“Speculators Ran Out Of Fools”: Nevada
A housing report from the Nevada Appeal. “A glut of overpriced properties and falling home values marked Carson City’s housing market through 2006, housing experts say. Methods used to finance the boom in the past three years could prompt higher foreclosure rates in coming years.”
“In an auction that lasted less than 10 minutes on the steps of the Carson City Courthouse, Judy and Ray Barrett’s last tie to Carson City was swept away. The couple’s foreclosed Empire Ranch Estates home sold for less than what the Barretts bought the house for in 2003. ‘I’m numb right now,’ Judy Barrett said. ‘We didn’t want to lose it. It’s been such a nightmare, so it’s a relief that we don’t have to worry about it anymore.’”
“Right after the auction, (winning bidder) Jack Flower said two people told him they were interested in buying the home from him. If buyers want it so badly, why couldn’t the Barretts sell it? ‘It was listed way too high,’ Flower said. ‘But they had to. They had a huge loan on it.’”
“Tom Cargill, economics professor at the University of Nevada, Reno, said what happened in 2006 was the aftermath of a ‘rapid escalation in housing prices’ that could not be supported by supply and demand. Speculators hoped a ‘bigger fool’ would come along to purchase. Soon they ran out of fools.”
“‘The bubble has burst,’ said Cargill, who studies the housing and construction markets. ‘Property values have fallen 10 to 20 percent, therefore, people who bought houses are now unable to sell them without experiencing very large capital loss.’”
“‘It was a good ride, but it’s over,’ said Cathie Jackson, branch manager with Mortgage Options Inc., of Carson City. ‘Every so often the world takes a step back and regroups. And we’re regrouping.’ She said the news isn’t all bad. Jackson is taking loan applications from people who couldn’t get into the market in the last few years.”
“The number of mortgage defaults by Carson City home owners increased 47 percent from 2004 to 2006, according to an investigation by the Nevada Appeal.”
“‘This shows speculation in the real estate market in Carson City,’ said Alan Glover, Carson City clerk/recorder. ‘It was way overpriced and people got in on interest-only loans and 100 percent loans and got in way over their heads.’”
“Glover said he believes it was mostly speculators who lost property in 2006.”
“‘Our Realtor said the real estate market is so bad and Realtors are quitting, and we picked the wrong time to leave,’ said Judy Barrett. The Barretts’ home sold Thursday on the city court steps for $343,000. They’ll still owe the bank about $150,000.”
In Business Las Vegas. “Anyone who doubts that the prices of resale homes are falling in the Las Vegas Valley can turn to the Clark County assessor’s office for proof. The county, drawing on home sales during the past 12 to 18 months in which more and more sellers lowered their prices, reported it has trimmed residential assessments more than 10 percent on some properties. There were a few reductions as high as 20 percent to 30 percent.”
“‘It means an overheated market is simply adjusting,’ said Richard Lee, vice president of First American Title, who said many investors are now willing to cut prices because appreciation is slowing. ‘It is as simple as that. It is coming back where it should be. The pendulum swings both ways. The consumer who has the power to write the checks is dictating where the market should be.’”
“‘This is definitely a trend for Realtors to say to sellers that ‘you may not get as much money as you thought you would get in today’s market conditions,’ Lee said.”
The Review Journal. “The developer of Sandhurst, one of the early high-rise condo projects announced for downtown Las Vegas, said Friday he’s returning more than $7 million in deposits to 105 buyers as rising construction costs have doomed yet another condo project.”
“Sandhurst had more than 60 percent of its units under contract and was negotiating with Corus Bank for roughly $250 million in construction financing, but coming up with equity financing was the ‘toughest portion,’ Michael Mirolla said.”
“‘We’ve taken it as far as we can. We’re two weeks from pulling permits from the building department. But in all fairness to the buyers, we have to get funding first,’ he said.” “Jeremy Aguero, principal of a Las Vegas research firm, was among the first to predict that only 30 percent of the proposed 100,000 high-rise units would be built. He said sales have fallen significantly in the past three months.”
