The good news is that my dire prediction last month of only 150 Solds for August was way off. Recall that I based my projection off of the number of “under contract” sales for July, which at the time, according to the data I had available, was 217 Pendings. Given our usual conversion rate (83%), and other factors, I projected 150 sales for August. Well, I have since learned that transactions reported as Under Contract take longer to reconcile in our system than do Solds and Actives. So, the longer I wait to observe the Under Contract number, the more accurate the count will be. For example, last month on August 13th my software reported 217 homes under contract for the month of July. Today, my software reports July’s Under Contract’s at 355 homes. Using this more accurate number and applying the usual 83% conversion rate yields 294 sales for August (and not the 150 I had projected). In actuality, August Solds came in at 318. (See table below.)
Other than that, the median “for sale” price continues to hold steady at $349,900; this same price goes all the way back to last October with nary a fluctuation. Sellers continue to hold on to hope. Meanwhile inventory continues to rise. Solds continue to decline…as does the median Sold price.
| Month | # Homes For Sale | Median For Sale $ | # Homes Sold | Median Sold $ |
|---|---|---|---|---|
| August 2007 | 5,457 | $349,900 | 318 | $295,000 |
| July 2007 | 5,442 | $350,000 | 348 | $296,498 |
| June 2007 | 5,442 | $349,900 | 345 | $300,000 |
| May 2007 | 5,207 | $349,900 | 412 | $295,250 |
| April 2007 | 4,952 | $349,900 | 378 | $296,000 |
| March 2007 | 4,716 | $349,900 | 372 | $293,700 |
| February 2007 | 4,459 | $347,000 | 312 | $285,000 |
| January 2007 | 4,875 | $348,900 | 324 | $280,000 |
| December 2006 | 4,712 | $349,000 | 337 | $290,000 |
| November 2006 | 5,339 | $349,900 | 318 | $300,000 |
| October 2006 | 5,760 | $349,925 | 409 | $299,900 |
| September 2006 | 6,073 | $354,000 | 385 | $299,900 |
| August 2006 | 6,350 | $355,000 | 372 | $306,650 |
| July 2006 | 6,408 | $359,900 | 411 | $322,900 |
| June 2006 | 6,440 | $359,900 | 463 | $325,000 |
| May 2006 | 5,955 | $364,900 | 425 | $316,000 |
| April 2006 | 5,203 | $364,000 | 412 | $316,000 |
| March 2006 | 4,900 | $365,000 | 434 | $328,000 |
| February 2006 | 4,403 | $369,900 | 321 | $317,000 |
| January 2006 | 4,248 | $370,000 | 325 | $325,000 |
| December 2005 | 4,043 | $375,000 | 385 | $319,900 |
| November 2005 | 4,435 | $376,895 | 443 | $331,000 |
| October 2005 | 4,697 | $376,900 | 559 | $335,000 |
| September 2005 | 4,567 | $380,000 | 603 | $336,500 |
| August 2005 | 4,370 | $385,700 | 695 | $334,950 |
| July 2005 | 3,860 | $387,000 | 677 | $345,000 |
| June 2005 | 3,411 | $384,500 | 607 | $335,000 |
| May 2005 | 3,113 | $375,000 | 717 | $326,000 |
| April 2005 | 2,808 | $365,000 | 650 | $315,000 |
| March 2005 | 2,611 | $350,000 | 660 | $309,000 |
| February 2005 | 2,198 | $348,250 | 411 | $301,000 |
| January 2005 | 2,078 | $349,000 | 381 | $295,000 |
Note: The median table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, NV and Sparks, NV. Residential data includes Site/Stick Built and Condo/Townhouse. Data excludes Manufactured/Modular. Data courtesy of the Northern Nevada Regional MLS - September 2007.
16 comments
So in August 318 houses sold. 5,457 did not.
1.4 YEARS of inventory.
6% of listings sold. (Can we finally give up saying we are selling through 10% of inventory?)
I think we may have to wait and see what impact the credit crunch has on closed deals. We may not get a good read on that until we see September, and even October numbers.
Right you are, RI. There is some lag time between the bankers wetting their pants, and sales figures going Hindenburg. Halloween should be quite frightful this year.
Aren’t numbers fascinating? If the MLS actualy required agents to be accurate in their listings (status, etc…) we might actually be able to draw legitimate conclusions… oh well - I guess it is what it is.
Happy Friday!
