A couple weeks ago I published an account of my clients’ experience viewing homes in Somersett and ArrowCreek (see April 22nd’s “It Quiet Out There…Too Quiet”). The gist of the post was to report the high number of vacant listings we encountered. Many readers responded by requesting vacancy rates for other areas of Reno.
The table below shows the percentages of Vacant/Owner Occupied/Tenant Occupied listings for various MLS areas in the Reno/Sparks area. The areas are sorted by Vacancy rate - highest to lowest.
| MLS Area | Vacant | Owner | Tenant |
| Somersett | 55% | 38% | 8% |
| Southwest Suburban | 40% | 60% | 0% |
| Southwest | 34% | 63% | 4% |
| Old South Suburban | 34% | 60% | 6% |
| Sparks - Suburban | 33% | 65% | 3% |
| Old Southwest | 32% | 61% | 7% |
| South Suburban | 32% | 63% | 5% |
| Sparks - East | 30% | 65% | 5% |
| Spanish Springs | 29% | 66% | 5% |
| Northwest Reno | 27% | 61% | 11% |
| South Meadows | 27% | 66% | 6% |
| Sparks | 27% | 63% | 11% |
| North Valleys | 26% | 65% | 8% |
| West Southwest | 20% | 73% | 7% |
For comparison purposes, the entire MLS breaks down as follows:
| Vacant | Owner | Tenant | |
| Entire MLS | 34% | 59% | 7% |
While compiling this data I also observed that in just two weeks the number of Somersett listings has increased 24% (94 to 117), and the vacancy rate has increased from 51% to 55%.
Data courtesy of NNRMLS May 2007.
21 comments
Actually, as of tonight, the IDX version of the MLS, the version available on your website, shows 130 listings in Somersett.
Lindie,
You are correct. But two weeks ago when I reported the 94 Active listings, I had excluded “condo/townhouse” as well as “Active – Pending…” from my total. For consistency purposes I excluded the same categories in reporting the 117 current Active listings in this post.
The way it breaks down is:
130 Active listings
- 3 Condo/Townhouse
- 2 Active – Pending Contract
- 8 Active – Pending Loan
————————-
117 Active Site/Stick Built
Thanks for checking my numbers.
So there are 130 listings. 10 pendings. This is 8% of listings with a pending offer. This is what it has been for over a year now. So much for the Spring Bounce. What we always hear from the local REIC is how sales are up. We never hear how inventory is also up. The most accurate leading indicator of a market’s performance is the pendings:listings ratio. At 8%, it has been dismal for the past year and continues to be dismal. Hence, the continuing deterioration of prices in Somersett as noted on this blog.
Did you all notice that more than 200 listings hit the MLS yesterday?
The pendings:listings ratio for Somersett, and for the market at large, is worse than 8:100. The MLS does not capture FSBOs (checked out Craigslist lately?) and much of the developer inventory that is built out and sitting empty.
The huge number of vacant listings show that speculation is what drove the price gains of the past several years. Included as speculators are those move up buyers who purchased a new home before selling the old one; a very unwise decision. So, the buyers of yesteryear are now the sellers of today. Just as their false demand drove prices up, their excess supply will drive them back down. Next year will be worse, and 2009 even worse. It’s better to cut ones losses and get out now, versus waiting for a turnaround which won’t happen for years.
Diane. I haven’t noticed any price drops on Caughlin Ranch. Are you getting any action on that one? While you’re the expert, I think that property came on the market more than a million too high. Furthermore, I think they should be dropping the price 1% per month until it moves. Of course, maybe they’re just not that serious about selling.
So only 38% of the houses for sale in Somersett are owner occupied?
For the entire market, only 59% are owner occupied?
Can we now, finally, put to rest the nonsense that Reno was not just as flipper infested as some of the worst markets in the country? Hell, we are only about 10% better than the very worst flipper markets like Phoenix, LV, and South Florida.
I suppose some market cheerleader is now going to comment that this is really not a problem at all. You know, thousands of highly paid tech workers coming to Reno will surely buy up the thousands of empty houses on the market here. And at ever escalating prices, too.
I’m not sure what it means, but if you elimate the extremes, WSW (old money) and Somersett (new money/investors), the owner occupied ratio is amazingly consistant at about 63.25% across all areas.
I think the 200 new properties on the MLS on Friday was a computer glitch within their system - almost no properties had shown up for a week or so, and therfore the glut when they got back on line.
Guy, the statistics would be interesting if you excluded the Raisin Ranch (Sierra Canyon).
GreenNV,
There are 26 listings in Sierra Canyon. Excluding those, as well as the pendings, leaves 94 current listings for the remainder of Somersett [note: for this exercise I’ve included the three “condo/townhouses” referenced in my post above because these correspond to “Duets” in the Village, and also because I noticed that there are other Duets listed that have been categorized as “site/stick built”.]
So, of the 94 listings: 50 are vacant (53%); 36 are owner-occupied (38%); and 8 have tenants (9%).
The numbers are very similar for Sierra Canyon alone: 54% vacant; 35% owner-occupied; 12% tenant-occupied.
