Lots of good stuff in this month’s Market Condition Report from First Centennial Title. Take a look by clicking on the chart below.
Some highlights from this month’s report:
- In last month’s report, the YTD market lagged the previous year by -24%. The current result (-19%) displays a five point improvement. However, this is generally slower than other markets surveyed. As an example, Las Vegas (resale) is currently even with last year’s sales pace, however, Clark County is dominated by distressed sales [even more so than Washoe County (see table within report above)].
- Months supply of Inventory for Reno is 18.9 months.
- The strongest sub-market continues to be Sparks SFR. The weakest is Yerington SFR.
- Failures (escrows) are down for SRFs. See graph below:
From the Market Condition Report (MCR): "The graph [above] from the MCR illustrates a very typical phenomenon that applies to the Reno area market as well as others. When markets are “good” (sellers’s market) the count of solds (successes) are greater than failures. As markets move toward the buyer, failures begin to increase and successes decline. The failure line crosses the success line, and at that point it becomes more likely a listing will fail than succeed (Reno Area-Jan 2006). This market movement through time is measured by changes in percent selling displayed on the MCR. Note the success (sold) line is poised to cross the failure line."
17 comments
Looks like an encouraging sign statistically. We’re seeing on the ground as well with the feeding at the bottom starting to make it’s way upward. South Meadows area has action at the right price points with Centex Cyan and KB home still selling out their releases while inching up on prices and cutting incentives. We’ve made 3 sales this week and have a closing on friday.
By the way. Good seeing you at the JDRF event.
Good to hear that the bottom is finally in sight. Rationality appears to be returning to the markets.
“Months supply of Inventory for Reno is 18.9 months.”
Oh yeah, that’s encouraging! Factor in the shadow inventory and it’s really, really ugly. Bottom? Where?!
BB, I really think a good enima could help you out (speaking of bottoms).
Wow! -”poised to cross the line”-
Guy, thanks for the great information and …summary of the meaning…. however I think you meant to say:
…. it appears to be “poised to cross the line,” however it is about to shoot back up to the stratoshpere. Becuase we all know the data is cyclic and this marks the end of the selling season… right? For example look at the pink dotted line… where Jun/Jul ‘05 is a bottom peak, then Jun/Jul ‘06 is a bottom peak, then Jun/Jul ‘07 is a bottom peak….so Jun/July ‘08 will suddenly change?…. especially with near record inventory (only a few % off last years all time high, not including shawdow inventory), ~ 1000 foreclosures still standing on the books, not to mention the short sales and the several hundred per month forclosures to come, bad economics happening in Reno (Casino’s, construction, banks & dealerships are struggling, so after IGT what is there?).
Sorry Kevin Kearney, billddrummer & doofus, but your excitment about a turning market will certainly be met with dissapointment at least for this season. But then again can you honestly remember the last time you said “Now’s not a good time to buy?”
doofus:
It sounds as if you’ve been hanging out in the Castro too much. Let’s keep this about real estate, ok? Appropriate moniker, BTW.
GratefulD_420,
The summary of the graph was taken directly from the report. It was not my interpretation. Thank you for pointing out the cyclic tendency of the historical data.
Kevin, Congrats on your three sales and closing. Those are impressive numbers in this market. It was good seeing you at the JDRF fundraiser, as well.
-yep, sorry Guy. I realized that when I went back to read the report in detail. Thanks again.
no worries.
Guy, have the Ticor charts come out yet?
Just telling what I’m seeing. I’m not encouraging you to buy anything. Being agressive in fearful times is a tough thing to do. It’s not for everybody.
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Warren Buffett
Interesting quote. BTW, how many houses is Warren buying these days?
Warren just (last month) stepped up, through thier investment in Clayton Homes, and waded into the subprime market by buying up mortgage paper.
Kevin, do you think the majority of people who contracted recently with the South Meadows builders are really going to close a few months from now when their houses are built?
Or do you think they will walk away, which will put a lot of inventory in the builders’ hands?
I would certainly expect that the majority of the people contracted will close. In my experience the vast majority of people entering a contract intend to perform and ultimately do so. Lending conditions have been the cause of most of unintentional fallout in the last year. Lending conditions have actually improved for the most part in the last few months so I wouldn’t anticipate any kind of massive fallout.
However, if FHA gets the “Neamiah” program or any of it’s similar down payment gift programs pulled, then that will certainly have a ripple effect and increase the builder’s inventory.
The buyers that fall out are usually identified prior to the closing table and their homes are sold as “Home of the Week.” Those houses can be a great opportunity to make an offer.
When markets are “good” (sellers’s market) the count of solds (successes) are greater than failures. As markets move toward the buyer, failures begin to increase and successes decline.
[…] Note the success (sold) line is poised to cross the failure line.”
You HAVE to be kidding me!
We’re going to ignore inventory, foreclosure rates and trends, scheduled resets in the next 18 mos, price and volume declines, both MoM and YoY, the general economy … and look only at successful v. failed sales rates?
And from that one datum, that singular metric, we should conclude the market is good and/or getting better?
Classic denial.
Honestly, the Market Condition Report’s summary is ridiculous.
Kevin — let me play the devil’s advocate here.
If Berkshire is buying homebuilders, that would be a good indicator to wait to buy a home? Why? The market generally forcasts six months in advance. IOW you’d expect homebuider stocks to start rising about six months before home prices started to recover. Since Berkshire likes to be six months or a year ahead of the market, if its investment is right, then that would mean the home market would start to recover in 12 or 18 months at the earliest.
That time horizon is consistent with other forecasts, so, if you look at buying a home as an investment, Warren is telling you that holding off would be a good idea.