“‘It’s not the first and I’m here to tell you it’s not going to be the last,’ Aguero said of Sandhurst’s cancellation.”
Has anyone looked at any milk cartons lately for LV_Landlord?
Last i heard she was buying 2 more properties in LV now that prices have dropped 10%.They cannot go any lower you know.
I think I’ve seen her on Craigslist.
I heard LV Landlord’s creditors are looking for her under the local bridges. Also heard rumors of a demented woman seen pushing her shopping cart filled with scrap aluminum cans past acres of “For Sale” signs, mumbling “Housing only goes up in Las Vegas!”
Speaking of LV investors, anyone heard how The Donald’s highrise is going? He won’t get a real haircut so I’m wondering if he’s getting a real estate haircut instead?
oh but the housing market for the filthy rich is doing fine in LV:
HOUSING: RUN OF THE MILLIONS: Despite housing slump, sales of seven-figure homes grow
LAS VEGAS
REVIEW-JOURNAL
It’s a buyer’s market in Las Vegas — unless you’re looking at luxury homes.
While the median price of an existing home has flattened for the past year and may even be poised for a decline, the high-end market is soaring.
James Beasley of Sotheby’s International Realty just picked up a $12 million listing for a penthouse unit at Turnberry Place, the four-tower luxury condominium complex on Paradise Road. It’s priced at about $2,000 a square foot, or twice the starting prices at Trump International Tower.
“I don’t think people grasp that for these premier high-rise units, people are willing to pay Manhattan prices,” Beasley said.
The luxury home market has had strong and consistent results, with prices climbing and sales steady, Beasley said in his third-quarter market report. There were 70 transactions at $1.5 million or more totaling $160 million in sales volume, up from $151.9 million the previous quarter.
His brokerage recorded the highest sale of the year in September at $8.5 million.
“In this last year, we have seen the market shift into a healthier and more stable market, a market that is yielding more consistent home values adjusting from the boom in prices during 2004,” Beasley said. “Since the growth fundamentals have not shifted and population growth continues in Las Vegas, our company is bullish on the future outlook of our market.”
more…
http://www.reviewjournal.com/lvrj_home/2007/Jan-14-Sun-2007/business/11818871.html
Maybe he is being hidden in Missouri.
I get sick of these realtors acting like this deep discount correction is just part of the natural business cycle . People are losing thousands of dollars ,losing homes ,without a recession even starting full blown yet . This market is the afthermath of a mania ,not just a little old business correction that is perfectly normal . The fact that the sellers can’t even weather a year of no appreciation is not normal . What a joke .
That’s a really good point HW. After so much cheerleading and even touting these ‘affordability products’, now it is brushed off like it’s raining on a weekend campout.
They were touting mostly the illusion of affordability.
That’s what I think about the “credit installment” society.
All along it was a marketing trick to make believe that people could afford to buy when in reality, they couldn’t. A kind of mega “Household finance” gimmick applied worldwide to real estate. What’s depressing is that all these tricks have been also used in a good part of the G8 countries.
Wasn’t that old Saturday Night Live skit, with Will Ferrell, all about finding the “perfect cheer”? I think that is what the REIC is attempting. I don’t think they have found it yet. Their team is getting their a$$ kicked whether they admit to it or not. The score will get a lot worse before it gets any better.
“2 - 4 - 6 - 8 , who do we appreciate? Default, default, default, yaaaayyyyyyyyyy default!”
Cheer for the FB’s
2-4-6-8 your homes will depreciate
The cheerleaders have no accountability. Now they are looking at each other trying to figure out who to blame. It’s always a great time to buy according to realotors because without transactions they go hungry.
“investors are now willing to cut prices because appreciation is slowing. ”
And they can’t even say it straight. If appreciation was only “slowing” why would a seller need to “cut” the price.
Appreciation is not “slowing”…. DEPRECIATION is “accelerating”…..
Well it’s temporary or transitory negative growth. Think positive.
yes its like the Marine Corpo who never retreat. They ‘advance to the rear’.