Interesting to note the # of homes for sale has increased by only 15 homes in the last 3 months. Could this be the homebuilder’s cutting back on projects and slashing spending? If I was a gambling man (which I am) I would bet that the # of homes for sale decreases in the next few months.
You’re only a loser if you cash out now and dont wait 5 years. That is to say if you bought 05′, Which thankfully I didnt.
Derrick, the MLS contains only resale houses. The inventory of new homes by the builders, except for the infrequent new house listed with a realtor, does not appear in the MLS.
In actuality, the number of houses for sale in Reno-Sparks is far more than the 5, 457 showing as MLS inventory.
Question please-
Is it true Westhaven Dev. Group bought up some of MDG’s Somersett lots and plans to build some homes utilizing the same floor plans?? True? Rumor?
Thx.
I have no idea nc. But for people with cash in their jeans and good credit and who are in no hurry to buy, it’s only good news. Sure, just what Somersett needs, as well as the whole market, is even MORE new inventory.
Let the builders build on! Add to the glut! Increase the REAL inventory to more like three years in Reno-Sparks!!
Since Reno is special, and the law of supply and (real)demand is inapplicable here, what does it matter?
nc - true, though I haven’t heard of any time frame. Floor plans may get tweeked.
RI - the inventory new houses listed and sold by realtors on the MLS is increasing an awful lot. My semi-educated guess is that is up to 7-8% of new home sales. But it begs a question - MLS sales report their numbers to NAR, and the builders report their sales numbers to the NAHB. Are the MLS new home sales being double counted? I suspect so. I hear my good friend Jaded is looking into it, and you may hear more soon.
DERRICK - Look at the trends on Guy’s charts - we are just about exactly on last year’s movement.
Hey Green, the next time you talk to your good friend Jaded, tell him it’s about time for a new post.
At least twice a week, I meet at least one or two idiots who don’t “get what is going on” and preparing to BUY RENO for a homefront. At least once a week I have an idiot tell me “you are throwing away your money renting!”
I have a hunch that we will be seeing worse times in this region over the next year, Bush, Jim Gibbons and Mendy Elliot won’t be able to move fast enough to keep up with the nationwide foreclosure event that keeps growing.
NVMojo wrote: “At least twice a week, I meet at least one or two idiots who don’t ‘get what is going on’ and preparing to BUY RENO for a homefront.”
I agree wholeheartedly! Until local agents “get it” [I think Diane and Guy now do], how can their clients?
By way of example, for many, many months my wife and I have been trying to find a new home in the “greater Reno” area. We really wanted to relocate on Lake Tahoe’s North Shore [which is next to impossible unless you want to rent bottom of the barrel housing] and for this reason considered portions of Somersett, Montreux and St. James Village. After incredible vigilance and persistence, we finally found our home [as renters (see below)] in Incline Village [”IV”]. Maybe not Reno per se, but Washoe County nonetheless.
To make my point, I’m going to reference a major real estate agent/blogger here in IV - Don Kanare [www.insideincline.com]. In past posts I have referenced some of Don’s quotes - the ones Lindie constantly repeats [how special IV is and how absolutely immune it is from what’s going on nearly every place else]. Until high profile agents like Don “get it” [and as you will see, he doesn’t], we have a long way to go.
So Don makes a post this week telling the world how the owners of an overpriced $995K home for sale in IV have now dropped their asking price by $180K [twice] in just the last week [and $20K before (and this seller is by no means alone)], and yet continues preach denial: “if you are a buyer waiting for a significant price decline you are probably going to be disappointed!” Well I don’t know where you come from but where I do, I call an 18.5% price drop in just a week “substantial!”
Yeah, things are so rockin’ in IV Don: YTD 192 sales [versus 187 for 2006 YTD (which was 50% of 2005’s sales activity)] - that’s a whopping 21 sales/month [and for the next three months I fully expect that average to drop into single digits [there were only 202 IV sales in all of 2006] - with 485 homes/condos/PUDs currently for sale on the MLS [and who knows how many more FSBOs]. And then to perpetuate Don’s delisional thinking, he makes observations like “at this time one year ago the median sale price was $1.12M. In the past six months the median sale price has moved up to $1.215M…[And] the median asking price of the homes currently in escrow [all 6 or 7 of them is]…all the way [up to]…$1.895M…So much for an across the board price decline in Incline Village…real estate!”
Well, we’ve all seen how reduced sales at the lower end of the price spectrum combined with a couple of stratasphere sales [like $8.95M and $13M] can skew the median sales price. Notwithstanding, Don thinks everything’s “cool.”