Guy,
Is there a way you could tell us what percentage of the total housing stock in Reno/Sparks is for sale? This would include condos and townhouses but not land.
Perry,
Off the top of my head I do not know where I would find the total number of houses and condos in Reno/Sparks. Perhaps one of our readers can offer an estimate.
What I can tell you is that at the moment there are 7,007 Active listings (again, excluding pendings) on the MLS for Reno/Sparks.
According to census data in the year 2000 there were 79,592 housing unites in Reno. This represents a 29.7% growth from 61,384 in 1990.
Of those housing units, 79,465 were located in either urbanized areas or urban clusters, and 127 were located in what is classified as a rural area.
Homeownership rate in Reno is about 47.7%. Reno’s vacancy rate, including seasonal lodging, is about 7%. Average household size is 2.38 people.
The majority of houses, apartments or condos in Reno were built after 1977.
http://www.idcide.com/realestate/nv/reno.htm
This data is 7 years old but it is a starting point.
One piece of data that is now significantly different from 2000 is the home ownership percentage in Reno. It is now about 70%, not 48%. Reno’s home ownership number is similar to the national number now.
The change shows what Voodoo loans to unqualified buyers can do. Proir to 2000, buyers had to do silly things like demonstrate they had verifiable income, and demonstrate an ability to repay the loan, and demonstrate they had a sufficient down payment.
Once those silly things became obsolete, and all buyers had to demonstrate is that that they had respiration activity, the “ownership” percentage went up to where it is now.
Its quite clear from the post that certain people here Like to post the same boring comments over and over and over.. blah blah blah speculation drove prices up, false demand, its going to get worse this year and even worse next year.. What do you people do all day?
you have been posting the same comments for months now. Time to get some new material dont you think? BTW real estate Is not going to get worse than it is now in 2009 DREAMERS
Based on historical price/rent ratios as well as historical appreciation rates and price in relation to medium income, the average Reno/Sparks house needs to fall another 28% in value from current prices to get to fair value. See you at the bottom in ‘09.
According to Ticor Title, the total number of owned housing units in Reno-Sparks is as follows:
Reno 70,046
Sparks 30,608
I’m finding 4121 housing units for sale in the MLS in the Reno-Sparks metro (Guy’s higher number may include greater Northern Nevada), so roughly 4% of the market is for sale at this very moment. That doesn’t seem so high to me…
Derrick,
I plan on buying in the Reno area in 2009 so naturally I like to hear that real estate prices will continue to decline. However, I would be the first to admit that what the real estate market will be like in Reno in 2009 is impossible to know. A lot could change in either direction. The national economy has been on a roll for the past 5 years and it could slow down. Personally, I think that inflation will come knocking on the door and the Fed will have to raise rates to deal with it.
Either housing demand in the Reno area has to pick substantially or else sellers will continue to lower prices in order to attract bottom fishing. Just my humble and honest opinion.
Just exactly how is housing demand in Reno going to pick up substantially in the next 24 months? Where will this demand come from?
70% of the Washoe County population already is in the market. They already own a house. The other 30% were either so marginal that not even the Voodoo lenders would touch them. Or, so smart to not buy into the frenzy from 2001-2005 and are sitting it out, stockpiling cash. So, where does the increased demand come from?
Please, just please, don’t tell me it will be thousands and thousands of big bucks tech workers moving here when 150 companies decide to move out of Santa Clara and Palo Alto and relocate to Reno because of the prowess of UNR’s tech programs. Please.
It appears that over the past 6+ years the number of owned housing units in Reno increased by 32, 081. That’s almost a doubling from the 37,965 owned housing units in 2000.
Does that sound plausible to those of you who have lived in Reno the past 7 years?
If we assume that people live in their homes for average of 8 years before moving, that means 8756 housing units will come on the market every year.
Economics 101: Supply & Demand.
When Filene’s Basement has a sale, GM, or the local grocer, its because of too much stock on hand. The stock is going to sit until the price point looks (really) good to a potential buyer.
Some sellers will drop their prices in itty-bitty increments, with the red slash crossed through the previous prices. Sometimes this works and sometimes the stock just sits and rots. Wiser sellers, understanding the market, jump ahead of the competition, tweek the numbers and get the stock moved.
I found this information amusing, but sad:
Sun Shadow Ct: There are three homes (same models) on this small cul-de-sac.
#1 was on the market for some time, price reduced and reduced,
and now in foreclosure. I believe it is going to auction.
#2 price reduced a couple of times. My husband and I looked at
it. Nice. Decent view. Seller asking $619K. Still on the market.
#3 listed a couple of weeks ago. House backs into a dirt hill.
Sellers asking $685K.
If this wasn’t so crazy, it would be entertaining.
RE: “BTW real estate Is not going to get worse than it is now in 2009 DREAMERS.”
Yeah, Ok.
Tell it to Moody’s. They’re now predicting falling prices through the end of ‘08.
Dare I say some other predictions by moody’s?
lets just say they dont have a sterling track record
lmao