Jackson is taking loan applications from people who couldn’t get into the market in the last few years.
Are we really at the stage where people who’ve been priced out can get back in? Not so in my area…
Really not so here either, despite what it says in the article. For what I think is reasonable for a house here, will still only get me a sh*tbox condo, or a rundown SFH in a bad area. Prices have started to budge a little in the upper price ranges, but affordability really hasn’t come back. Unfortunately in this area, there are few MSM outlets, and the existing ones rarely run any articles that are true to the actual housing conditions. I am actually surprised to see this article in the Nevada Appeal. The Reno Gazette Journal hardly tells it like it is. This town is full of sheeple (AKA rednecks) too stupid to do any real research before making the biggest decision of their life.
The other issue is the ridiculous number of oversized houses that have been built. It seems the builders only know how to build a 3000 square foot home, or attached homes. It seems that there is such a disconnect here, and I don’t quite get it. The area has boomed in the last several years, but it has all been REIC supported and related in one way or another. Bantering Bear described it the other day as “The Twilight Zone”. Describes this area perfectly.
This town is full of sheeple (AKA rednecks) too stupid to do any real research before making the biggest decision of their life.
Reno is bad, but think about all those dumb-a$$es that bought overpriced homes in the boonies like Fallon, Silver Springs, Stagecoach, and Fernley. Sorry to offend anyone, but those places are full of rednecks.
I hear that, crash1. I’d never live in any of those places. And don’t forget old Elbow, I mean Elko. Scary whackjobs up there.
Hold on to your money. Things are just getting started. I think there are dozens of builders on the brink of BK right now. Prices are really going to plummet. I say, within 2 years, you will have your pick of whatever you want, name your price (within reason). A good friend of mine in Reno is trying to sell right now, and it is BAD. A few lookers, nothing serious. And his place is priced way below other comps. The guy who bought that foreclosure in Empire Ranch in Carson is another GF. Yeah, he may be able to turn it over, but still, he paid too much. Prices are so far detatched from wages that there is no way it was/is sustainable. I think things will go back to 2000 pricing at the minimum. This puts you in a 2500 sq foot older ranch on 1/2 acre for $200-$250k. As recently reported, Nevada is #1 for foreclosures, and things are just warming up. The tsunami ahead will provide more homes than anyone will be willing to buy. I think there will be a saturation point where homes won’t sell at any price. The overbuilding is staggering. Even in an extremely healthy market, it would take years to work through all of the excess. I am seeing foreclosures in all price ranges and neighborhoods. Reno is going to be something to behold. Patience will prove to be golden.
Bear,
“The tsunami ahead will provide more homes than anyone will be willing to buy.”
This is what happend in norcal in the mid 90’s. I recall telling buyers that sellers were not ready for offers till they have sat on the market for over a year. Agents did not bother previewing new listings.
Mind you these were well priced homes. The premiemum due to nicer hoods disappeared (just like on the way up when people bought crap in crackville LA, homes not worth owning other than to sell) and in order to sell you had to be the least expensive (per sq.ft) and the best quality to even get offers.
There were so many good deals around (based on rental cash flows) that you couldn’t waste your time with them. While messing with a good deal (that precluded you (financing) from buying two at once) a “MUST BUY” would come along (20%+ under value) that you would lose. The investors got gunshy about buying anything in fear of missing the big fish (whale) whilst messing with small (guppies) ones.
You must back drop this with the fact that financing all but vanished. If you wanted to do a deal with a bank (for an investment) it was a huge deal, and they often would not give any loans to all but the most worthy clients. More so was the fact alluded to above that one loan a year with fantastic credit and assetts was all the banks would do. If you didn’t have all cash for several deals missing the “MUST BUY” was a painful loss. The “MUST BUYS” were (in the long run..taxes mostly) worth several very good buys.
EXCELLENT POINTS rich !!! When the lending gets tough only the people that don’t need the loan get the dough…
Yep, marginal deals would cashflow, but screamin deals needed fash cash. Profit was secure at the front end of the deal. Thanks for reminding me Rich. I remember this environment during the 80s in Az.
