440 Mountain Lake Ct. is now listed as a bank owned property for $475,000. At 1,864 sq ft with 3 bedrooms and 2 baths on nearly 1/2 acre in this relatively low elevation, Eastern Slope neighborhood. This is the best buy in Incline Village for location, potential and price. Please contact me for all the details, this property is not listed in the Incline Village MLS. The listing agent is very competent and well respected. I just did a transaction with him for a bank owned property in Reno in November, and we closed within 15 days.

These are some great buys that have caught my attention recently- they are in nice locations with decent sized lots, a nice yard, either close to the beach or low in elevation and over 2,800 sq ft. in size.

734 Mays Blvd. 2,803 sq ft. $859,000
This is located just a short walk from Burnt Cedar Beach as well as shops, restaurants, and groceries at Village Center. With 5 bedrooms and almost 1/2 acre lot, this has huge potential and would make a nice vacation rental. It needs updating- flooring, kitchen/baths but the vaulted ceilings give it an open feel and cosmetic upgrades area easy to do. We have a home around the corner and love this neighborhood.

590 Lucille 3,232 sq ft. $789,000
Lots of space with a lovely, level/terraced, landscaped sunny lot! The kitchen and bath(s) have been updated and 5 bedrooms provide options for vacation rental or for a big family. The location is convenient to the Village Center and within a mile of Lakeshore and the beaches. This is a geat home and the price is very attractive.

1069 Mill Creek 3,100 sq ft $739,000
This home was priced over $1M last year, and has come way down to below the seller’s costs. It is now a short sale, subject to bank approval, if you have the patience to wait through the process. It also has lots of living space with 4 bedrooms, and huge garage for several cars and a boat. The lot could use some nice landscaping and would give the home curb appeal and a buffer from the neighbors, but the lot is nearly 1/2 acre with a nice yard in back. This neighborhood is so well situated just a walk to Incline Beach, the Hyatt, Country Club shops, restaurants, salons and Sierra Nevada College. This is a best buy for the size and location!

One of these Best Buys has just gone into escrow at 377 2nd Tee on the Eastern Slope, listed at $750,000 with 2,392 sq ft living area- this is pending short sale approval and will be a great buy if approved at this price.

Please contact me to view any of these homes- these are priced to sell and I believe these will go into escrow soon.

Concerns are increasing: We may see a spike in interest rates and, at the same time, a plunge in the prices of some commodities. It is surely worth making this possibility clear to potential homebuyers…because now, when rates are attractive and prices have stopped falling and the $8,000 and $6,500 tax credits for homebuyers are in place–now is surely a great time to buy a personal residence. And it isn’t necessarily a good bet to wait for a better time.

We hope homebuyers can understand this. Like you, we wish as many people will be able to take advantage of this incredible buyer’s market as possible.

Current interest rates are as follows:

30 year fixed conforming rates (for well qualified buyers who are purchasing a primary or secondary residence):               5% with no points.

Jumbo 5/1 ARMS with 30% down (primary residences) are 4% with no points up to $850,000.  With 25% down, the interest rate on the 5/1 ARM is 5.25% (no points).

Steve Peterson

Branch Manager, Sierra Pacific Mortgage

Office: 888-232-7687 Cell: 775-219-7151 Fax: 866-649-3235

January 13, 2010 

KEY INDICATORS 

Gold $1129.10/ounce [up]Crude Oil (Brent) $79.00/brl [down]U.S. Dollar to…    Euro .6900 [down]    Japanese Yen 90.90 [down]6-mo Treasury Bill Yield 0.12%10-yr Treasury Note Yield 3.82%[6-mo down 3 bps, 10-yr up 7 bps]11^th Dist Cost of Funds 2.094%[+]30-yr Fixed-rate Mortgage 5.48%15-yr Fixed-rate Mortgage 4.94%1-yr ARM 4.50%[HSH averages rates: 30-yrdown 10 bps,15-yr down 9 bps; 1-yr ARM down 22 bps] 

Mortgage Bankers Association Mortgage Applications Index week ending 1/1[Index plunged in week ending 12/25/09]  Overall    462.2 (up 0.5%; down 22.8%the week prior)  Purchase Money Loans    212.1 (up 3.6%; down 4.0%            the week prior)  Refinancing Loans    1976.9 (down 1.6%; down 30.5% the week prior) 

Jobless Claims 1/2     434,000 – prior week 433,000 – continuing claims fell to 4.802 m 

ISM Non-Mfg Index Dec    Up from 48.7 to 50.1 

Employment Report Dec    85,000 payroll jobs lost – unemployment remained at 10% 

Weekly Commentary 

A 10% unemployment rate understates actual unemployment because it doesn’t take into account the unemployed who have simply given up looking for work for the moment. A more accurate assessment is 17.3% unemployment. 

