The drop in October’s median sales price is truly startling (see table below). I believe October’s is the largest one-month decline in sales prices we’ve seen since I began tracking these numbers. The median sold price for Reno and Sparks homes has now fallen below $220,000. However, the really shocking number is that this drop represents a seven percent decrease from September’s median of $236,500. Yes, that’s 7% in one month!
What accounts for this dramatic price drop? As we have been explaining on this blog for many months now, it’s the downward pricing pressures imposed by the “distressed properties”. [And by distressed I am referring to the short sales and REOs (bank-owned, foreclosed properties).] As I look at the inventory mix of the home sales in the last month, I see that REOs accounted for 48% of the sales and short sales accounted for another 13% of the sales. In fact, after removing court-ordered and other non standard sales, I see that only 36% of the sales last month were traditional, non-conditioned sales.
Units sold held steady in October at 365 sales. This is not too shabby; in fact, units sold are up 36% compared to October 2007. October’s median list price held sticky at $269,000.
What will November bring? Who knows, but at the current rate of decline the median home price in Reno-Sparks will fall below $200K before the end of the year.
| Month and Year | # Houses For Sale | Median Asking $ | # Houses Sold | Median Sold $ |
|---|---|---|---|---|
|
October 2008 |
4,604 | $269,900 | 365 | $219,900 |
| Sept 2008 | 4,727 | $269,990 | 362 | $236,500 |
| August 2008 | 4,786 | $275,000 | 350 | $240,000 |
| July 2008 | 4,881 | $279,900 | 418 | $247,000 |
|
June 2008 |
4,780 | $285,000 | 393 | $255,000 |
| May 2008 | 4,755 | $283,000 | 343 | $255,000 |
| Apr 2008 | 4,531 | $285,000 | 337 | $269,000 |
|
Mar 2008 |
4,213 | $290,000 | 245 | $260,000 |
| Feb 2008 | 4,067 | $295,000 | 221 | $271,632 |
|
Jan 2008 |
4,126 | $299,900 | 191 | $268,000 |
|
Dec 2007 |
4,161 | $309,000 | 249 | $275,000 |
|
Nov 2007 |
4,523 | $310,000 | 231 | $286,000 |
| Oct 2007 | 4,885 | $317,865 | 267 | $287,000 |
| Sept 2007 | 5,027 | $320,000 | 270 | $285,000 |
| Aug 2007 | 5,475 |
$327,500 |
348 | $295,000 |
| July 2007 | 5,420 | $332,900 | 351 | $295,995 |
| June 2007 | 5,375 | $338,003 | 378 | $300,000 |
| May 2007 | 5,181 | $339,900 | 427 | $296,000 |
| April 2007 | 4,933 | $340,000 | 393 | $295,000 |
| Mar 2007 | 4,675 | $340,000 | 391 | $297,000 |
| Feb 2007 | 4,416 | $340,000 | 334 | $285,000 |
| Jan 2007 | 4,696 | $342,500 | 336 | $279,950 |
| Dec 2006 | 4,554 | $345,000 | 347 | $293,995 |
| Nov 2006 | 5,187 | $349,000 | 330 | $300,000 |
| Oct 2006 | 5,640 | $349,900 | 422 | $300,000 |
| Sept 2006 | 5,960 | $352,000 | 396 | $301,000 |
| Aug 2006 | 6,252 | $355,000 | 393 | $310,000 |
| July 2006 | 6,123 | $360,000 | 416 | $324,750 |
| June 2006 | 5,949 | $364,000 | 473 | $329,000 |
| May 2006 | 5,407 | $369,900 | 432 | $318,750 |
| April 2006 | 4,626 | $369,000 | 415 | $317,000 |
| Mar 2006 | 4,295 | $369,900 | 437 | $329,000 |
| Feb 2006 | 3,899 | $374,900 | 326 | $315,250 |
| Jan 2006 | 4,245 | $370,000 | 325 | $325,000 |
| Dec 2005 | 4,040 | $375,000 | 385 | $319,900 |
| Nov 2005 | 4,432 | $376,448 | 443 | $331,000 |
| Oct 2005 | 4,694 | $376,700 | 559 | $335,000 |
| Sept 2005 | 4,567 | $380,000 | 603 | $336,500 |
| Aug 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 |
| Mar 2005 | 2,611 | $350,000 | 660 | $309,000 |
| Feb 2005 | 2,198 | $348,250 | 411 | $301,000 |
| Jan 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 properties. Data excludes Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – November 2008.
