Market Condition Report – February 2010

February’s Reno-Sparks Market Condition Report provided by our friends at First Centennial Title has arrived.  Click on the report below to enlarge.

From the report:

  • OVERVIEW: Market is little changed from February with all measures barely moving from the same period 30 days ago. Current Market Speed, which measures conversion of listings to closings, is unchanged at 22, down 1 point from February. As an example, Market Speed in Las Vegas is 64 (3 times faster). Speed in Phoenix is 34, which is about 35% faster. These speed differentials are caused by the high numbers of REOs in those markets. If the REOs where removed from these competing markets, all would be about equal in pace and tempo.
  • SUPPLY (ON MARKET): Slight gain from previous month.
  • DEMAND (SOLD PER MONTH): Demand decreased slightly for SFR. Condo up slightly.
  • FAILURES (EXPIRE-WITHDRAW): SFR and Condo steady in the current range.
  • IN ESCROW (FUTURE CLOSINGS): SFR and Condo inventory in escrow hug up at the current level. This suggests that closing in the near term will likely not increase or decrease significantly.
  • PERCENT SELLING: Unchanged.
  • MONTHS SUPPLY: This key measure is tightening slightly for both types signaling that demand/supply realities are not shifting significantly.
  • MARKET SPEED: The pace of the Reno market is beginning to rise ever so slightly. The best performing Reno sub-market remains the perennial favorite, Fernley SFR, returning a Market Speed of 35 (no change from last month). The slowest is Yerington SFR, Gardnerville, and Sparks Condo tied at a very sluggish 13.
  • PRICES: All prices very stable in the current range with a slight positive propensity.

 

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About Guy Johnson

I am a licensed Nevada REALTOR® living and working in Reno, Nevada. Give me a call at 775-722-4011. My team and I will be happy to assist you with your real estate needs.
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85 Responses to Market Condition Report – February 2010

  1. Avatar bob_c says:

    I haven’t seen one bull post on this site.
    Neutrality is the most bullish stance on the RRE blog. The outcome of the macro issues facing the
    entire economy trump everything….and those possible outcomes are so diverse and possibily radical that these are not stable investing times.
    (ie are we headed for Japan style erosion/deflation or is the reflation effort going
    to be too successful?). With overnight interest rates at zero and reflation well underway….cash
    is trash (unless the reflation fails). These two
    outcomes are so opposite, that the risk is huge.

    Inaction sometimes is the worst action.

  2. Avatar Raymond says:

    Doesn’t Broten’s comment say it all?

    The guy has $300K to spend on a house. He has been looking for 9 months, and what he sees is that with each passing month his $300K can buy a nicer house. IOW, the prices of nicer houses keep dropping.

    Now how can that be true if the market has bottomed?

    DonC? Smarten? MikeZ?

  3. Avatar Janice says:

    My experience is the same as Broten’s. My husband and I have been looking for a house since last summer. I’d like to finally find something, buy it, and move in. But what Broten says is absolutely true. We can buy a nicer house today for what we could have last summer. Despite my desire to buy, I have to admit we have clearly benefited by waiting. We will be looking at houses this coming week that were out of our price range last summer.
    The only explanation for this is that prices are still falling. Even our realtor tells us that. Now we are not looking at houses near the median. We are looking in the $300K range as well. All I can say is that those of you here who are saying the market has not bottomed, must not be out there looking. Or are you saying that the market can bottom but prices can still fall? Because prices are still falling guys.

  4. Avatar Janice says:

    Sorry, I meant to say that those of you are saying the market HAS bottomed must not be out there looking.

    (This blog needs an edit feature)

  5. Avatar Carney says:

    Allow me to say it for the 431st time.

    Ready?

    Really ready?

    The prices of Smithridge condos and 800 sq. ft. houses in Cold Springs have bottomed.

    The prices of houses above a certain point, probably $250-$300K, have NOT bottomed.

    That is why Broten and Janice are finding that they can buy more house for the same money today than they could have a few months ago. This is true for everybody looking above the 250-300 price point. For people looking to buy a Smithridge condo, it’s probably never going to get any better than it is now.

  6. Avatar smarten says:

    Raymond and Janice. Please understand what I previously posted: “there is no one ‘market,’ and we have to define our terms when we talk about what constitutes a ‘bottom.’”

    So a question for you Janice. You state “we will be looking at houses this coming week that were out of our price range last summer.” My question is WHY if the market has not bottomed?

