Following my Median Sold Price post last week, jkat asked see the historical inventory levels of single family homes in the Reno area. I have compiled this data in the table below. I’ve also included the median “For Sale”, or “Asking” price, on a monthly basis.
The table looks very similar to the Median Sold Price table, which I update once a month, however please do not confuse the two tables - the data contained in each is very different.
As with the Median Sold Price table, the Median For Sale Inventory/Price table covers Reno-Sparks. Also, as with the Sold Price table, the For Sale Inventory/Price table excludes manufactured/modular homes.
Some items to note: 1) Reno home prices peaked in July 2005 with a median For Sale price of $387,000. 2) Referencing last week’s Median Sold Price table we see that the median Sold price peaked that same month as well at $345,000; or 89% of the median asking price. 3) Today, we see a median For Sale price of $358,000 for May 2007. This price represents a 7.5% decline from the peak in July 2005. 4) Today, we see a median Sold price of $296,000 for May 2007. This represents a 14.2% price decline from the peak of July 2005. 5) May’s median sold price is 83% of May’s median asking price.
| Month | # Homes For Sale | Median For Sale $ |
|---|---|---|
| May 2007 | 4,967 | $358,000 |
| April 2007 | 4,776 | $355,000 |
| March 2007 | 4,587 | $350,000 |
| February 2007 | 4,382 | $349,900 |
| January 2007 | 4,829 | $349,000 |
| December 2006 | 4,674 | $349,100 |
| November 2006 | 5,307 | $349,999 |
| October 2006 | 5,736 | $350,000 |
| September 2006 | 6,054 | $355,000 |
| August 2006 | 6,340 | $357,900 |
| July 2006 | 6,401 | $359,900 |
| June 2006 | 6,437 | $359,900 |
| May 2006 | 5,952 | $365,000 |
| April 2006 | 5,201 | $364,895 |
| March 2006 | 4,898 | $365,000 |
| February 2006 | 4,400 | $369,900 |
| January 2006 | 4,246 | $370,000 |
| December 2005 | 4,041 | $375,000 |
| November 2005 | 4,433 | $376,895 |
| October 2005 | 4,697 | $377,000 |
| September 2005 | 4,567 | $380,900 |
| August 2005 | 4,369 | $385,500 |
| July 2005 | 3,861 | $387,000 |
| June 2005 | 3,411 | $384,500 |
| May 2005 | 3,113 | $375,000 |
| April 2005 | 2,808 | $365,000 |
| March 2005 | 2,611 | $350,000 |
| February 2005 | 2,198 | $348,250 |
| January 2005 | 2,078 | $349,000 |
41 comments
Wow,
Thanks for the fast response. Looks like the inventories are heading up, but no where near a record.
Thanks Again
J-Kat
Thanks Guy for this terrific info. These numbers, in conjunction with the sales numbers, shed light where before there was darkness.
In May, there were 407 sales and 4967 listings. That is 8.2% of listings that sold. That is ONE YEAR of inventory.
407 sellers attracted a buyer. 4,560 did not.
If only 25% of those 4,560 sellers who failed to sell last month get serious how can prices not fall from here?
Guy:
Is there an easy way for you to post the number or pending offers in the Reno-Sparks market when you post the number of listings?
The sales:listings ratio is quite valuable in assessing the market for obvious reasons. But it is a lagging indicator. It tells us where the market has been.
The pendings:listings ratio is a leading indicator. It tells us where the market is going.
Together these two ratios are very helpful in assessing the market. I suspect that the pendings:listings ratio today is not much different from the sales:listings ratio. Probably a bit higher, because not all pendings result in a close; some fall out of escrow. But pretty close. As long as it wallows in the 9:100 range, I suggest we will continue to see declining prices.
I believe one way to identify the bottom of the market will be when we see the pendings:listings ratio improve for a period of several consecutive months. I suggest it is a more valuable measure of where the market is going than the “gee, I think it’s going up because I want it to go up” approach.
If it is possible, it would be great to have the number of pendings when we get the number of listings.
Thanks again for all your terrific info.
This article shows that there are a number of opinions among the various real estate/business experts about the impact of the housing slow-down.
http://www.bloomberg.com/apps/news?pid=20601109&sid=akV2sasSGUY8&refer=patrick.net
The 1/2% increase in the 30 year rate over the past 5 weeks can’t help things.
R.I.,
Good points regarding the Pendings data. I will include this data the next time I update listings table.
RI posted:
“I believe one way to identify the bottom of the market will be when we see the pendings:listings ratio improve for a period of several consecutive months. I suggest it is a more valuable measure of where the market is going than the “gee, I think it’s going up because I want it to go up” approach.”
