In a recent thread generated by the July Median’s post, a reader and commenter asked about the differences in median sales price between “distressed” properties vs. non-distressed properties.  And by distressed, we’re talking about short sales, foreclosed properties, bank sales, etc.

Per Kevin’s request I decided to take a look at the Solds data from our MLS.  Unfortunately the field on which I filter (i.e. “Special Conditions of Sale”) in order to separate distressed properties has no been available for very long.  It was only recently added to our MLS system, so meaningful data began to appear in February. 

That being said, I have data going back for the last seven months.  Not sure what conclusions can be drawn from these numbers; as a few readers have already provided very good comments regarding the value of this info (both pros and cons) in the aforementioned thread.  Perhaps we can pick up the discussion here.

* denotes partial month

Note: If you’ve noticed that the numbers above are a little different from those reported in my Monthly Median Post, it’s because I’ve pulled from a slightly different area and have also included manufactured/modular in the mix.

Data courtesy of the Northern Nevada Regional MLS (NNRMLS) - August 2008.

The monthly charts from Ticor Title for Washoe County have been delivered (see below).  Nothing really jumps out as noteworthy.  July resales and filed Notices of Default were essentially unchanged from June’s stats. 

Technically July’s filed NODs were less than June’s, but only by two (as in 431 NODs in July compared to 433 NODs in June).  Regardless, July extended the number of consecutive months of declining NOD streak to three.

July Resales in Washoe County totaled exactly the same as in June, specifically 491.  New home sales declined 5%; from 167 in June to 158 in July.

July’s largest decliner continues to be re-fi’s, dropping another 17% from June’s number.  At 588, July’s number of re-fi’s is only a third of the number being done at last year’s peak (1,796 in May 2007).

Of all the projects downtown, the Belvedere (Sundowner) is the one I could never wrap my arms around.  What was it supposed to be when it grew up?   Too expensive for UNR student housing.  Too far away from the "inner city" development for the locals or investors.  Really strange unit plans.  High prices.  I get what Grand Sierra Resort, Holcomb Lofts, Ponte Veccio, Gray’s Landing, Arterra, Wingfield Towers and others were trying to achieve.  But what was the Belvedere thinking?

The notice of default on the $32,000,000 construction loan was finally filed yesterday.  This isn’t much of a surprise to anyone who follows downtown.  Construction has been at a standstill for months.  The first mechanic’s lien was filed in October 2007 (and subsequently released).  Literally hundreds of additional liens have been filed by the contractors and consultants since (some cured, most not),  and the Reno tax liens have been huge.  The "closings" the last few months (2 May was the last one) have mostly been to parties connected to the developer.   And several lien holders have been petitioning to foreclose based on their mechanic’s liens.

There are literally millions owed to local contractors and consultants who, most likely, will see zero return from their accounts receivable.  There is an additional $6,500,000 in hard money loans on the project that will probably be wiped out.   There are probably a few saps that actually bought here to live, and now will find that they are the sole support of the HOA.  Can you imagine living in a ghost ex-casino?

RIP,  Belvedere.  I can only hope the next incarnation of the Sundowner won’t be the King’s Inn Jr. and be left to rot for 30 years as a blight on downtown.  I’m not too hopeful.

So, OK, blogmind, what should the Sundowner become in its next iteration?.

Leslie Henderson is a Realtor in our office who specializes in short sales and foreclosures. These are difficult transactions with lots of gotchas that frequently fail to close, but Leslie has a few tricks up her sleeve to help you succeed in stormy seas. This eight-minute interview offers a street-level view of what’s happening in the Reno-Sparks market today, and I even learned a few new things in the short time we spent together. Okay, yeah, maybe this sounds a bit like a commercial… but Leslie’s really good at this stuff, so call her today if you like what you see: 877 963 4263.

Our friends at First Centennial Title have provided me with July’s Market Condition Report.  One of the stats I like to read from this report is the “Percent Selling” number.  I see that the number is still holding steady around 50%.  What this means is that even after an offer has been accepted by the seller and escrow has been opened with the title company, the property only has about a fifty percent chance of closing.  The other half fall out of escrow for whatever reason (financing falls through; buyers get tired of waiting for the bank to approve a short sale offer; etc.)  Four years ago this ratio was as high as 86% (see Percent Selling Market Efficiency graph in the report below).

And as I reported with yesterday’s July median numbers, this report shows declining median close prices and increasing units sold for July over June.

click on the chart above to enlarge

Below are July’s medians.  Lot’s of noteworthy stuff here.  The first thing that jumps out is that the median sold price dropped substantially from the previous month’s low.  At $247,000, not only does July’s median sold price represent a 3% ONE MONTH decrease, but also a new low median sales price since I’ve been tracking these numbers.  We are now 28.4% off of Reno’s peak median price of $345,000, set three years ago in July 2005.

