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| In September 2009 there were 930 Notices of Default, 659 Notices of Sale, and 260 trustee sales in Washoe County. |
This chart is posted with the kind permission of Ben Nelson at Ticor Title of Nevada, Inc.
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The Unreal Estate Monthly
The following is an excerpt from a monthly newsletter published by appraiser Mark Rasmussen and is reprinted here with his permission.
Median prices have declined 21.2% since 09/08.
The peak was 49 – 50 months ago. The historical peak to trough real estate value is 46 months. Then again, the recent past has exceeded anything in history by several orders of magnitude. We are there!
Foreclosures for Washoe County:
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- Foreclosures (300) for Washoe County were up 3% from 09/2008.
- Notices of default (930) were up 58.4% from 09/2008. NOD’S have exceeded MLS sales for 25 consecutive months. Many of the large number of defaults will be added to Real Estate inventory with a 4 – 5 month lag time (Foreclosure process).
- 31.6% of notices of default from 05/08 (4 months) ended in foreclosure last month. We are having an extremely successful modification period…..not or, there is a huge amount of shadow inventory building.
- Unsold inventory in the Reno/Sparks MLS is 3.08 months (lowest in over 4 years) plus fewer new homes completed and under construction. This is a substantial improvement from the first of the year.
- REO’S and short sales represent 45.3% of listings, 68.2% of sales (09/2009) and 82.62% of pending sales. No one can sell for less than a lender.
- Option Arms (loans where the borrower doesn’t even pay the accrued interest, which is added to the principal balance) adjustments peak in 08/11. These are not to be confused with Sub-prime or Alt-A (liar loans/stated income). These are the loans where payments can double and triple in a month. Expect much higher default rates than sub-prime. Goldman Sachs expects 61% default rates – ever the optimists, Barclays Capital expects 81% (me too), which is consistent with early resets this year. Most of these have growing principal balances with declining values. Refinancing is not an option.
- Nevada is now at a record high rate of unemployment (13.2%), is increasing and leads the nation in default rates (11.6%).
The low interest rates, first time home buyer tax credit, more reasonable short sales and seasonality have all contributed to dramatically increased sales and pending sales activity. The number of sales and pending sales were the highest in several years. The inventory of unsold homes is near the low over the past several years. Median prices increased for the first time since 06/09. Alt-A and Option Arm (exploding arm) resets are increasing. This looks like the eye of the storm to me. The expected default rate on option arms is multiples of sub-prime. Remember, we were told that this was all contained and unemployment would peak at 8.2% by the “experts” that aren’t as accurate as a broken clock, that is correct twice a day. Understated unemployment is now 9.7% and rising. U.6 (the broadest measure of unemployment) published by the BLS is 16.8%.
Important new laws regarding eviction and foreclosure procedure in Nevada become effective on October 1, 2009
AB140, which was passed by the 2009 Nevada Legislature and signed by the Governor, becomes law on October 1, 2009. AB140 is a product of the state of the economy and the huge number of foreclosures in recent years.
Here are some important changes contained in AB140 which you should know:
- If a residential property is in foreclosure, the lender must serve a separate notice on any tenants in possession. The language of the notice is in the bill which you can read by clicking here.
- A purchaser of vacant residential property at a foreclosure sale is now required to maintain the exterior of the property. There may be penalties of up to $1,000 per day for failure to maintain the property.
- Existing law allowed a purchaser at foreclosure sale to evict on 3 days’ notice anyone who held over in possession of the property after the trustee's sale. Under AB140, a purchaser of residential property at a foreclosure sale is required to give a tenant (other than the person whose name was on the deed or mortgage) at least a 60 day notice of an intent to evict. However, if the tenant doesn’t pay the rent, the owner can evict on shorter notice for non-payment of rent.
- A landlord must disclose to a prospective tenant if the property to be leased or rented is the subject of foreclosure proceedings. Further, it is a deceptive trade practice if the landlord fails to make such a disclosure.
- Foreclosures (327) for Washoe County were up 8.6% from 08/2008.
- Notices of default (1,068- a new record) were up 91.1% from 08/2008. NOD’S have exceeded MLS sales for 24 consecutive months. Many of the large number of defaults will be added to Real Estate inventory with a 4 – 5 month lag time (Foreclosure process).
- 35.1% of notices of default from 04/08 (4 months) ended in foreclosure last month. We are having an extremely successful modification period-not or, there is a huge amount of shadow inventory building.