Sean
great information Guy, is there anyway to track the price per square foot since the peak. That would be really interesting to see i think.
Sean
Guy Johnson
Sean, I wrote a post on May 15 that tracked #/sq.ft. See http://tinyurl.com/6f4343 I’ll pull the current $/sq.ft. data, and then re-post.
Thanks for asking.
BanteringBear
“The median sold price for Reno and Sparks homes has now fallen below $220,000. However, the really shocking number is that this drop represents a seven percent decrease from September’s median of $236,500. Yes, that’s 7% in one month!”
The median sold price is now $219,900, far below the “bottom” which the stucco Oracle predicted. We are now a mere $20,000 from dropping below a median of $200,000- something I was laughed at and derided for as recently as a year ago. Is there anyone left who thinks I’m crazy now?
The economy is fragile, with job losses accelerating, and in my archived posts I had stated that this was the wild card. We are in the worst case scenario. I don’t see any way for prices to yet stabilize, as the massive inventory overhang persists, and there are simply not enough buyers out there.
Wages, stagnant to falling over the course of the past decade, WILL be the main drive of prices as we go forward. Local wages DO NOT support a median of $220,000. It’s quite easy to see where prices are headed.
BanteringBear
PS- Sorry for the bold. I meant to highlight a few sentences, not the whole thing.
SmartMoney
Good stuff. At the bottom of bubbles prices always fall below fair value. Good to see we are on our way there.
Tom
From our “reliable sources:”
Get ready for expanding gaming industry lay-offs, coming soon.
Apparently not enough discretionary spending money is projected in the average gaming visitor’s budget to sustain continued staff levels through the slower winter months, except at top tier properties.
Josh
What does this mean?
I understand the median value, but isn’t there some built in anomaly represented by the decrease in sales of more expensive properties due to credit and investment issues associated with the crappy credit markets?
Perhaps new times suggest a need for new metrics. Would $ per SQft be a better metric?
Perry
I found this today and think it’s quite relevant to this thread. http://www.moneyandmarkets.com/the-great-american-housing-nightmare-next-phase-27880?ref=patrick.net
I know the focus here is primarily real estate but it seems like there’s more to come with this financial mess. We know that people are willing to walk on their homes/flips but what’s going to happen when they start walking en mass on their credit card debt? I think the last to go will be the auto loans as they provide a tangible benefit but what’s to keep people paying on the steak & seafood from last year?
Casa de Dolor
Yeah Bantering it’s been a long strange trip since the early days on Ben’s blog, huh? I don’t find the seven percent decline that shocking… it’s the 365 sales I can’t believe. Knife catchers.
Casa
Sully
Since these numbers generally represent the past 45 – 60 days, distressed properties are only part of the equation. In the past two months – the stock market has gone downhill; unemployment rising; bailout money going everywhere but to the distressed homeowner; the recent election whereas you had two choices one bad the other worst.
Nov,Dec,Jan aka “winter” coming up – perhaps the reason for the 365 sales. The so called “wealth effect” hibernating. Current wages not really able to handle the current median – an overabundance of high end properties (putting it mildly).
I can go on for another hour on this, but you get the point. It was brought up about a month ago, regarding a price correction around Oct – Nov. Smartens prediction for a buying opportunity around Jan is looking good. NOT a bottom mind you, but a real buying opportunity, as this area has been way behind the curve in price correction.
I got to go, looking at three REO’s and a short sale today.
BanteringBear
“Smartens prediction for a buying opportunity around Jan is looking good. NOT a bottom mind you, but a real buying opportunity…”
You mean the same Smarten who has been espousing “it’s a great time to buy” for more than 6 months? How do you think the people who bought over 6 months ago feel about his sage advice? You know, the people who believed him, and are underwater by $50k or more already.
Sully
Buying opportunity as in getting a REO for 50% of trustee sale. These toxic waste MBS have to be gotten rid of sooner or later. So, it couldn’t hurt to put an offer in!
smarten
“You mean the same Smarten who has been espousing ‘it’s a great time to buy for more than 6 months?”
I haven’t been saying it’s a good time to buy for six months. Rather I’ve said all along that come October, it could be a very good time to start looking to buy. Which would have been 100% accurate [in retrospect] were it not for the worldwide collapse in credit [something BB argued with me months ago couldn’t possibly be the case].
I know of about six pendings this last month in Incline Village [remember, YTD on average there have been about 8 SFR sales/month] that fell out of escrow specifically because the buyers couldn’t secure purchase money financing. Until qualified buyers can secure reasonably priced purchase money financing, virtually nothing is going to sell.