First of all, is this legislation a direct challenge to MERS? (the Mortgage Electronic Registration System). An explanation of that system follows below and has been copied directly from their web-site:

MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.

Simply put, MERS allows banks and investors to exchange mortgages without the typical title and escrow work we’re all familiar with when we buy, sell or refinance our homes. While your home may have stayed with you all these years, your mortgage has likely changed hands many times. This system has served the banks well for many years. However, at this point bankers are clearly lacking in confidence when it comes to risking a felony offense.

Secondly, this will no doubt have an affect on housing inventory in Nevada. At some point in the near future the inventory of available bank owned homes will drop dramatically. Short sale home sellers may delay their plans. Why rush to sell short if the lender isn’t going to rush to foreclose? I’m very concerned that this will create a false sense of demand in the market. Prices may rise due to scarcity but there’s no doubt reality will roar into the market someday soon.

Last but not least, why would any bank want to lend in Nevada? Let’s think about this… High unemployment, declining home values, state mandated foreclosure mediation and now this. Seriously, I’m no big fan of the banks but common sense would seem to dictate that Nevada is not a great place for banks to do mortgage business. Home financing is already tough in our market. No doubt this will only make things tougher in the long run.

Let’s hope our legislators do a little more homework before they pas the next round of laws intended to protect us all.

Days on Market Report

Median Sold Price Report

In looking at the Tahoe Donner subdivision in Truckee, which comprises the largest percentage of the sales in the overall area, the statistics are similar. A total of 222 single family homes sold in the subdivision (5 less than in 2009), at a median price of $520,000, a decrease of 8% from 2009, and a total decrease of 32% over that subdivision’s high of $765,000 in 2005. The 86 homes currently on the market within Tahoe Donner is only a 4.6 month inventory.

The sale of distressed properties increased in 2010, no surprise. Of the 858 homes sold, 151 were REO (investor owned) and 108 were Short Sales, an increase of 22% over the number of REO/Short Sales sold in 2009. We anticipate this distressed property activity to continue in 2011, as homeowners and their real estate agents/representatives continue to negotiate short sales where loan modifications/refinances are not an option, and lending institutions continue to sell their inventory of homes taken back in foreclosure.

A bright light for Buyers, and Sellers too, for that matter: Frank Nothaft, chief economist for Freddie Mac, says he expects long-term mortgage rates to hold below the 5% threshold throughout 2011, as key macroeconomic drivers provide a backdrop that supports a continued, albeit gradual, housing recovery. Turning to home prices, Nothaft says markets that have large inventories of for-sale homes and REO properties will continue to see home-value weakness in 2011, but he believes price indexes for the U.S. as a whole are close to bottoming out.

In this mountain paradise we love to call home, that’s great news. We look forward to another successful year, helping buyers and sellers realize their dreams!

Short sales accounted for 39% of November sales.  The median sales price for short sales was $159,900 and the average days on market was 180. 

Bank owned proeprties accounted for 35.1% of November sales.  The median sales price for bank owned sales was $128,000 and they averaged 95 days on market. 

Traditional (equity position) sales accounted for 25.7% of November sales.  The median for these sales was $192,000 and they averaged 82 days on the market. 

Buyers used FHA financing for 42.9% of these purchases.  Conventional financing accounted for 28.9%, 19.5% were purchased with cash and 7.8% using VA financing.

Bank owned or REO sales accounted for 32% of the sales in October.  The median was signifcantly lower at $1390,950.  These properties saw the fewest days on the market with an average of 96 days.  These listing received on average 99% of asking price.  The median sales price wasn’t helped much which only 3 homes sold over the $500,000 mark and almost 80% of the sales at the $200,000 or below price point.

Short sales accounted for 27.9% of the sales in October.  They brought in a higher median sales price than the REO properties at $161,000.  They unfortunately average the longest market times of 199 days.  Short sale listings received an average of 99.1% of their asking price.  The short sale median sales price was definitely bolstered by a $1,200,000 sale.  There were 4 sales over the $500,000 mark.  70% of the short sales were under the $200,000 price point.

What does all this mean???  Sellers with equity can successfully sell their homes in a distressed market given that they have realistic expectations of the price.     Bank owned/REO sales net the banks less than short sales, a continued argument that banks seem to be getting finally.  And lastly, short sales aren’t just for homes in the lower price points.  You can do a short sale on a $1 million home.  You just have to prove to the bank that you have a hardship and that it’s in their best interest to not take the property back onto their books.  It can be done.

The total number of sales for the Sparks area  (MLS area 108) dropped slightly from 2009 to 2010, down about 6.1%.  In addition, the median price also fell from $170,000 in 3rd Q 2009 to $160,700 in 3rd Q 2010, a drop of 5.5%. 

There are currently (as of 10-22-2010) 568 active listings available to buyers in the Sparks area market.  Of these 48.6% are short sales, 34.4% are traditional sales and 16.9% are bank owned.  Key here for buyers is to make sure you have a buyer’s agent working for you that knows the ins and outs of short sales – doing your homework before making an offer on a short sale is key.

Bank owned properties continued to earn the highest list to sale price ratio.  In 3rd Q 2010 bank owned lisitngs got an average of 99.6% of the asking price, short sales 98.9% and traditional sales 97.4%.  Fewer foreclosed properties at low prices, continued mis-understanding of short sales and over-priced traditional listings drive these numbers.

As expected short sales have the highest average number of days on market.  For 3rd Q 2010 short sales averaged 184 days on market, bank owned 79 and traditional sales 77.   As a note the average number of days to close a short sale is relatively the same between 2009 and 2010.  We keep being told by the banks that they are improving their processes.  Hopefully this will reflect soon in our average days to close a short sale.

According to a Yahoo.com report on 10-20-2010 more than 55% of the active mortgages in the Reno-Sparks area are upside down.  I think we will continue to see more and more short sales as homeowners become more educated about short sales as an option to foreclosure.  The key is making sure that you select an agent that is highly skilled in the short sale areana and get legal and tax advice as well.