Glimmer of hope
Bank-owned homes are selling for close to the prices at which their owners listed them for sale, and they’re selling within about three months of the time they’re put on the market.
It’s still difficult, however, to sort out the meaning of it all.
The sale of foreclosed homes is the primary driver in the residential markets of Reno and Sparks these days, as sales of bank-owned properties accounted for slightly more than half the fourth-quarter transactions tracked by the Northern Nevada Multiple Listing Service.
Bank-owned homes account for 23 percent of the homes currently on the market in the region. Among homes priced at less than $400,000, bank-owned properties account for 30 percent, says Kris Layman, president of the Reno-Sparks Association of Realtors.
Gayle Williams, an agent with Dickson Realty in Reno, draws optimistic conclusions from recent data that show bank-owned properties are selling at about 98 percent of their listing price, and they’re on the market an average of 100 days.
“People are beginning to realize there are some good deals out there, interest rates are low and loans are available,” she says. And potential buyers, she says, increasingly have a longer time-frame for their residential purchases.
“The days of flipping are over,” Williams says. “People need to realize they are buying for the long term.”
As they do so, she says, the flood of bank-owned properties will subside, getting the region’s home market back to balance.
But efforts to restore balance need some help from the supply side of the equation as well, and the news
last week was less than positive.
RealtyTrac said 1,396 homes in Washoe County were somewhere in the foreclosure process during January. More troubling, the Irvine, Calif. company said the Reno-Sparks market saw an 8 percent increase in foreclosure activity from December. Among American cities with the most foreclosures Reno ranked 10th in January that’s the only month-over-month increase reported by RealtyTrac.
A real estate broker who’s busy listing and selling bank-owned properties worries that more foreclosed properties are about to flood the market.
Ken Wiseman notes that Fannie Mae and Freddy Mac placed a moratorium on any evictions until March 1, and the Obama administration looks to impose a moratorium of its own.
“By holding off we are only prolonging the problem,” Wiseman says. “Seventy percent of the homes I get to list have been vacant from one to six months. Obama is asking that we don’t even get these on the market.”
But until the inventory of foreclosed homes vacant or occupied is cleared, Wiseman says stability can’t return to the region’s residential market.
He said real estate brokers who are working with lenders typically are told to sell homes within 30 to 60 days, and they’re typically listing the homes at prices similar to those on the three lowest-priced properties for sale within a one-mile radius.
But those prices can erode quickly.
If foreclosed properties don’t draw offers within a month or two, banks often begin trimming the list price by anywhere from $5,000 to $15,000 every couple of months, Wiseman says.
That, in turn, makes it difficult for private sellers to price homes at a point that will sell.
Winters said she believes some of that price-cutting by banks is beginning to disappear as financial institutions from around the globe listen more carefully to pricing advice of real estate agents who are working the streets of Reno.
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