My last post was a rant about local lawyers telling Reno homeowners to dump their house. I argued that many homeowners can actually choose to keep their house or sell as a "regular" sale -- meaning, not a short sale or foreclosures.
I want to expand on that a little bit more.
The thing that surprised me most with all the positive things happening in the Reno housing market is the the time it took for Reno home values to increase. Simply unbelievable. The velocity from negative home equity to increases of tens of thousands of dollars in MONTHS. Not one year. Months. This, I did not see coming.
I remember Ian and I making a market video back in 2007 where we told people that the Reno housing downturn is getting so deep that when it recovers it will be gradual -- around 5% per year in property appreciation. The graph will look like a "U" pattern rather than a "V". Boy, were we wrong.
What's creating this incredible demand? You'll be surprised, it's coming from different sources. Most people know that brisk housing demand in Reno and Sparks come primarily from: First-time home buyers, second home investors, move up buyers, small time investors and deep pocketed investors. And all those are true. But what's a less known fact is demand may be coming from far back east as far as China.
Foreign investors could make a big dent on our housing market. China is beginning to experience trouble in it's once seemingly indestructible housing market.
Let me explain. Some of you know that last December I co-wrote my magna opus (what I then called my "passion project"): Open Letter to Philippine President Aquino III--Now is the time to prepare for a massive housing crisis.
A major point I made there is that the economic prosperity happening in the Philippines was caused by investors from foreigners putting buckets of cash into Asia as Europe and United States fell into deep recessions. Well, guess what, we are largely out of the recession and Asia, specifically China is still in the middle of a housing bubble. I believe the smart investors are starting to pull their investments from Asia and are starting to bring back the dollars here in the U.S. as our economy is starting to get back on it's feet. And much of their cash is being invested in Real Estate.
San Francisco, Miami, New York, Los Angeles are already experiencing significant increases in foreign investors snapping up properties in affluent neighborhoods buying properties in cold cash. I was talking to a Realtor friend of mine and they had an offer for $300,000 over asking price for a home in East Palo Alto, California! I think it is very possible that many of these same investors would be looking at second-tier cities like Reno.
What am I saying? I think the crazy demand for Reno real estate that we're currently seeing -- six offers in two days, $20,000 over asking price -- is just the beginning. It could get worst before it becomes better. Inventory is still very low as banks are not fully releasing "shadow inventory" and many sellers are still gun-shy with the housing market.
I just want to give you a "heads up" as you plan to buy or sell your home. It really could be a good time to sell your property. Especially if you think that short sale is STILL an option....I would consider that again if I were you. Call me and we can check the value of your property and explore the options of doing a "regular" sale versus a short sale. You may be able to sell your house at a modest profit over hurting your credit score when you do a short sale, or foreclosure.
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