The numbers don’t lie. Sales are plummeting, and so are prices. 4 of the 8 houses on the circle I am living on, sold in 2005 for WAY too much. Zillow, which is on the high side in it’s Zestimates, already shows all of them underwater, some by more than $35k. These are average at best 70’s tract homes in a noticeably aging neighborhood. I would venture to say that two of them are upside down $100k right now. Judging by their vehicles, I don’t imagine these folks have that kind of equity, since these were starter homes for them. So, they are STUCK. Not a smart decision after all since they could have rented something much nicer for around half of the price, and banked the difference each month to save for a healthy down payment. There was simply little value for the price they were paying, and huge RISK. But, like most who bought at the peak, they thought real estate in Reno would go up 20% per year until the end of time. They should have suspected something was not quite right when neighboring homes sold, in the 1990’s, for less than 1/3 of what they were paying. One of the homes was flipped for almost $100k profit in less than 12 months! This sort of appreciation was completely abnormal, unsustainable, and phantom really. Now, the chickens are coming home to roost. The final nail in the coffin will be the drying up of the easy money. Qualified buyers are becoming an endangered species. This spells bad news for sellers. They better get religion and price things attractively, otherwise they might never sell. That’s right, NEVER. Not all homes in this market are going to sell. There are too many for too few buyers. And just wait till the big builders start selling for what seems like insanely low prices. The resale market will dry up. And what many don’t realize, is those builders can afford to sell those homes for LESS than it cost to build. They have the resources. Toll Bros. is looking to walk away from land options in the area, signaling what’s on the horizon. Things are just warming up.

I am looking at purchasing a new home in the first phase of the new Mountain View Estates subdivision,located off Ferrari McLeod Blvd. This new subdivision is next to the recently sold out Lennar housing development on Socrates. The new home I am considering is a 2955 sq. ft 2 story model with 4 br. and 2-1/2 ba. It sits on an approx .16 lot. With some upgrades, I expect my sales price to be $455,000 and supposedly the home as an appraisal value of $517,000. Consiering the surplus of homes on the market and declining sales prices, would this purchase still appear to be safe or a smart move for me?