Not necessarily. As prices fall, there will be many people buying the dips, and transactions and prices will improve for a short while, then fall again. The path to the bottom is not a straight line. There will be many false bottoms. I think the bottom to this mega bubble will be easy to recognize because we will stay there for some time. People won’t even want to talk about buying houses anymore.
I suggest that all those trying to call the market’s bottom, don’t. You’ll know you’ve hit bottom three or more months after-the-fact and not before. Even then it will probably take another three or more months to confirm that really was bottom. If everyone could simply track listings/sales/median prices in a vacuum and know the precise bottom of the market, everyone would be rich.
As a supplement to tracking listings/sales/prices, I suggest you start looking at the rental market [which understandably, is extremely soft because of excess supply]. Let me give you an example:
How about a new/near new 4,950 sq. ft. Toll Brothers home in Somersett for $3,150/month [http://reno.craigslist.org/apa/355300922.html - and BTW, I think $3,150/month is high? Nearly $895K to purchase according to the builder. Let’s see, with $90K down [which costs at least $412.50/month in lost interest at 5.5% (which is readily available from many FDIC institutions) and even more in an environment of rising interest rates (which we’re in)] that leaves a $805K mortgage [assuming that in this market some lender will actually make a 10% LTV mortgage]. Assuming a teaser interest only adjustable rate of 6%; no out-of-pocket closing costs; and your teaser rate remains constant for the next two years [an impossibility] and you’re looking at a monthly mortgage payment of $4,025. Now let’s include property taxes at full value; property insurance; and let’s assume the lender hasn’t made you purchase mortgage insurance. That’s another $900+/month in ownership costs.
Thus the cost to own versus rent becomes $2,200 or more monthly. And let’s assume the market really doesn’t turn around for two years. With commissions and costs of sale, this property must sell for $1.023M [an appreciation rate of over 7% per annum] JUST TO BREAK EVEN!
Don’t want to assume it will take two years for the market to turn? O.K., let’s assume one. With commissions and costs of sale, this property must sell for $995K [an appreciation rate of over 9% per annum] JUST TO BREAK EVEN!
Now look at the glut of listings at the absolute peak of the year to sell. If sales volume hasn’t quadrupled within the next two months, there are going to be a whole lot of property owners who either need to drastically cut their sales prices; sit on the sidelines by becoming a landlord at whatever cash flow they can generate; or, become casualties [and I’m not even assuming these owners are sub-prime borrowers]. Of course more homes for rent translates into lower rents which create even less incentive to buy [at least at inflated pricing].
As long as people can rent for so much less than to buy and with no money down nor mortgage liability, there’s absolutely no incentive to become owners. And if you take the time to investigate the plethora of quality rentals out there [how about Montreux at $4,000/month (which is still LESS than the cost to own a Toll Brother’s Somersett!)], you’ll realize how far this market really has to go.
Of course these are just my opinions and I could be wrong, but I don’t think so…
Diane and Guy,
I believe if comments posted immediately, the blog would get more traffic. Bloggers can be impatient! Just MHO.
BB
Smarten,
It is a good point to compare monthly cost-to-rent with cost-to-own.
If you keep property for 20+ years it really does not matter how much you paid. If you are planning for a shorter term, you would have to sell at whatever the market can support of could become a landlord (and then the monthly cost matters).
I would introduce a couple of points of caution when considering cost-to-own:
1) There may be a tax advantage to own (deductable interest and taxes)
2) If you are a landlord, you may be able to depreciate the home
3) Some markets can support long-term imbalances between the cost-to-own and cost-to-rent. One example is San Francisco, which is probably the worst in the nation at a cost to own of three time the cost to rent. Reno is not San Francisco, so a huge imbalance is not sustainable, but a smaller one can be for years.
I know many people who rent because it makes no sense to buy into an inflated market. Personally, I would only buy if it is a long term commitment and even then I would be looking for a good deal.
BB, if you saw some of the spam comments we get now and then for gay nude males and hot young teens, you’d understand why we don’t let the drive-by posters do whatever… just trying to keep it PG rated here!
Welcome back to your blog, Diane. Where have you been?
Staging you open houses with some of the “gay nude males” you are stopping from posting might really open up a new market for you. The pupu platter just doesn’t make it anymore. Skin sells!
LOL, on second thought, thanks for sparing my eyes Diane! Seriously, aren’t there any good spam filters out there? That stuff is out of control.
BB
DJ states he “would introduce a couple of points of caution when considering cost-to-own:
1) There may be a tax advantage to own (deductable interest and taxes);
2) If you are a landlord, (there may be another tax advantage to own) you may be able to depreciate the home.”