This is grim, and it is chained to the current recovery like an anchor, keeping personal spending from rising significantly. It is worth noting, too, that personal bankruptcy filings rose by 32% in 2009. And worth noting that, with people combining their living spaces and moving in with family, the vacancy rate for apartments rose to 8% in 2009, a 30-year high. Landlords, in response, have thus far lowered rents by 3%. 

In other words, we seem to be bouncing along the rocky bottom of this recession. Though we can detect a probable rising trend for the economy, the final results of the recession are far more visible to the naked eye. Speaking of rising trends, though, The Economist, the London newsweekly, noted this week that the unveiling of the new skyscraper in Dubai—the Burj Khalifa, now the world’s tallest building—was in keeping with past skyscrapers, which were “commissioned when money is cheap and optimism about economic growth is at its height,” but are “often finished when the champagne has gone flat.” 

The Economist, along with other analysts, worries as well that the prices of many commodities are rising too high thanks to the cheapness of borrowed money today. Money is so inexpensive to borrow, remember, because of the support provided to the credit markets by the federal government. Last week, the 2-year Treasury note yield actually fell below 1%. No wonder banks have been slow to make riskier loans when they can borrow nearly-free money and take the gains from placing that money in nearly-risk-free investments. 

But the risks are growing. The yield curve, if defined as the gap between the 2-year T-note and the 30-year T-bond rates, has never been this high before. That suggests something is going to snap. 

“Interest rates will stay low only if growth remains slow,” The Economist observes. “But if economies grow slowly, then profits will not rise fast enough to justify current [stocks’] share prices…. If, on the other hand, the markets are right about the prospects for economic growth, and the current recovery is sustained, then governments will react by cutting off the supply of cheap money later this year.” 

Either eventuality could disrupt the economy. We’ll watch closely.

Lexi Cerretti, Intero Real Estate, Lake Tahoe
Incline Village, Lake Tahoe home sales crept up in 2009 with 89 homes sold this year compared to 84 sold in 2008, a slight improvement in volume, although prior to 2008, sales numbered well over 100 to 200 per year for homes.

Average sales price in 2009 was $1,495,789 up 7% from 2008 average sales price of $1,383,060. This reflects the large number of high-priced sales- 24 sales over $2M in 2009 compared to just 12 homes sold over $2M in 2008. We saw many all cash sales in the high end with buyers looking for bargains in new construction, homes close to the lake or with lake views. The highest priced home sale in 2009 was the one of the two full lakefront homes sold this year at $7,350,000 compared to the highest priced home sold in 2008 at $6.7M, a home with shared lake frontage.

However median home sales price dropped in 2009 to $1M compared to $1,115,360 in 2008- this reflects the increased sales in the low end of the market- 44 homes sold under $1M in 2009 compared to 37 sold under $1M in 2008. Buyers came in with bargain prices in the low end. The lowest priced home sale in 2009 was $370K compared to $525,000 in 2008.

Home sale prices were 90% of asking price in 2009- compared to 91% in 2008, although average list price was 8% higher in 2009, again, reflecting the increased number of high-end homes sold.

12 homes sold in Lower Tyner, while 10 homes sold each in Lakeview Subdivision and Millcreek in 2009. Lakeview Subdivision, Millcreek and Lower Tyner were also the most popular areas to buy a home in Incline Village in 2008, with 10 homes sold in each area.

Larger home sales were also evidenced, with the average home size at 3,502 sf up from 2,953 last year. Price per sq ft has also dropped from $462 in 2008 to an average of $403 in 2009. Price per sq ft actually peaked for single family homes in 2007 at $539.

Days on market has dropped from 178 days in 2008 to an average of 139 days to close in 2009, encouraging although not 100% accurate as homes are often taken off the market and re-listed.

Other sales to note are in the the PUD or freestanding town homes, where both average sale and median sales price dropped significantly, over 35% on average. This is attributed to the many older, lower priced units sold in 2009 compared to more new construction sales in 2008.

In condo sales, priced dipped 25% in a very competitive sales market. Many sellers lowered prices and buyers snatched up bargains. Only 3 condos sold for over $1M in 2009, compared to 9 in 2008, and many sales were in the $100K’s.