If a recession hits and possibly with HELOC drying up LV and Reno may just be toast; Indian C’s are closer to urban centers.
Salinas;…The Indian C’s are now going after the last leg also….”Live Entertainment”…Ck “Cache Creek”….That only leaves no “State Income Tax” as the retiree draw…Still significant particularly “if” Cali needs to raise taxes OR congressional tax reform “eliminates” the deductability of state income taxes on your fed return…
That was just BS sales talk dribbling automatically out of her Branch Manager mouth.
“‘Our Realtor said the real estate market is so bad and Realtors are quitting, and we picked the wrong time to leave,’ said Judy Barrett. The Barretts’ home sold Thursday on the city court steps for $343,000. They’ll still owe the bank about $150,000.”
Oooh, that’s going to leave a mark! What are they going to owe in taxes on that 150K? About 50K or so? Ouch!
I heard that the IRS is really good at forgiving that kind of step. They should just ignore it. That will work out well for the Barretts as they hide out in Alabama as the Gonzalez’s.
Imagine how many other people are in their situation. There are probably thousands of other folks who will get caught buying high and selling low. I wonder much much they lost in the tech bubble?
arizonadude, my ex-brothere in law bought a house about a year ago in Cold Springs, which is a Reno suburb. Just found out he has to sell because he can’t afford it. Of course he also has a boat and a lifted SUV…my husband and I are wondering when these will get re-posessed. He manages an apartment complex and is single…no way he is pulling enough income to support that type of spending in this area.
People who bought in Cold Springs, Stagecoach, Fernley, etc. are done. Those areas are, for the most part, nasty. It is nothing but desert wasteland for as far as the eye can see. Land should only sell for a few hundred an acre. Hell on earth.
Not to sound snippy……but is there ANY place in Nevada that isn’t desert wasteland???? I’ve not been anywhere other than LV, Reno, and CC….but all three look like “hell”.
JMHO
Sounds like the typical scenario your brother faces reno girl. You might have him as a roomy soon.I go to reno a couple times a year and gamble at the atlantis. I cannot believe the prices up there.
Not in my 2 bedroom apartment.
I went to vegas friday night and payed my nevada taxes for this year already.I stayed at the luxor hotel and casino.I had a good time in the lovely state of nevada.
You may have seen me out. I was the guy slinking away from the tables after a sound spanking, around midnight or so. Glad I got that out of my system!
Will this result in a windfall for the government, or is somebody on the back end taking a writeoff to balance things out?
It looks to me like the resale market is still smoking something, but HB and foreclosures are starting to get a little more realistic. But this is just the beginning of the meltdown. We have a minimum of 2-3 years to go. And then, the question is…
Will anyone here want to buy then?
From the Carson City Article:
“Carson City is removed from the problems of large urban centers, such as big layoffs, said Bret Duster, broker manager at Re/Max Realty Affiliates of Carson City, which could be one reason why the default and foreclosure rates have not been extreme.”
Right, So what you’re saying is, since there are no big employers like in a Urban Area that supply a lot of jobs, you don’t have to worry about lay offs. So Carson City has HIGH housing prices with NO job base to SUPPORT them. Good Luck.
Carson City has barely any jobs, let alone well-paying. Another little bubble city whose prices were driven purely by speculation. Most buyers had no intention of living in the place long term. Median home prices should be around $100k. Sadly for many, that may be where they are headed.
In laws moved into the carson valley. Only min wage and gov jobs. Miserable freezing cold desert with plenty of room (limitless miserable freezing cold desert) to build more crap.
I think a few hundred an acre is far to generous. There is a good reason that the Gov owns all the land in NV, they couldn’t give it away during the land rush in the 1800’s. Once they run out of stupid expat Californians they are toast with a capital “T”.
Carson city is a nice clean town if your in love with big box strip malls in the freezing cold desert.