Gee, I thought the so called “big” advantage to living in Nevada was the lack of state income taxes. No state income taxes = no state tax advantages when you own property!
So I would introduce a point of caution when considering living in Nevada; the lack of state tax advantages if you own property.
Therefore although tax advantages may mask under performing real estate in places like San Francisco where prices may be higher [but take a look at Incline Village where prices are even higher than San Francisco], they don’t in Nevada.
This is just another reason why becoming a property owner in Nevada had better make economic sense and in today’s Reno real estate environment, it doesn’t.
You could do it up Vegas style. Hold your open house but have a few of those card snapper people standing at other agnet’s open houses snapping the cards at people as they’re leaving. These cards of course will have all the details of your open house.
Sorry, I couldn’t resist.
RE: “And let’s assume the market really doesn’t turn around for two years.”
Two years?! The ‘89 downturn took 8 years to turn upward again - and that boom was half the magnitude of this one.
In two more years we may be halfway through this downturn, but no further.
Very good post smarten. That is exactly why I sold my house in the summer of ‘05. It made no sense to own when it was so dirt cheap to rent. Still makes no sense to buy. The rent/buy ratio still has to go back to historical averages. We need at least another 20% decline in home prices to get there. Bottom in ‘09???
I beg to differ It does make sense to some people. Especially when your saving anywhere from 100-200k/year on taxes if you had stayed in california.. Makes plenty of sense TO US anyways
Derrick posted:
“I beg to differ It does make sense to some people. Especially when your saving anywhere from 100-200k/year on taxes if you had stayed in california.. Makes plenty of sense TO US anyways”
I’d love to see how purchasing a $260k stucco sh!tbox in Spanish Springs saves $100k-$200k per year on taxes. Anybody else smell some BS around here?
Bantering bear your a funny guy. But I will try and explain it to you. my family and I all own alot of stock which was purchased @ .01 cents/share. reason being is our technology company was bought out by a bigger firm (publicly traded).they bought our company by buying our shares (.01 cents value) thus converting all of them into shares of their company valued @ 62.00/share.
Not sure if you follow me but ill keep going. Anyways whenever we cashed out shares we were paying california taxes and capitol gains taxes.
By moving to reno and buying a house here and creating residency we were able to lower our taxes by roughly 50%. The amount we have saved in just the last few years would have been more than enough to buy a 260k sh*tbox stucco house in spanish springs.
I’m with you on this one, BB. I cannot fathom how buying a house in Spanish Springs, or anywhere in Reno, could possibly save anybody $200K a YEAR in taxes. Ostensibly what Derrick the financial guru is referring to is California state income taxes? Of course, if one is a Nevada resident one does not have to pay California income tax. But in order to save $200K a YEAR in Calif. state income tax one would have to have well in excess of $1 million in annual income. Hardly the kind of folks buying cookie cutter houses in cookie cutter neighborhoods in Spanish Springs. A multi-million dollar lakefront at Incline Village, maybe, but Spanish Springs, or South Meadows, or Somersett, uh, I think not.
Bear:
Would you PULLEEZZE stop responding to “him.” It just exacerbates
the spewing!
Thank you.
Derrick, you say you have saved $260,000 in California taxes in the “last few years”. What is the top Calif. rate on income taxation? About 10%? So you are saying you have earned $2,600,000 in the “last few years”? And with that you went out and splurged on a $260K house in Spanish Springs?
Bantering Bear is correct, it is getting very smelly in here.
http://www.ti.com/corp/docs/press/company/2000/c00032.shtml
Believe what you may. But that was my family’s company.
Derrick, you say you,ve saved $260,000 in California taxes.
As you know the maximum state tax rate in California is 9.3%. For you to have saved $260K in California state income tax your income AFTER ALL DEDUCTIONS and credits had to be close to $3M [and parenthetically, you would be in the 36% or greater (because of AMT) federal income tax bracket = $1.08M in federal taxes].
Everyone I know who is looking at yearly income in the millions and taxes of millions/year [and for the reasons which follow, I DON’T KNOW ANYONE LIKE THIS], spends his/her money on highly leveraged, expensive [commercial] real estate so he/she can take advantage of depreciation write offs and/or oil and gas exploration limited partnerships which generate 75% or more write off in year one, plus a 20% depreciation allowance on future income. That way, the income DOESN’T go to taxes and there’s no reason to move to another state to avoid paying them.
Therefore looking to the “tax advantages” of owning a $250K single family home in Reno [or a $1M one for that matter], is really a drop in the bucket and in my view, doesn’t warrant a move.
