Guy, thanks for the post. 158 houses sold for less than $269K, and 158 sold for more than $269K.

Is there any way to find out how many of the 158 houses that sold for less than $269K sold between $200K and $269K, and how many sold for less than $200K?

And, of the 158 houses that sold for more than $269K, how many sold under $300K, under $400K, under $500K, etc.?

If it’s too much work to gather that data, I understand. I am curious where the bulk of the sales activity below and above the median is occuring. I have some realtor friends who say that the upper end is dying on the vine, but some data would be helpful to know for sure.

speaking of bottom.. how about the U.S dollar ..

R.I.,

< $200,000: 19.3%
$200K-$269K: 31.8%
$269K-$300K: 13.1%
> $300,000: 35.8%

Many ways to interpret these numbers, but the quick story is that two-thirds of sales are occurring at $300,000 and below.

Thanks Guy for the info. That really helps clarify the below median segment. Interesting that 1 in 5 houses selling are now below $200K and 2 out of 3 are below $300K.

I remain curious about the upper end. I’m hearing from friends selling real estate that only a very small percentage of that one-third of the market over $300K is selling for over $500K. Perhaps Diane can give us some additonal info about the number of sales over $500K?

You and Diane provide a great service here. Thanks again.

Its pretty obvious that the 500k and OVER market will make up a VERY small part of homes being sold in reno. hence the median price ( 269k). However the 300-500k market seems to be selling rather nicely, taking up almost 33% of ALL sales.

smarten you are the one who predicted the median would FALL in April.. Not me.. take your own advise!

Just a thought, but has anyone considered the 1800 houses in the NOD pipeline that haven’t even hit the MLS yet? And that doesn’t include the April numbers.

I don’t see that there is much to get excited about here. Only 7% of all houses sold. 93% did not sell.

About 60 houses sold for less than $200K.

About 100 houses sold between $200K and $269K.

About 40 houses sold between $269K and $300K.

About 100 houses sold for more than $300K, but we don’t know how much more than $300K. My guess is that most of these 100 houses sold for less than $500K.

I think some people here are a bit too obssesed with the median number. I can tell you that an 1800 sq. ft. house on my street that sold for $520K in July, 2005 just sold for $372,500. That is a 29% drop in value. It also is a decline from $291 a sq. ft. to $207 a sq. ft. This particular house obviously falls to the upside of the median, but on a percentage basis has dropped in value much more than the median has dropped since its all time high.

And there is another house of the same model on the market the next street over that is listed for
$395K that can’t get a look.

Marla, you do realize that your argument is identical to people’s arguments during the peak. Everyone could point to an example of where their neighbor purchased a house for $372K and sold it a year later for $520k. At some point what goes up must come down and visa versa. I think we are getting very near the point where it wont go down much more, I’m starting to see a lot of value out there, and values will not drop to zero. Be careful of the “lemming” mentality, it can cost you just like it did many on the upswing.

Thanks for the lecture about my mentality Allen. I know it must be getting to you to be sitting on your overpriced “million dollar” house for more than a year. I’m sure all these stories of sellers having to take big price reductions to sell their house are upsetting to you. But I’m sure your house is special Allen. I did not say that values would drop to zero. Did I say that Allen??

Allen, I agree with you that “the fact of the matter is that we are still at historical lows and it can’t get much better. 3/4 of a % isn’t that significant if you can remember double digit interest rates;” and I do.

Would I hold off making a purchase simply because mortgage rates may not have hit bottom? Of course not. If I had a mortgage and wanted to refinance would I hold off because I believe mortgage rates may not have hit bottom? Yes [because I think we’re going to be in a 1/2% range even if the feds don’t cut the cost of funds rate]!

If you’re a buyer who is going to have to rely upon a purchase money mortgage, my recommendation would be to start working with a lender [or mortgage broker] to get yourself pre-qualified. That way you’ll be able to move when that perfect property comes along. In fact [believe it or not] that’s exactly what I am doing. A loan broker I’m working with tells me he’ll be able to give me a loan commitment good for 90 days and if I haven’t found something to my liking within that period of time, he asserts it will be a simple matter to secure renewal for an additional 90 days. The key is documenting your income and assets. That way all you need do when you’re ready to move on a specific property is to update that documentation.

diane/guy, why do you both have different numbers for the inventory? If dian counts manufactured home and guy does not shouldn’t the numbers be the other way around??

Love the graph Guy; thanks.

Now if we could get one for median sales prices in addition to unit sales, that would be even better.

You know, it’s hard for me as a lay person to envision any source in Reno/Sparks being more up to date on what the residential market is doing than you, Diane and the other posters on this site.

The comparision with ChaseNation is night and day - someone over there needs to take notes. Good job Guy!

Just added a median sold price chart (see above). Thanks, CBam.

