So, the homebuyer tax credit has extended the traditional buying season probably through November. The open question: is this another “cash for clunkers?”

In other words, is buying focused primarily on the low end? Declining median sales price suggests that may be the case. Also, have future sales been siphoned off so that buyers can take the easy $8k?

If these two things are happening, it’s not necessarily long term bullish for Reno. But you gotta start somewhere.

All of the above stated — you must look at the scoreboard. What cannot be argued is that the “new normal” is sales >500 during the selling season. This data has to be considered good news, at least for those at the lower end.

Is there any info on specific price bands? That would really give dimension to the stats. Thanks to Guy for the data, and the insightful commentary.

Guy,

I think you’re pinning too much of the residential real estate “recovery” on the first time homebuyers’ income tax credit. Unless you have a means of confirming that a particular sale is or is not to a first time homebuyer, you’re speculating as to the credit’s effect [could it just be that there are actually some good buys out there?].

Additionally, we have no means of determining how many “first time homebuyers” would have eventually purchased in any event, either with or without the tax credit. It’s kind of like the criticism of the cash for clunkers program - according to naysayers, all it did was push 4th quarter sales into the 3rd quarter. Maybe that’s by and large what the first time homebuyers’ tax credit has accomplished?

Thus I think you’re going too far when you state “the real question is what will happen once the tax credit is no longer available (during the 2nd-half of 2010) [i.e.], with the stimulus gone, to what degree will sales be impacted?” I can conceive of a whole series of other questions which need to be answered in the second half of next year having nothing to do with the tax credit [such as: long term mortgage rates; revisions, if any, to the FNMA/Freddie Mac/FHA conforming loan amount maximum; accessibility to reasonably priced jumbo mortgages; secured property tax reductions that have apparently been taking place; the effect of mortgage interest deductions on increased federal income tax rates [should Obama go back on his word]; etc.].

I think that what we can say from your data is that at least in the short term, it appears we’ve reached some sort of a Reno/Sparks residential housing market “floor.” And I think that what you’re predicting is that for the next 6 or more months, we’re either going to by and large skirt along this floor, or actually begin some sort of march upwards.

And FWIW, I don’t take much stock in comments from posters who tend to discount the data because it wouldn’t be what it is were it not for “unatural” intervention by the Feds. These posters need to understand there in essence wouldn’t be ANY residential real estate sales market were it not for intervention by the Feds. EVERY sale that depends upon purchase money financing [or access to a HELOC for part/all of a property’s purchase price] is directly affected by the Fed’s intervention [FHA, FNMA, Freddie Mac, etc. mortgages].

FutureRenoHomebuyer,

Here is the price banding you requested. Percentages represent proportion of October’s unit sales (stickbuilt only; condos excluded).

>=$100,000: 11.9%
>=$150,000: 35.4%
>=$200,000: 59.6%
>=$250,000: 75.9%
>=$300,000: 85.5%
>=$350,000: 89.6%
>=$400,000: 92.6%
>=$500,000: 95.4%
>=$600,000: 97.4%

E. Edward,
Some friendly advice:

-First, go to grammar school.
-Next, proofread what you write.
-Lastly, instead of directing the masses out there to do your bidding, why don’t you do the research your demanding and actually contribute to the blog?

smarten,

Your points are well-taken. Correct, I do not have a means of confirming that a particular sale is or is not to a first-time homebuyer. So, I suppose I am speculating, albeit for the anecdotal observations made within my office and my personal business.

But more food (data) for thought to add to the discussion:

For the last three months (August – October) there have been 1,540 residential sales in Reno – Sparks [MLS area 100; site/stick built only]

For comparison, I looked at the same time period going back to 2000. Here is what I found…
2009: 1,540 sales
2008: 1,033 sales
2007: 782 sales
2006: 1,056 sales
2005: 1,597 sales
2004: 1,605 sales
2003: 1,541 sales
2002: 1,371 sales
2001: 1,165 sales
2000: 1,127 sales

Probably different ways to interpret these numbers, but there’s no denying there’s been a dramatic increase in unit sales recently. A nearly 50% increase over 2008 sales; and a 97% increase over 2007 unit sales, for the same period. In fact, current unit sales have now returned to bubble peak levels.

Again, you can probably raise the same points as you did in your last comment, but I believe the increase in unit sales is being driven largely by the first-time homebuyer’s tax credit.

During the bubble years, increasing unit sales was driven by rising home values (spurring homeowners to cash in) and “voodoo” loans (as they’re frequently referred to on the blog). In the absence of these drivers, what is driving the phenomenal increase in unit sales today?

Btw, I am by no means discounting the case that there are actually some good buys out there.

Skeptic Realtor,

Truly sorry to cast a negative Shadow over ones livelihood, I’m just compelled to point-out the obvious….

I know its tough out there and most likely will get a lot tougher…

A lot of cherry picking of data going on here. While it’s true sales have really picked up, I don’t see many mentioning the fact that prices are still at their lows since the peak, and DOM is very high as compared to the go-go years. It’s obvious that the tax credit really kicked sales into high gear (speculators), but the article I linked a few weeks back shone a light into the warped world of “qualified buyer”.

This thing’s far from over. They’re still minting mass future foreclosures. With unemployment still increasing, I see absolutely no indication of a recovery in housing. Housing does not lead an economic recovery, it follows it. Next year, we’ll be reading sob stories of individuals who purchased houses with tax “credits” used as down payments, and are in foreclosure because they ‘didn’t understand’ that they couldn’t afford the house. The practice of shoehorning every living, breathing person into a mortgage loan will not end well.

“…do the research your demanding…”

This is excerpted from the post of the chap who rebukes another on this blog: “go to grammar school’ and “proof-read what you write.”

For his info:
you’re = `you are,’ as in research what you are demanding.
your = possessive pro-noun expression; what message? Your message, as in “your message shows that you are not practicing what you are preaching.”

Moral: people who can’t spell any better than the average sixth grader shouldn’t criticize other posters for grammar and spelling errors.

pronoun isn’t hyphenated.

‘Anyone who buys a house now under $300K is most likely not going to default. Why? They can turn around and rent the house out for a similar amount as their mortgage payment’

Sorry, Smarten, I can’t agree with this statement.It assumes rents stay the same as well as a level of sophistication that isn’t there with low end house buyers (in general).It doesn’t even take into account if house values go down further. If you can’t make payments on your house because you were ’shoehorned’ into in the first place and have lost your job or just messed up your finances, it’s unlikely you’d have the where-withal to rent it and then go on to rent another house yourself.

And by shoehorned ( I know I stole it)I mean First Time buyers credit and low down payment loans.Anyone would have to admit your cutting things pretty close if an $8,000 credit is the only reason your able to by now. After all, that just makes your house worth what you bought it for if you need to sell it, less commission.

Sorry about that. I see the error of my ways

Hi Smart, as a former landlord, I would be very leery of any “this will cash flow” claims.

Such analyses tend to assume optimistic occupancy rates, rents, taxes and repair costs. Speaking from experience, one bad tenant can wipe out years of cash flow. YEARS.

In the last month alone, 2 different people have explained to me how a particular property will cash flow as rental from “day one.” Yet none of them are willing to buy themselves or even split the purchase with me,

I wonder why. I guess they don’t want a guaranteed cash flow?