As to NVMojo’s further obseration about idiots telling him “you are throwing away your money renting,” I again agree wholeheartedly! I’m not going to share the amount of rent we’re paying for our home but it’s about 25% of the cost to own assuming a 25% down payment.
Now why would anyone own given the disparity [are you listening Allen Murray] I’ve referenced but for massive price appreciation? Tax benefits you say? You mean those Nevada State tax benefits which really don’t exist given there’s no state income tax? I don’t think so.
So the lesson for people relocating to Reno[, IV or really anywhere] - the one’s who really have to live here - [at least IMO] is rent instead of own. Your rental dollar will go much, much farther. Take the 75% savings and put the money in the bank so that when prices turn, you’ll have money for a down payment.
Let me preface my remarks by stating that I own my house. Bought in 1995 before any of the Voodoo money nonsense set in. So please, all you delusional cheerleaders, spare us all the “bitter renter” comments. (As if there is even such a thing as a “bitter renter” when anybody who had respiration activity and was willing to lie could get a Voodoo loan anytime between 2002 until about a month ago).
I remember when there were two traditional measures to consider in the rent v. own calculation. Now this was before the REIC-invented “New Paradigm” that simply invited people to abandon time-honored rational analysis in favor of the “buy now or get priced out forever” spin.
The first measure was that houses ought to sell for 150 times rent. In traditionally expensive markets, usually big cities, 200 times rent was the norm. So, for a place like Reno, a house that rents for $1,400 a month ought to sell for $210,000. A house that rents for $1,500 a month ought to sell for $225,000.
The second measure was that a prudent and fiscally responsible person ought not to spend more than 3-3.5 times household income for a house. If household income is $60,000, one ought not to spend more than about $210,000 for a house. People with substantial household incomes could push this up a bit, to say 4 times income.
Under the onslaught of millions of dollars of advertsing by just the local REIC here in Washoe County between 2002-2006, these
measures sound rather quaint now, don’t they?
Do you find yourself thinking, well, Reno really is different than every other housing market in America, Reno really has a economy better than every other place in America, rich Bay Area transplants will come here and prop up our prices forever, land is getting scarce in Reno, and nodody loses money owning a house in Reno, so I think it is OK to spend 10 times my (real)household income for a house, or spend 400 times rent?
If you do, well, the REIC is very pleased. It’s millions of dollars in billboard ads, and televison programs, and fancy mailers and glossy brochures, and newspaper supplements really worked. You bought it.
I applaud people like NVMojo and Smarten for not buying into the (still) REIC hype and drinking the kool-aid. I applaud people who refused to buy into the “you are throwing your money away by renting” nonsense and refused to take on a suicide Voodoo Special for the “dream of home ownership.”
RE: RI, traditional metrics
Pre-2001, in Southern New England, the typical price:rent ratio was 120 times rent.
Conventional financing carried these caps (you had to go non-conforming otherwise):
- Minimum 20% down
- Total mortgage amount no more than 3x annual gross documented income
- PITI no more than 40% of gross documented monthly income
- PITI no more than 33% of net (take home) monthly income
While reading MikeZ’s post which talked of traditional lending guidelines including things like “PITI no more than 40% of gross documented monthly income”, I couldn’t help but wonder - where’s Jeff the mortgage broker? He never did come clean as to how he worked those stated deals. You know, the ones which are the current and future foreclosures. The deals in which he looked at some poor saps paltry $25k per year income, uttered something along the lines of “we need to go stated” then put him into some $400k house he never had a prayer of affording. I often wonder what it must feel like to live without a conscience.
The whole idea of stated rather than documented income screams “FRAUD” to me - why else would you decline to document your income for a loan? Even a self-employed borrower has tax returns that that can be used to document yearly income.
You’re right BB - Jeff the mortgage broker, who is outranked in the professional license requirements department by someone who gives haircuts for a living, has been pretty quiet on this whole issue.
Wonder why?
Waz,
It hasn’t been as much of an issue declining to document income, as the lenders just not asking you to. The loan programs they were pushing didn’t require documentation, and there was really no financial advantage for a borrower to do so.
For less than the annual fee on my credit card, I just got a $150,000 HELOC non-doc, because that is what my mortgage holder was offering. To their credit, as funds were drying up in late August, they backed off on the amount, so I documented assets and underwritting approved me for the full amount. There was never any mention of documenting income, and they had to scramble to figure out how to receive my asset docs - my “account executive” had never had to deal with it before.
Assuming Jeff is an owner, anyone else curious what sort of loan product he has himself into?