They still have the brothels going don’t they? I forget the names but there was a group of 3 that were right in between Reno and Carson as I recall? Those would be high paying jobs I would suspect. Wouldn’t be surprised to see an uptick in applications for those jobs now that the bust has arrived!
LOL! What moronic swill!
We all know that the top ramen and pork rind wages in small towns can support such inflated prices in perpetuity! And they have a much more diverse job base than all those big cities!
The Reno Real Estate market is due for a come back, from a 12/29 Reno Gazette Journal article (http://news.rgj.com/apps/pbcs.dll/article?AID=/20061229/BIZ12/612290398/1083)
Ken Wiseman, broker-owner for Reno Rancho Realty, said he has seen an uptick in interest from out of state, and that could, in part, explain the rise in the local median.
“The Californians are coming back in force,” Wiseman said. “There is still a lot of standing inventory, but it is starting to weed itself out and I think with the interest rates (so low), we are starting to see some sort of tick.”
Woo Hoo! The Californians are coming back to keep driving our prices up! It’ll all be ok now.
Obviously, the only one who’s been “Weeding Out” too much is Ken.
So true! And drinking the bong water…
We in California are the 8th largest economy in the world - as such, we feel obligated to help other communities…..so enjoy it!
I thought California was the 5th largest economy. I heard that just the other day.
Sorry…it was in the paper yesterday that we are 8th largest. At least we are still ahead of Spain and Canada.
Does that include all the tax money that goes out of other states and is spent in California?
Last I heard, Cali liberals were complaining that we pay more tax than we get back from the Feds. Funny, because I thought libs were ‘progressives’ who believed in the rich paying more and giving it to the poorer (states).
Sure as long as they don’t resent us for being rich and successfull thats great. California gets back far less than it puts in to the till and yet you never hear any end of people moaning about how awful California and its people are.
Josh
This is why states in general should secede from the federal government.
If you see Californian’s sneaking across the border call RENO 911 to deal with em!
Is that something like the “Baby Boomers are all moving here” argument? I’ve heard them say the same thing about Arizona, Idaho, Oregon, New Mexico, Colorado and Texas.
I don’t think it’s the baby boomers so much as those who were able to sell high in the bay area or Sac and move here for considerably less. Problem was that the prices when up so high so quick that it quickly lost the profitability factor of selling high and buying low (gotta be able to buy your toys too). Now we have 11 months of resale inventory, not too mention the 78 new home develpments in the area, dependent upon outside money to be able to move them. Anyone who has lived and worked here for any length of time was basically priced out several years ago. Unlike a lot of people here, my salary has increased 50% in the last 3 years. I’m still not stupid enough to purchase when things are still so obviously wrong.
So true Reno girl,
Same pattern in Ashland, OR. Except we have plenty of retirees too that aren’t going anywhere except six feet under eventually. Buyers have been about 70% from Bay Area and 20% from So. Cal. for the last 4-5 years. I too have a decent salary and cannot afford to buy intown, nor can any of my employees. Not boomers exlusively running things up, but certainly bubble-assisted Californians have hosed the market in the near term. It will be nice to see some of this shake out eventually.
Reno Girl
Want to but a condo at the old Flamingo, Sundowner, Hilton, Comstock, King”s Inn, Colonial Inn, Onslow, Cheers, etc.? Pure junk crap! And they are still building condo’s and houses in Reno. Nobody can aford these dead casino shells.
In downtown Reno we are going to have half completed condos all over the place.
“Ken Wiseman, broker-owner for Reno Rancho Realty, said he has seen an uptick in interest from out of state, and that could, in part, explain the rise in the local median.
“The Californians are coming back in force,” Wiseman said.”
Complete and total bullsh!t. Yeah, there may be a few CA equity locusts buying right now, but many are selling as well. I have driven through many newer subdivisions in Reno, looking at newer homes already for sale, and many have cars with CA plates. I am led to believe there are a lot of transplants who are also sellers for whatever reason. Bottom line, CA refugees will not protect pricing in any bubble town. Median price will be dictated by local wages, and nothing else.