  7. Avatar DonC says:

    Janice — I’m not into predicting bottoms, or tops for that matter. I’m not Cassandra.

    What I am saying is that markets don’t go up forever and they don’t go down forever. If the market was overvalued by 5% at the beginning of 2008, undervalued by 17% at the start of 2009, and undervalued by 30% at the start of 2010, do you think it likely that it will be undervalued by 60% when 2011 rolls around? How much further do you think prices can drop? It’s impossible to know of course, but the numbers suggest there is more upside than downside. http://www.ihsglobalinsight.com/gcpath/ValuationReport4Q10.pdf

    Also keep in mind the point smarten is making, which, put another way, is that even at the bottom not every house is priced to sell and not every house is a bargain. My advice to you at this point would be that if you find a house you like, at a price you think is reasonable, then, if you can afford it and have a reasonably long time horizon, buy it and get on with your life. (Keep in mind what you’re paying for this advice).

    However, if you’re fussing and worrying about whether the market has bottomed or if you can get a better price in six months then spare yourself heartburn and don’t buy. Because at the end of the day it’s all about how well you sleep at night. There are no guarantees.

  8. Avatar DonC says:

    skeptical — You keep saying people are leaving Reno. Do you have any reference for this? TIA

  9. Avatar billddrummer says:

    This is a bifurcated market. Houses below $200,000 that don’t depend on a move-up buyer sell briskly.

    Houses above $300,000 that typically need a move-up buyer don’t sell at all.

    As the higher end homes come down in price, the median sales price rises.

    At some point, the median home price will stabilize at an equilibrium point.

    I suggest the equilibrium point will be a function of what the median household income can support for a mortgage payment.

    Just throwing in my .02 I’ve been busy on my novel, and haven’t had much time to post lately.

  10. Avatar Norton says:

    Houses in Reno are undervalued by 30% at the start of 2010?

    That’s the silliest damn thing anybody has ever said on this blog.

    What deluded world do you live in DonC?

    Man, DonC World, where a lack of move-up buyers is good for the market, where ten thousand foreclosures are irrelevant, and houses are UNDERVALUED by 30% in Reno.

    You are bizarro, DonC.

  11. Avatar smarten says:

    Billddrummer states that “houses below $200,000 that don’t depend on a move-up buyer sell briskly. Houses above $300,000 that typically need a move-up buyer don’t sell at all.”

    Not exactly billddrummer. When Guy posted last month’s data, do you recall he augmented it with price banding as RI requested? That branding was as follows:

    “Less than $100K? 38 or 11.5%
    Between $100K and $200K? 167 or 50.6%
    Between $200K and $300K? 67 or 20.3%
    Between $300K and $400K? 29 or 8.8%
    Between $400K and $500K? 12 or 3.5%
    Over $500K? 17 or 5.2%”

    Thus the number of sales above $300K [58] was 17.5% of all sales for the month. I would hardly describe this segment of the market “not selling at all.” In fact, I would point to it as evidence that as it continues to grow, we’re going to start seeing the median sales price increase.

    Again, not necessarily a housing recovery. But evidence of the fact that houses priced more expensively than what average household wage earners can afford ARE starting to sell.

  12. Avatar Janice says:

    All I said is that the prices of houses are falling guys. It is absolutely clear that I can buy a better and nicer house for the same amount of money that I could have even three months ago. I said nothing about market timing. You did. The fact is that prices are dropping still, and it appears that you guys just can’t stand to admit that.

    If you refuse to acknowledge the obvious, I see no point in carrying on with you.

  13. Avatar billddrummer says:

    To smarten,

    Thank you for pointing out my error. I should have used $500,000 as my upper band.

    My bad.

  14. Avatar uptick says:

    Janice, you are correct. Our requirements are simple: young house, 1 acre, +/- 3300sq ft. private and gated. Looking in St James. About 21 months ago saw 174 Nottingham, which sold around 750. Then 10 months ago we saw 212 Waterman which sold around 620. Now 218 Earlham is listed for 425. All three houses fit the criteria. Glad we listed to the Bear.

  15. Avatar DonC says:

    norton — There is that old saw about empty barrels making the most noise. The numbers I’m using came from a study which has proved robust over a fairly long period. Since you have the cite and think the study is bizarre I’m assuming you’ve taken the time to read it. So why don’t you explain what part of the study’s methodology you find flawed? Better yet, what study are you citing? Or are these elitist questions?