30 year fixed conforming rates (assuming excellent credit, owner occupancy and 20% down for houses and 25% down for condos) are 5.125% with no points or 4.875% with 1 point.

Jumbo 5/1 ARMS with 30% down (primary residences) are 4% with no points up to $850,000.  With 25% down, the interest rate on the 5/1 ARM is 5.25% (no points).

We have entered 2010–a New Year, a New Decade–but the New Year hasn’t taken off its New Year’s Eve costume just yet. We can’t understand current credit market moves with confidence and, as an obvious result, shouldn’t be trying to make short-term predictions, though we might be able to hazard the guess that longer-term, rates are rising and the economy is, in its lumpy way, recovering.

Still, it’s fun to speculate. I am imagining, very tentatively, that the recent Freddie Mac average 30-year fixed rate is a smidge higher than where it was a year ago because rates are in the process of rising and leaving behind the lows they enjoyed last year. Who knows. Could be, but I wouldn’t count on it–or anything–for a few weeks. We await further instructions from the markets about how to expect the short-term future to look.

Steve Peterson

Branch Manager

Sierra Pacific Mortgage

Office: 888-232-7687

Cell: 775-219-7151

Fax: 866-649-3235

January 6, 2010 

KEY INDICATORS 

Gold $1117.30/ounce [up]Crude Oil (Brent) $80.14/brl [up]U.S. Dollar to…    Euro .6965 [down]    Japanese Yen 91.66 [down]6-mo Treasury Bill Yield 0.15%10-yr Treasury Note Yield 3.75%[6-mo down 5 bps, 10-yr down 8 bps]11^th Dist Cost of Funds 2.094%[+]30-yr Fixed-rate Mortgage 5.58%15-yr Fixed-rate Mortgage 5.03%1-yr ARM 4.72%[HSH averages rates: 30-yrdown 1 bp,15-yr up 1 bp; 1-yr ARM up 19 bps] 

Mortgage Bankers Association Mortgage Applications Index week ending 12/18[Next index report 1/6]  Overall    595.8 (down 10.7%; up 0.3% the week prior)  Purchase Money Loans    213.3 (down 11.6%; down 0.1% the week prior)  Refinancing Loans    2889.9 (down 10.1%; up 0.9% the week prior) 

Jobless Claims 12/26     432,000 – prior week 452,000 – continuing claims fell to 4.981 m 

Construction Spending Nov    Down 0.6% 

ISM Manufacturing Index Dec    Up from 53.6 to 55.9 

Factory Orders Nov    Up 1.1% 

Weekly Commentary 

The credit markets are doing their best to be incomprehensible. It’s a task at which they excel. 

We should remain aware, though, that the markets go on a quiet annual binge of confusion every year at this time. Many players take a week or two off, thinning the ranks of investors. As a consequence, there was a concern, ultimately unfounded, that fewer bidders at last week’s auctions of 2-year, 5-year and 7-year Treasury notes would cause rates to rise but, buyers came from all over the world and there were between two and three bids for every T-note. Go figure. 

The Freddie Mac average 30-year fixed rate, at 5.14%, moved up roughly ten more basis points last week from the week prior. (It’s measured Thursday through Thursday). A somewhat surprising benchmark: That 5.14% rate is actually four basis points higher than where the average rate stood one year ago. Why is that surprising? We have been looking for a long time at rates that were significantly lower than their year-prior counterparts. Twelve months ago, though, mortgage interest rates were declining to extremely attractive levels. Today, rates seem to be in the initial phases of a long trek north, and they may be leaving the territory pioneered a year ago. 

But it’s not a good time to be making assumptions. The fact that our Treasury securities are selling so well at auction doesn’t erase the result—a vast, and growing, quantity of Treasury securities in the resale market. Demand for securities doesn’t always exceed such a massive supply, and we no longer have the Federal Reserve jumping into the markets to buy up excess securities. (That was crucial in pushing interest rates as low as they could go not long ago.) 

Without this support, the markets must deal with the buying and selling of the currently huge supply of securities without governmental help. When there are more securities available than there is demand for them—as any student of supply and demand and of inflation knows—the prices will decline, which means their yields will rise. And that is the primary reason that Treasury securities seem to be in the midst of a rising trend. 

It’s a trend, though, that could turn around on a moment’s notice—not the sort of thing you want to take to the bank. So we continue to watch very closely, especially the moves made by the 10-year Treasury note, in hopes that we just might know, maybe as quickly as the market knows, which way interest rates will eventually move in a sustainable fashion. Meanwhile, we eat up the leftovers from our holiday meals.