- Unsold inventory in the Reno/Sparks MLS is 3.41 months (lowest in years) plus fewer new homes completed and under construction. This is a substantial improvement from the first of the year.
- REO’S and short sales represent 44.4% of listings, 64% of sales (08/2009) and 85.2% of pending sales. No one can sell for less than a lender.
- Option Arms (loans where the borrower doesn’t even pay the accrued interest, which is added to the principal balance) adjustments peak in 08/11. These are not to be confused with Subprime or Alt-A (liar loans/stated income). These are the loans where payments can double and triple in a month. Expect much higher default rates than sub-prime. Goldman Sachs expects 61% default rates – ever the optimists, Barclays Capital expects 81% (me too), which is consistent with early resets this year. Most of these have growing principal balances with declining values. Refinancing is not an option.
- Nevada is now at a record high unemployment rate (12.7%), is increasing and leads the nation in default rates (11.6%).
More Thoughts on the Shadow Inventory
The following is an excerpt from a recent white paper published by appraiser Mark Rasmussen and is reprinted here with his permission. The following statistics are national - not just Nevada.
There is a “shadow market” of 2.7 million homes that are technically in foreclosure but are yet to be reclaimed by the lender, says a Wall Street Journal study today. While it’s no secret banks are kicking the can down the road on finalizing foreclosures (and consequently accepting the mortgage loan as a loss) this is the first guess at the total number of such homes that we’ve heard:
“As of July, mortgage companies hadn't begun the foreclosure process on 1.2 million loans that were at least 90 days past due,” says the study. “An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn't yet acquired the property. The figures don't include home-equity loans and other second mortgages.
“Moreover, there were 217,000 loans in July where the borrower hadn't made a payment in at least a year but the lender hadn't begun the foreclosure process. In other words, 17% of home mortgages that are at least 12 months overdue aren't in foreclosure, up from 8% a year earlier.”
The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said. “The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said. The amount of pending foreclosed-home supply has been boosted by more borrowers going into default, fewer being able to catch up once they do, and longer time periods to seize properties because of issues such as loan-modification efforts and changes to state laws, the New York-based analysts wrote.
The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. The Census Bureau said that there were 18.8 million vacant homes (4.8 million seasonal/ vacation) in the second quarter of 2009. How many of these are owned by the unemployed, underemployed/marginally attached/discouraged workers 16.8%?
Dave Guinan coaching contact page
Dave Guinan coaching contact page
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August Statistics for Washoe Co. Foreclosures
In August 2009 Washoe County hit another new all time high for foreclosures - 1067!
Curiously, the number of NODs dropped to 711 in July, which may have been due to a temporary moratorium on new foreclosures.
As noted in a previous blog entry, a new factor will be the requirement for foreclosure mediation, which I describe at more length here. As yet, the Nevada Supreme Court is still training mediators, and no mediation has actually occurred.
This chart is posted with the kind permission of Ben Nelson at Ticor Title of Nevada, Inc.
The Unreal Estate Monthly
The following is an excerpt from a monthly newsletter published by appraiser Mark Rasmussen and is reprinted here with his permission.
Median prices have declined 28.4% since 08/08.
The peak was 48 – 49 months ago. The historical peak to trough real estate value is 46 months. Then again, the recent past has exceeded anything in history by several orders of magnitude. We are there!
| Foreclosures for Washoe | County: |
| 2006 | 69 |
| 2007 | 779 |
| 2008 | 2,194 |
| 2009 | 3,437 annualized |
The low interest rates, first time home buyer tax credit, more reasonable short sales and seasonality have all contributed to dramatically increased sales and pending sales activity. The number of sales and pending sales were the highest in several years. The inventory of unsold homes is near the low over the past several years. Median prices remained flat MTM. NOD’s recorded a breathtaking increase, to a record 1,068 – 21 working days. Alt-A and Option Arm (exploding arm) resets are beginning to increase. This looks like the eye of the storm to me. The expected default rate on option arms is multiples of subprime. LOL. Remember, we were told that this was all contained and unemployment would peak at 8.2% by the "experts" that aren’t as accurate as a broken clock, that is correct twice a day. Understated unemployment is now 9.7% and rising. U.6 (the broadest measure of unemployment) published by the BLS (Bureau of Labor Statistics) is 16.8%.