Furthermore, the percentage of the population that pays enough state income tax to warrant [as a primary motive] a move to a no state income tax state like Nevada must be less than 1/10th of 1/10th of 1% of the population. Although I applaud you if you’re one of these few, that still doesn’t make it economically savvy to be purchasing Reno real property unless you’re buying under market value and you have reasons to be here for different reasons [like family, health, a job, etc.] over a long, extended period of time [like the 20 years DJ posited].
BTW, I’m NOT a Nevada resident but have been looking at Reno as a possible place to relocate, NOT because of no state income taxes [which really, are more than offset by higher real property taxes (that’s right, HIGHER)] but rather, because of depressed real estate prices. But they’re not depressed enough for my liking [and I’m certain, many Californians will agree with me]. That’s why I’m looking to rent.
In my initial post I referenced a luxurious Montreux rental at $4K/month. You can view it at http://reno.craigslist.org/apa/357957664.html. So just to make my point, I’m going to give any of you interested in becoming a Montreux renter the first chance [compare $4K/month in rent to what you’re currently spending as an owner on your Reno home (even after “tax benefits”), and then compare your digs to this one]. After a week or so, I’ll take my own stab at renting it [assuming it’s still available] and maybe become a fellow Reno resident. Heck, I’ll even try to negotiate an option to purchase where the purchase price is determined a year or more down the road when if the price isn’t less, I won’t exercise the option.
Oh, BTW. Why do you think a property like this is even being offered for rent versus sale [especially by a real estate broker]? And why do you think the owner is only asking $4K/month? I submit the answers to these questions will tell you everything you need to know about the current state of Reno real estate.
Dudes and dudettes, just pause and consider for a moment that Derrick might be RIGHT. A 260K home fits his needs, he doesn’t need a Montreuax address to impress anyone. I’m a Cali evacuee, and saved over $15,000 in state taxes when I sold my SF home. I could afford to spend a LOT more on my monthly mortgage, but choose not to. I LIKE where I live, it suits my lifestyle, it is actually pretty cool. By moving my S corp to Nevada, I also save the 10% Cali state tax.
So, OK, Derrick may be a bit of a pill. But he doesn’t deserve the scathe, yet. I sort of think all the info he has disclosed to us may be real.
Derrick:
By now we have all heard, ad nauseum, how extraordinarily brilliant you are. How rich you are. How we all ought to envy you. We get it, Derrick.
You can leave now.
Say hello to Bill Gates for us all next time you have lunch with him.
Doofus,
Come on. Derrick insinuates he has made MILLIONS of dollars a YEAR over the “past few years.” I’m just not buying the notion that Derrick is the multi-millionaire next door type quietly living an obscure life in Spanish Springs. Derrick constantly barrages us with his feats of financial acumen. Hardly the kind of personality who lives quietly in middle class suburbia. No doubt there are many people who really do have a net worth in the multi-millions, and who do live an obscure life in nice middle class ciscumstances. I suspect there may even one or two of them who post here, but never to tell us about how rich they are. These people, however, are not the ones who feel the need to post here every other day about how much money thay have made in California, and Florida, and Nevada, and how they sold out the family business for a fortune. Really, Doofus, how many multi-millionaires do you know who have some ego-deficient need to constantly tell a blog full of strangers how damn rich and smart they are?
Ok, ok. I have figured it out. Derrick does not really exist. He is just a cyber creation of Diane and Guy, created to post outlandish comments on the blog, intended to induce the rest of us into responding thus creating traffic on the blog. Very clever, Diane and Guy. Very clever.
First let me say; Diane I love this blog! Although you are relatively new to the Reno area and not a long time agent, you really know what is going on. Thank you for not following Lereah!
Second; We are again a Reno statistic, a very happy statistic. We listed on May 10 in the Northwest, today the new owners of a home we very much loved but outgrew will now make them happy.
43 days from meeting our selling agent to close. WOW!
Reason for success? Realistic pricing, strategy, not walking away from a somewhat lowball/high incentive 1st offer. 3 counters later, got asking price with a little less than 2% seller credit to close.
Did I mention realistic pricing?
Could we have gotten $30-40 sq ft more last year? Yes, but that was last year? We were not ready to move, we were not ready to rent although we looked, and we had a baby on the way as as well.
Wow, wow, wow, and I feel that this was such a close call. Nationally things are turning quickly, maybe not so fast here in Reno. However all it will take is a few stock market adjustments here, maybe a war there, a couple of hedge fund blow ups and blammo, consumer sentiment heads south and then we will really see where Greenspan has taken the U.S. economy.
Anyway, again thanks for what you do here, it has been a long time since I first posted, but I have been here very often to help myself ascertain where this Reno market is at.
