by Georgia Fisher As Reno’s foreclosure crises stabilize, nobody knows what the street looks like around the corner
Y
ou’d think foreclosure auctions would be more dramatic. After all, you’ve got anguished families in the mix, investors with startling amounts of hard cash, and auctioneers rattling away on the steps of the Washoe County Courthouse. But for all their emotional potential, the events are pretty sedate, at least on the surface. Trustees and even homeowners have until the very last minute to postpone a sale, so buyers tend to stand around a lot, leaning against stairwells and messing with their phones until each round of bidding starts. Many are middle-aged men in sneakers, ball caps and dad shorts. And plenty are savvy investors who seem far too relaxed for people with $100,000-plus cashier’s checks in their pockets, buying properties they’ve yet to even tour. The bidding process is understated, too—so much so OPINION
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NEWS
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GREEN
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FEATURE STORY
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Chasing shadows
that onlookers probably shouldn’t scratch their heads unless they want new digs. “Sometimes [investors] just bid with their eyes, practically,” says Auction.com employee Dalene Vandermyden. “It’s funny.” Her company isn’t the only one outside the Washoe County Courthouse each week. Auctions may draw crowds. Nothing is guaranteed: not turnout, nor a clear title, nor the promise there won’t be a gaping hole in your new floor. “You hope you get a good deal,” says Guy Archer, an affable Reno native who bought a foreclosed house—a place off McCarran Boulevard he’d researched at length—on April 11. It was his first. These days, a buyer like him might save 20 percent or so, he figures, but “you’re not going to skin anybody.”
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ART OF THE STATE
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There’s no doubt our market is on the upswing. In in the last year, it’s shown as much as 30 percent appreciation in areas such as South Meadows/Double Diamond, and about a 25 percent bump on average. Interest rates have been historically low, too. And although Nevada still has the third-highest foreclosure rate in the country, according to RealtyTrac, the nation’s go to real-estate site, the number of “preforeclosed” and bank-owned homes in Reno has dipped considerably since March of last year — by around 85 percent and 9 percent, respectively. In fact, the biggest problem for first-time buyers may just be the fact that houses in their price range are being snapped up so fast that they’re hard to find. But some say the whole market—or the way it looks, anyway—is a bit manipulated. My own |
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agent, longtime real-estate agent Clay Alder, prefers to use the word “influenced.” In a nutshell, Alder figures as many as 7,000 to 12,000 or more Reno-area homes that could be for sale right now aren’t, for various legal reasons. And in the unlikely but conceivable event they should all materialize at once, we’ll be in trouble. “Let’s say there are 7,000 [such] homes out there,” he explains, noting that he’s not trying to sound alarmist. “If those homes were all to come on the market tomorrow, it would change the supply-and-demand model, and subsequently, I believe our market would drop in value.” He’s referring to shadow inventory, which is a somber but not exactly urgent concern. Its scope can include seriously delinquent properties, those in some stage of foreclosure, and houses that are already bank-owned but not yet up for sale. And even right now, with the market beginning to stabilize, “the ingredients are there,” Alder says, for a fallout to happen. It’s probably not imminent, seeing as banks wouldn’t want to destroy the market for themselves, but it’s technically possible. You may have heard of “zombie foreclosures,” too; they’re part of the same pie, and amount to foreclosures left unfinished by banks, and homeowners who move away without realizing said banks have halted or abandoned the paperwork, for whatever reason. Unbeknownst to them, these families actually still own their houses—and are on the hook for accumulating bills and upkeep, too. In fact, the whole undead-house issue is big enough nationally that a federal agency, the Consumer Financial Protection Bureau, has begun looking into it. According to RealtyTrac, more than one-fifth of all active foreclosures in the United States are zombies, so to speak, and they happen to be on the rise in Nevada. “It’s a tough, tough stat to track down,” says real estate agent Cory Edge. At any rate, “these unoccupied homes that are in some stage of foreclosure … have become a larger story lately, given the lack of [overall] inventory.” And that’s its own can of worms. As for shadow inventory, the issue goes back to 2011, for our purposes, when well-known Nevada Assembly Bill 284 (A.B. 284) slowed the paperwork process for banks that would have otherwise been issuing widespread notices of default. (NODs, as they’re often called, serve as official notice that a borrower is behind on his or
paGe 14 MISCELLANY
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APRIL 24, 2014
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