  16. Avatar DownButNot Out says:

    Janice – I have to repeat Smartens question – why are you looking at houses this week? After all you are asserting they are going down. Or is it market timing your practicing?

  17. Avatar DonC says:

    Janice says “It is absolutely clear that I can buy a better and nicer house for the same amount of money that I could have even three months ago. I said nothing about market timing”

    It is also absolutely clear that the same money will buy a much nicer house today than it would have four years ago but not nearly as nice a house as it would have ten years ago. If you’re not talking about timing then you’ve completely lost me.

  18. Avatar billddrummer says:

    To DonC,

    I have to concur. If it’s market timing she’s after, I submit that it’s impossible. Far better to find a house you like and make an offer on it. Otherwise they’ll still be looking in 2021.

  19. Avatar bob_c says:

    Uptick—
    there were two NEW mcmansions on earlham listed
    at 389-399 last year as short sales…..one
    was relisted as that short sale fell thru….top
    of the line properties ……seems 425 is a 6-10%
    increase on a similar short sale on a used property

    some real values were seen early to mid last year after the stock market crashed, i can’t find those low fire sale numbers anywhere now—
    there was some panic selling last year and that
    represents the bottom and it has NOT been tested

  20. Avatar bob_c says:

    Uptick—-you better watch the HOT sheet at a realty office, because any of these super bargains
    are now pending WHEN listed and there is not 2-3
    days to race over and get your offer in……if
    it is anywhere near the 2009 lows, it is sold before its 1 day old so you wouldn’t be able to get it anyway.

  21. Avatar bob_c says:

    Uptick—–then you have to be decisive enough
    to act. No f_____g around considering options, you have to ACT immediately. I would look at
    the listing one day or less and easily pick out
    the super distressed mcmansion deals. There
    was about 1 per day. Now i don’t even see 1 per week. And if there is 1, it is pending.

  22. Avatar smarten says:

    Okay Janice. Since Mr. BB has purportedly left our little blog, I’ll share some of my methodology [which actually seems to match yours] which gave rise to my decision to purchase.

    Everything we saw on the market was in our opinion, grossly overpriced. The stuff that was available in our price range was in our opinion, not worthy of spending money on. The stuff that we really liked, was a $1M or more beyond our price range. So for us, unless prices dropped by a lot, we weren’t going to be making any purchase.

    So as the market began to change, what we could buy within our price range changed. Notwithstanding the fact that the median sales price DIDN’T change much [in Incline Village], what it was that one could purchase for that price improved dramatically [the same movie you see being played out today in Reno/Sparks]. In fact in our case, it improved to the point that in our opinion, we were able to purchase something that for us was only a dream [something that we never, never could have imagined affording before]. Then I followed skeptical’s advice. Even though the price had come down a lot, we submitted an offer that “knocked the bejesus” out of that price even more [thus assuming that prices would continue to fall for some additional period of time]. And low and behold to our surprise, our offer was accepted.

    So here’s my recommendation to you [even though you haven’t asked for it]. Whatever your price range may be, stick to it. As prices come down, you will see what you’re already seeing; that you’re able to purchase a lot more house for your money. If prices continue to come down and you’re able to find something really nice; located someplace you where you actually want to live; and it’s something you feel you never before could have afforded to purchase but for the current economic situation [in other words, you’re able to buy “up” using the same amount of money you’re prepared to pay today]; pull the trigger. Stop worrying about whether/not we’ve reached the market bottom. Or whether by waiting, the amount you’re prepared to pay today ends up purchasing “more” next month. Just because that house may cost more than what an average wage earner household can afford to pay; or there are 10K or more houses sitting out there in shadow inventory; or there have been close to 3K NODs recorded YTD; or the market is tanking in a different price range than yours; becomes immaterial. If you don’t adopt a methodology similar to what I have suggested, the likely result will be that you become paralyzed through inaction and ultimately either purchase nothing; or something you’re really not excited about because you waited too long and were pressured into making a purchase well after everyone else realized the market bottom had been reached months before. If you do your homework and are able to find something you think is a really good deal on something you love, in the long run it really doesn’t matter whether the value ends up dropping another 20% because the odds of that happening may end up being far less than your finding nothing at all! Good luck.

  23. Avatar Downtownjunkie says:

    Why short sales are almost impossible and the reason for the shadow inventory:

    The banks are holding this inventory off the market and only allowing a small percentage of short sales through because of an accounting exception that will eventually expire.