PS: I bet some will think that we got taken by our Realtor. My response to that is, look at all of those homes that we drive by in that area everyday that have been listed 3, 6, 9, even 12 months. Ouch, I feel for these people (at least the families and first timers, not the speculators who were going for a free ride). This situation is much like stock market rallys. The average Joan or Joe is last in on the big moves up and when things start to unravel, they are the last out after taking a severe beating and likely ended up with a loss of capital.
Assume that one has $2 million in capital gains. Moving from a State that has a 7% tax to one that has 0% tax means a savings of $140,000.
Using that tax savings to buy a house in a depressed real estate market makes plenty of sense.
I would suspect that there are a number of milllionaires who live a regular middle-class life-style……that’s how they got to be millionaires in the first place.
you wanted me to explain how moving to reno and buying property saved 100-200k easily, Well I did. FOr the record however Never Did I say I personally was rich So get over IT lindie.
Furthermore this is a RE blog So there is nothing wrong with posting your success In RE. I suspect many of you need to stop being jealous and reading into or over-analyzing me.
Appreciate you being open minded “move to reno”. Its too bad others are too blind to see that angle. Furthermore That was a big reason we moved to reno.
For someone to think just because you are rich you should be living on lake tahoe or in a multimillion dollar house is rediculous and a short sighted view.
cheers!
Nice post “Smarten” just proves the point , you have absolutely NO IDEA !! On any of my existing investments.
When you are rich maybe you can tell us ALL how to invest. because I must be doing something wrong! LMFAO
“Just proves the point, you have absolutely NO IDEA !! On any of my existing investments.”
Since you’re so eager to let the rest of us know how rich and saavy you are Derrick, why don’t you share your existing investments? I would love to learn from the master who couldn’t figure out how to shelter $260K in state income taxes [and at least another $1.1M in federal income taxes] short of moving to Nevada [and BTW, was it a bona fide move or was your sole purpose to evade paying California what was justly due because of your efforts in that state?].
And since this is supposed to be a real estate blog, please emphasize how those strategies have played themselves out in the real world insofar as your particular Reno property purchases/sales are concerned.
Maybe then I can apply your proven strategies to my own humble situation so someday I too can become “rich” like you [and BTW, what exactly is your definition of “rich”]?
Hey Diane/Guy, I see it all so clearly now. How truly clever. These last three posts from your fictional “Derrick” are amusing. You are making “Derrick” a bit whiny now, however.
Derrick said “I beg to differ It does make sense to some people. Especially when your saving anywhere from 100-200k/year on taxes if you had stayed in california.. Makes plenty of sense TO US anyways”
That’s great and all, but if you move to Reno and rent a house, you also become a Nevada resident and save on California taxes. You make it sound like you had to buy a house here to save on CA taxes.
Smart Money, you are correct about all residents enjoy the same benefits of the 0% income tax rate. However, there are plenty of reasons to be a home owner instead of a renter.
1. I don’t want some stranger coming over to my home any time he wants and walking around in it.
2. I want protection from any serious inflation of money that might occur in the future.
3. I don’t want to be forced to move from my house because some stranger decides he wants to sell the house to a 3rd party.
4. I don’t want to face the prosspect of future rent increases.
5. I do want to enjoy any future price appreciation that might occur.
Like I said earlier, the best way to buy a house is a cash deal. That means looking for the best deal available given the cash outlay, not “how much house can I afford” mindset which is responsible in part for the current housing downturn. I would much rather live in a $300k house that is all paid for than a $900k house in which I owe $600k.
According to forbes In order for 1 to claim themselves as rich they would need a net worth of roughly 4-5 million. So to answer you, I would consider 5,000,000 and over to be rich. Anything Less? thats just very wealthy but not quite rich. cheers!
p.s. I dont have 5 million!!!
I have no reason to shy away form anything I have said. all the info I have posted is 100% real. It is what it is.. cheers.
According to Doofus, “Derrick may be a bit of a pill. But he doesn’t deserve the scathe, yet. I sort of think all the info he has disclosed to us may be real.”
I submit we now know Derrick is not for real. With an admitted net worth of less than $5M, he’s not “rich” [by his own admission]; he certainly did not save $260K in California state income taxes; and, he should not be calling strangers’ kettles black.
Yes Derrick, in addition to moving to Reno purportedly for the state income tax savings, you are doing something[s] wrong!
BTW, is the house you purchased in Reno located in Spanish Springs or somewhere else [and if somewhere else, precisely where]?
40 comments, I do believe you set a record for this blog. Keep posting the good information.
Thanks
J-Kat