Good point. Yes, the Californians have deluged the peripheral markets,but they do return too. It seems like a fairly good number of them grow tired of the “freezing high desert, gloomy PNW, and roasting low desert, lack of culture, etc.” Once prices fall in Cal., I wonder what percentages will return? In any case, I hope you are right about prices recoupling to local wages eventually.
Culture in California?
You didn’t know. Arnold is very kulltureedd man. Ya Ya Ya.
Hasta la vista baby. Look at my steroid kultured musculus.
That’s true. A few Californian investors are selling their properties in my brother-in-law neighborhood of Mountain’s Edge in LV. He said some of those properties have been un-occupied since. Some don’t even have blinds.
Here’s a perspective from a recent home seller in Hawaii….me!
We bought our house on the Big Island in May 2003 for $340k. The boom here was just starting. We watched in amazement as the price of comparable home shot up to $400k, then $500k, then close to $600k, in just a couple of years.
But things began turning around about 18 months ago. Suddenly there were many more homes on the market. In our subdivision, there were just over 30 listings for single family homes, compared to about 20 the year before. These houses sat on the market a long time, too. Sometimes, a seller would simply pull the house off the market because of a lack of customers.
A few months ago, we put our house on the market. Working with our realtor, we priced it at $565k, which he thought was a fair price. So did other realtors who saw our house. But the buyers didn’t come by. So we cut it to $549k. Then again and again. Finally, at $499k, a buyer agreed to buy it, and we are currently in escrow.
We were lucky. We bought before the price went out of sight, and had no mortgage so we could be very flexible about the price. Anybody who bought in the two years, though, is probably going to break-even at best. After realtor commission and other closing costs, we’ll walk away with about $460k. If we had bought in 2005, we’d probably lose $40k or more on the sale.
BobR,
Your property isn’t sold until the you’re officially off the deed. Many people have thought they sold, only to find houses falling “out of escrow.”
Hey, that should be the name of the next Real Estate Show on HGTV: We have “Flip That House”, “Flip This House”, “Sell This House,” and NOW, “Out of Escrow!” which will feature a bunch of greedy California speculators trying to unload their “investment properties.” Just when they think they are off the hook by finding the next greater fool, the greater fool pulls a fast one a backs out. Such a show would provide at least some reality to what is really going on out there.
So true! Wonder what percent of non-HBs sales fall through while some HBs are complaining of 40 to 60% cancellation rates.
Oh yes, we’re well aware of that, Anthony! We’re holding our breath until the money hits our bank account.
Yes, Yes!
All CA residents, go out and bail out the 8-9 X medium income cities and $hitOs. Let’s get all the equity left in the CA real estate nose-dive out of the golden state. Yep, that will happen…NOT! Darn!
Why did speculators run out of fools?
That’s because speculators stopped buying!
“Faites vos jeux. Rien ne va plus !” It’s Monaco casino speak. Play your game. Nothing or anything goes.
http://www.msnbc.msn.com/id/16625040/
Article about how boat sales are down. Housing related? Of course, but they mentioned “falling consumer confidence.” I don’t buy their argument. The economy is still officially growing, and unemployment rate is 4.5%. They are forgetting to mention, or don’t understand that home equity loans are a favorite way of buying boats.
A similar take on this up here in the PNW, but on the used boat market. I was working as a yatch broker we heard throughout the region how there were so few boats for sale in the $100,000 range. One reason was the economic uncertainty and boat owners holding on to what they have versus upgrading every few years. There still seem to be plenty of buyers (mostly boomer transplants), but less sellers.
B-hamster;..PNW is Pacific NW ??
And Hummers. And all the scrap and junk you do not need to be happy, McManshions included. Consumer CON-fidence numbers are probably as phony as the CPI and the unemployment rates. It will be nice the next numbers, even the phony ones. Economists are a fraud. Anyways. The great majority of them.
Yeah, when I lived in NV, Reno/CC was banking big time on the Cali residents moving into town and creating wonders for the economy and housing markets. Looks like they never came. Or like everyewhere else, the dreams were mere figments.
Figments of FED.