental market for moderately priced homes. Many homeowners are turning into semi-investors: renting their homes instead of selling in order to wait this downturn out. For those who have the money and the credit, this market is a great opportunity to pick up an income property. Many tenants are also interested in longer term leases. With the continued decline in family income, we are also seeing many tenants asking for rent concessions, or moving to less expensive homes.

597 homes were sold in June (bolstered by the Tax Credit), and 402 in July. The median sales price has been fluctuating between $170,000 and $180,000. The average sales price has increased due the sale of the a $3M foreclosed property to $230,000.

Sellers are also becoming very realistic about their home's value. The spread between initial asking price and sales price was about 10% above the final sales price, but when price reductions were factored in, that spread narrowed to under 3%.

The upper end of the market had a great 2 months, as 8 homes sold for $900K or above in June, 5 in July, and the highest priced home sale was a $3M foreclosure in Washoe Valley.

Condo sales warmed up with summer, and 165 resale condos changed hands. 76% of these units were either bank owned or short sales. From the assessor's recordings, it appears that 44 new condos were sold during June and July. These are a mix of new projects (remodeled older buildings) and resale. (It's difficult to obtain an accurate timely accounting as recordings trickle in)

New home sales held their own in June and July. 92 homes were recorded sold. Some of these homes were standing inventory located within foreclosed projects picked up by other builders. (It's difficult to obtain an accurate timely accounting as recordings trickle in.)

Sellers are aggressively pricing their homes with increasing time on market. The final selling price on homes was less than 3% of the asking price. Days on multiple listing for sold homes in July averaged 129 days.

(775) 324-SNRE