I really appreciate the Blogger participation I’m seeing here. Another reader sent a spreadsheet graphing the number of homes sold as a percent of those available for sale. I’ve added this chart on the post above. On this chart he also graphed the monthly change. His analysis: “It looks like if May can exceed 8.3% of homes sold, there could be relief in sight. If May [‘s absorption rate] is 5% or lower, probably 6 out of next 8 months will see declining medians.”

I see no real reason for the incessant blather of a certain few posters here. There is absolutely nothing to celebrate in the numbers. Median price, as well as houses sold have continued to deteriorate YOY, and as Marla has accurately pointed out, price per square foot is the real barometer.

As we meander toward a bottom, there will be brief periods of apparent improvement, as it’s never a straight shot down. Let’s answer a few questions. Do wages now support the median? No. Is it cheaper to buy than rent? No. Is the economy strong? No. Are wages strong? No. Are inventories improving? No. Are foreclosures slowing? No. Oops, looks like more pain ahead.

Anybody want to buy a $400k McMansion on Dant for $1.2 million? Didn’t think so. Commence the price slaughter to shake out all of these weak hands.

Thank you GreenNV!

I was talking about the inventory Guy, not the number of sale.. sorry for the confusion.

Diane has the inventory lower by about 200 than you, yet she includes manufactured. what gives?

The talk about a bottom sounds a lot like in 1991, four years before the bottom http://www.southoctracker.com/2008/05/south-oc-home-stats-may-2.html

“The county’s new-home market caught fire…as sales shot up while inventory went down.

If both trends continue, real estate analysts said the county’s housing slump could be over by the end of this year.

“We’re seeing indicators that show the economy is in a similar situation to what it was (in July of) last year. The big difference is that buyers now are confident. They are perceiving that this is the end of the down cycle, not the beginning,” said John Shumway, president of Market Profiles, a real estate consulting company in Costa Mesa.

Or perhaps not…This story was printed in the OC Register in March 1991 - about four years before the actual end of that down cycle.

I agree with Smarten and the rest who estimate next January as the bottom. Very typical for sales to rise this time of year. Since everyone is playing god as far as what the bottom median will be. I am going to call $247,750 AND .10 cents -this is fun…

I think that there are some deals to be had in the under 300k segment and rates are low-perfect for first timers with good credit.

Diane is very correct as far as buyer strategy: Make an offer. Most sellers and their agents don’t really know what to do as far as pricing because the market is changing so rapidly. You will find that asking price has no reflection on motivation, especially if you have the data to back it up.

I’ll join the vultures around the end of this year and pick up some FEASIBLE income property.

Love the Blog Diane/Guy

Reno is overpriced. Just look at Sacramento prices falling. Why is Reno imune or specail.
Reno’s day is coming. Texas is a far better place to invest. What is Reno’s industry? As far as I can see most people make 6-7 dollars an hour there. Almost bought a condo in Reno in 2005 it was offered at $119,000 I saw the same condo for sale for $79,000 2 weeks ago, glad I went to Texas where I have made money, not lost money in Reno!
The Realtors here have to be upbeat and sometimes lie, their income is based on sales, of course they will lie!!!!!
Prices in Reno have to fall another 25%-40% to be competitive with the rest of the U.S.
Remember, in most cases now you have to put down 15%-20% as a down payment. Who has $30,000 to $40,000 sitting in a bank account now a days?
I doubt casino workers and the McDonald’s workeres don’t have that in Reno!! I won’t even mention inflation, sliding dollar and unemployment. Come on people, do that math!!

Mea Culpa, John. Sometimes I can’t read my own handwriting. The correct TD figure for April is 187, not 137.

With 5 of 21 business days completed for May, TD 38, NOS 61, NOD 139. As you know, these filings tend to show up in big chunks, so it’s hard to be the “Oracle of Verdi” this early in the month. But so far TD and NOS numbers look like they are trending down a bit, and NOD numbers up. I think you have to be in default to get the bank’s attention for a work-out that prevents worse recordings.

Jose Rock,

If you are really looking at condos in the 100K range you could sell your 20″ “rimz” and save a couple $6-7/hour paychecks. Texas is far too North for a smart investor like yourself.

Your right BB. I forgot that Realtor/casino stereotypes are allowed on renorealtyblog.com

I meant that Mr. Rock might have better luck investing outside of the US as we are experiencing an economic downturn.

It will not happen again.

so are you saying we will see a median price of 210k MikeZ? that is rather amusing, considering it will NEVER happen lol.

Mike Z, I can appreciate your prediction, but I don’t see it either. Its too early to say we’ve hit bottom but I think the lower end might be there. When do you think we will hit $210/220K?