On a positive note, the other number that stands out is the number of houses sold.  July saw the 400 unit level surpassed; a feat we haven’t seen since May of last year.  Activity has certainly been on an upswing lately…since bottoming out in January with a paltry 191 units sold that month.  Each month since January has exceeded the previous month’s total.  And not all of this activity can be attributed to seasonality.  Observing year-over-year numbers shows that July’s 406 sales surpassed last [2007] July’s 351 sales by more than 15%.  Furthermore, historically, July has not been the peak month for units sold. For example, last year’s peak units sold occurred in the month of May; in 2006 the peak was reached in June, and in 2005 the peak occurred again in May.  It will be interesting to see if total units sold continue to increase for August.

So where are all these increased sales occurring?  Well, obviously at the lower price points.  July’s sales break out as follows:

Nearly 70% of the monthly sales are occurring below the $300,000 price point.  That is the reason the median sales price continues to fall.  And what is driving these prices?  As we have pointed out numerous times on this blog, it is the “distressed properties”; i.e. the short sales and foreclosed properties (REOs).

Case in point: Of July’s sales, a full 36% were bank-owned.  Another 8% were short sales.  Add to that a handful of sales subject to court approval and other special conditions, and July saw 47% of its sales originating from distressed situations. 

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 and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS - July 2008.

January 2007 – local client makes offer on a home that they have always admired that is now on the market as a short sale.  They make an offer knowing that it may take several months but they don’t have to sell their current home in order to purchase.  Every week I call the agent for an update and of course get no news.  Every month we send an addendum to keep the offer current.  On July 18 I receive a report of the homes that are currently going to the courthouse steps.  Low and behold I see the address of this property with a date of July 16.  I call the agent again and she says that is not correct but last week I get a call from her stating that the second lender will not accept a short sale and property will now go to Trustee’s sale on August 13, she has no more information.  The last recorded document was that the sale was to take place on 7/16 but no one is sure if it went through or not.  Client is still insisting on purchasing the house.  Where do we go from here?

Do you have your favorites?  Outrageous price?  "Contractor special?"  "Close to transportation" (abuts I-80 sound wall)?  "Selling due to illness" (got sick of the project)?   Let’s have some fun this weekend, and post away with your best shots on the worst Reno area listings.  Links and/or MSL listing numbers are appreciated.

My current favorite?  2895 Arentz in Belli Ranch, MLS 80010780, http://www.prunevada.com/propertyDetail.aspx?listingid=17-80010780&src=propSearch.  This is a Realtor owned home, and the photo quality is stunning!. I didn’t know that shoe phones had photo capabilities!

This listing sure does not make me leaping up to plopping down $1,400,000, and actually, the price is very justifiable.   A 3 way lot split with riverfront access  is possible due to a fluke in the CCRs, which the owner and certainly the listing agent don’t know about,.  And by the way to proxy listing agent Kasey, the zip code is 89523, not 89436 Spanish Springs.  Maybe you were going for 89439 Verdi?  Still got it wrong.  Is it an upgrade if it he 3 fireplaces are from the original construction in 1986?

Can you imagine if Guy listed Diane’s house, and this is what went out to the public forums?

Have fun with this one!

It is hard to know what to feel about what the foreclosure numbers mean in a Regional context.  What does 2% of the county’s housing units going into some sort of default mean to you or me?  That’s 98% NOT in default, right?  A Plevelism!

We can respond to the more social aspects, like in Diane’s A Conversation Overheard post.  It’s sad and we all now know people in this situation now, but it’s a rarity, right, and not in my neighborhood.

Sometimes you just need to see it to start to getting a grasp on the magnitude of of the situation.  We are a visual species, after all.  Take a drive around your neighborhood, and take a look at the scorched earth effect.  Our climate does not take kindly to forced xeriscaping, and when the funds for TMWA and SPPC payments run out, the desert is quick to reclaim it’s territory.

This is Lennar’s Sterling Pointe, but it could be any neighborhood in any zip code here at this point.  (low batteries killed the shots of the 3-pack of  scorched earth including, a Chase listing).   I’m not trying to pile-on Sterling Pointe - it is just close to my neighborhood -  but at least 8 of the 89 homeowners have abandoned their yards and NONE of these are REOs yet.  So far, the banks have refused to actually foreclose and inherit the the maintenance cost, HOA  and property tax liens.

I know from the numbers that there are at least 1000 REOs cued up to enter the MLS at some point in the near future.  There are numerous reports of the lenders increasing their time lines for the initial NOD from 90 to 150 to 180 days.  One of my neighbors has been in default for over a year, and their bank still hasn’t made definitive move to up the ante from a NOD to a NOS and seize the property.  This is creating a vast pool of "shadow" REOs of a greater magnitude than any of the default action we have seen to date.

I never thought I would see the day where I considered that Bantering Bear might be an optimist.

The foreclosures started (Notice of Default) January thru June 2007 averaged 199 per month while January thru June 2008 brought us an average of 489 per month.  Foreclosures completed (Trustee’s Deeds) January 2007 thru June 2007 averaged 48 per month with January thru June 2008 bringing in 179 per month.  Take a look at this report provided by Jud Klinger of Datasource (www.datasourcenev.com) which also provides a comparison of resales for 2006, 2007 & 2008.