Wrong downtown junkie, I flipped my fair share of homes during the boom.. its safe to assume I made MORe than a few pennies.. as far as me being stuck in my current home.. Please don’t make me laugh .. I paid cash for the house I live in now more than 5 years ago.

You hardly impress me! heh heh

I don’t think I quite follow you Mike. Right now we are at $269K median, you say we will hit a $210/220K median. I ask, when do you think we will hit that median? This year?

So John, do I understand correctly, you do not believe that we are at bottom yet, but don’t want to guess as to when we might get there?

I’m not trying to bust anyone’s chops, I enjoy hearing everyone’s opinions on whether or not now is a good time to buy. The tone of this board seems to be changing in that now we are discussing the bottom, and several agree that the lower end bottom is here. Mike Z thinks $210/220K is possible, I don’t see it happening. I think $240K may be possible this winter after the spring/summer surge, but I wouldn’t be surprised if it holds steady this winter also.

Greenspan said yesterday that the worst of the credit crisis is over, the dollar is coming back and gold is getting weaker. I agree its too soon to say, but things are looking up.

Thats true Sully…care to make a prediction as to the low median in Reno and when???

OKay - Jan 2009 210-220K.

My crystal ball has a short in it and not working very well. Also it might help if I was actually looking at median priced houses, to see what is offered at current prices. I have been looking in 400 - 600K range and can see some room for price reductions.

Haha, it will be interesting. I think Smarten’s prediction was Jan ‘09, correct me if I’m wrong. If we agree that the low end has hit bottom, and the mid range is next, this past March at $260K may in fact be the low median. What does my secret admirer Bantering Bear think?? Is the sky still falling?

I’m not sure how you guys are guessing when the bottom will come, even when the guess is obviously tongue in cheek. Just curious as to what you tie it to, if anything.

I understand that historical data aren’t always helpful, but FWIW I think Schiller’s data suggests most housing busts consist of two big down years followed by two smaller down years and then five or ten years of bumping along a bottom. Along the way there are of course small ups and downs. If the peak was say January 2006 that would put the bottom some time in January 2010.

Good point Don, I also think we will be at the bottom for a while. I consider bottom to be the point where prices cease to decline. This may be the case in the under $300K range now. The mid and upper range has a ways to go perhaps. If you use median sales price as a rough indicator, I think August 2005 was the peak. This August will be 3 years of decline if this April’s numbers turn out to be an anomolie. Obviously, we won’t know until after the fact. I do know that the realtors and lenders that I know are all busier now than they have been in some time. As a possible buyer, I figure if we are near bottom now and think we will be here for a while, now is a great time to buy with inventory is high and rates are low. Will this be true 3 years from now?

What’s become exceedingly boring, are the incessant attempts by certain posters, with anchor houses, to goad others into committing to dates in which they believe the housing market will bottom. Nobody knows. But one thing’s for certain; the return to fundamentals.

Housing prices will, once again, represent what local wages afford, with a possible overcorrection due to the severity of the bubble. Again, I won’t be surprised to see the median drop below $200k. Inflation is quite high, and could prevent such a low number, but a return to 1999 prices in inflation adjusted dollars is “in the bag”.

70 comments ago, I pointed out that the only segment of the market with any signs of life is the under $300K segment. I pointed out that the upper end segment is dying on the vine. Sales over $500K comprised only 8% of all sales last month. Sales over $300K comprised only about 30% of all sales. My point was only to highlight that the only vitality in the market is in the (relatively speaking) cheap seats.

Others created the notion that the much hoped for “bottom” must surely have arrived in the cheap seats, and then, of course, it must surely just be around the corner for the rest of the market. These are the folks who have created the fictional notion that one price segment of the market can have bottomed while other segments have not. Maybe what we will hear next is that prices in the one mile radius east of Virginia Lake have bottomed but prices in the one mile radius south of Meadowwood Mall have not. Listening to this is akin to listening to the political spin doctors on TV hype their respective candidates. You wonder how they can say it with a straight face. These folks offer nothing to support their view of the bottom having arrived in the cheap seats other than their opinion that the cheap seats must surely now be cheap enough and can’t get any more cheap, and their obvious personal hope that the market is done deteriorating.

I think a lot of people will be surprised just how low prices get. But, if you look at history, that’s ALWAYS the case when a bubble collapses. When the NASDAQ fell from 5,000 to 3,000 we saw similar talk, it then rallied and then collapsed to 1,200. Well below fair value. If this bubble does what every bubble in history has done, then house prices will collapse to well below fair value at the end. Unless it’s “different” this time???

Allen Murray, like hordes of other industry shills, is employing a tactic known as “fuzzy math”. It’s quite common in times of desperation. But there is no such thing as a “new paradigm” when it comes to real estate. Prices will simply revert to the mean which, unfortunately for Allen, is not close at hand.

PS Allen:

If you indeed attended college, which I will take your word for, why is your reading comprehension, and memory in general, so poor? I didn’t “finally” make a prediction. I have been sharing these same sentiments for well over a year. In fact, that’s why you started your shoot the messenger attack posts. Remember Allen? Surely a well-educated nail pounder like yourself wouldn’t forget now, would you?

Does anyone know the historical relationship between median income and the median house price in the Reno area?

That’s the critical question, isn’t it?

Absent the hordes of rich, migrating Californians, who will buy the homes in Reno? People who live and work here, of course.

Here’s some historical data for Reno: http://tinyurl.com/54kct2

It’s easy to see the various pre-bubble trend lines and, if you believe in reversions to mean, it’s also easy to see where we’re headed.

Historically speaking, house prices in Reno run around 3.5 times household income. Household income is roughly $45k per year, so that would put median prices at $157.5k.

My numbers are: median *family* income ~$50K, 3.5 times median income = -$175K. 20% down gives us a median home price ~$218K.

That’s what current median family income would seem to support.

Why isn’t anybody talking about material costs? I don’t see concrete comming down that much as our partner in economic crime to the west is a huge user of building materials.

and..

Unless we are headed for a depression I don’t see housing values strictly derived from median household incomes. There is a reason why retirees from California come here-it’s a nice place to live and offers great tax advantages. If everyone could afford a home, why rent.

I am calling 250K as the lowest we go.

MikeZ:

While I generally agree with all of your posts, I think you’re miscalculating price to income. The historical price:income ratio is defined as “The median single family home sale price divided by the median family income for the metro area.” The assumption of 20% down with a 30 year fixed is already built into that price.

As far as household income, the $45k number is the best I could find, but who trusts government statistics anyway?

DonC:

I’m not a fan of the greater depression scenario either, but things are going from bad to worse, economically speaking. While you don’t see a financial meltdown happening, I am watching it in real time. I shudder to think of how many institutions, both large and small, are insolvent.

Allen, as a follow up to your previous question as to “how close are 15 year rates to [my] 4.5[%] target?”

Apparently right after my last post to you on this subject, mortgage rates took a demonstrable dip. On page 2C of today’s RGJ there’s an advertisement by Eldorado Savings Bank offering conforming 10-year fixed 4.75% primary OR vacation home purchase or refinance loans! Now the advertised APR is 5.29% which tells me there are probably a couple of percent of loan origination fees involved; and these are for 10 instead of the 15 years I targeted; but 4.75% is getting pretty, pretty close.

For those reading this blog who may be interested, 80% minimum LTVs required for purchases; 75% for refis.

Allen, I think I stated in a previous post I am seriously considering doing something within the next six months or so.

We’ve contacted a real estate loan broker who’s getting us pre-qualified for the type of loan product we can afford and will agree to [we’re not going to chase over priced jumbo/arm products just to finance a purchase]. Like most people, we have our own particular problems to deal with. Since we’re looking at properties well in excess of the conforming loan maximum [$417K]; and we don’t have mutliple hundreds of thousands of dollars to place down; and whatever we buy is likely to become a project; we need to be creative.

Meanwhile we have located a property we’re interested in and are currently doing due diligence. Don’t know how things are going to work out, but this may all be for naught given prices are still too high and I doubt the seller is going to come down as low as we think he needs to - but at least we’ve exited the renter freeway.

Will keep you abreast.

Thanks for the link DonC. I’ll agree to disagree with Krug.

Astounding! Month over month increases. Wow! Reno continues it trend. Or, does it? Have we forgotten to look at same sells year over year? Asking prices are 86.8% of April 2007 a decrease of 13.2% year over year. Nationally, the 1st quarter shows a decline of 7.7% in prices…. That’s 30% annualized decline nationally, my realtor friends! Reno? People here will wake up to the declines as foreclosures continue to increase (as they are doing), and California people stop coming in droves with a handful of money; as their houses there in many areas are now priced below Reno. So, to sell their house there and buy one here for half what they sold theirs there for, is history. I think most of your blog here is supported by the overly optimistic exuberant realty community. Not too accurate in my opinion.

Normally I wouldn’t respond to the stucco oracle, but I have to correct Derrick’s post as I don’t want new readers to make the mistake of believing his inaccuracies.

Wages HAVE NOT increased with the rate of inflation over the course of the past 8 years, but have been stagnant, and even declining. This has been widely reported and well documented by the media, etc., and also talked about in great length on this blog and others.

Furthermore, and for the last time, when talking about historical price:income ratio, it is defined as “The median single family home sale price divided by the median family income for the metro area.”

It’s that simple. It doesn’t mean that you take the number, then add 20% to it. The 20% down with a 30 year fixed is assumed.