    If the banks were to release this shadow inventory they would have to show this on their books and REALIZE the loss. Thus, making the banks hopelessly insolvent. We are talking Trillions in losses here. They are not holding these off for better prices, they are holding them because they simply can’t take the losses.

    So, if we have 8-10K shadow homes here that are worth 50% less from bubble days this could amount to billions of dollars in losses. This is just Reno.

    This reminds me of the recent uncovering of an accounting exception (illegal?) that hid Lehman Bros true financial state.

  24. Avatar uptick says:

    We suspect the FASB accounting exception (which allows cooking the books to the extent of not recognizing mark to market losses) will be extended. Obama needs all the help he can get. Bob C please provide the addresses of your new properties sold last year so we can complete our research. Thank you

  25. Avatar Sully says:

    downtown, Repo 105 rule, to which you refer, is legal. All the banks use it. The way Lehman used it though was more like Generally Accepted Enron Standards.

    Uptick, even if they don’t extend the exception, a new one will be created the next day, Obama needs even more help then ‘all he can get’ – he may have to buy options on the help to multiply the results. 🙂

  26. Avatar DonC says:

    When talking to some people this weekend one thing I realized is that the residential real estate market will be helped by the wealth effect. Perhaps it’s no big deal at the low end, but, at the higher end, and definitely in places like IV, it will play a role.

    Simply stated, when your portfolio is losing the equivalent of a car or a house or whatever every month, it’s hard to get excited about dropping bucks on a new house. But things have definitely come back, and portfolios are just about where they were when the markets tanked. So my guess is we’ll see buyers in the higher end come back as their confidence is returning.

    As for buying, Smarten has put his finger on the difference between getting a good deal and potentially overpaying — you have to be prepared to walk. This is always true but in the current market walking should be quite effective. You’re not going to get a good deal if you first fall in love with the house and then start making offers, defining success as getting one of the offers accepted. Since there are a lot of options, line them up and, if the first one doesn’t work out, move on. Sooner or later one will come through at a price you can live with.

  27. Avatar E.Edward says:

    You-Hoo… Brain Deads,

    ONE MORE TIME….. An overwhelming majority of ligament facts/reasons have been presented here how and why this local housing price market will continue to deterorate…And yet, Still nothing but a bunch of baseless yack….

    Instead of the typical same-ole’ bottom caller/feeder realtor-just throw it out there post, Would someone care to present an equal amount of valid realistic reasons why this market will improve for these poor buyers who are about to watch there down payments disapear?…

    P.S. For a good laugh, I do log-in once in while …..Keep it up… Great entertainment!

    Also… I just gotta know… Does That last name C stand for clown or clueless?

  28. Avatar DonC says:

    Downtownjunkie– Do you have a reference for this? It strikes me as something of an internet rumor. FASB Rules 166 & 167 are now effective but these do not really effect shadow inventory, assuming this exists.

    Yes there are a lot of foreclosures. Probably near 750,000 in April before the number tails off. But so far there hasn’t been any shortage of buyers. Quite the opposite. Complaints have been about limited supply.

    Sully — Repo 105 isn’t a rule. It was just the name given to the shell game Lehman was using. It clearly was neither ordinary nor legal, which is why Lehman couldn’t get a US law firm to bless the practice. It had to get a UK law firm to say the practice was legal under UK regulations, and then do a quick shuffle where the transactions were run through a UK shell.

    The perfection of unregulated capital markets.

  29. Avatar Sully says:

    Its legal in England, where they used it. I called it a rule – ok its a gimmick.

  30. Avatar Derrick.E.Edward says:

    Why isn’t anyone paying attention to me?

  31. Avatar E,Edward says:

    OH’ HEY.. C-MON….

    This is all in good fun… I mean really, Lets hope somebody here hasn’t actually diluted themselves into thinking that some potential buyer actually researches these blogs and can be swayed one way or another based on these mindless post’s?…No unfortunately those poor buyers will be learning the hard way all by there lonesome!

    Looky… The posters here mainly consist of a bunch of realtors with way to much time on there hands, 1or2 Fence standers, A few bored house wifes, And a couple worried home-owners…

    The few post’s on this blog that I have made reflect my opinion and that is all… If by some miracle somebody did pay attention and helps them save some or all of there future retirement money….. Then Great!

  32. Avatar billddrummer says:

    DonC,

    Further on ‘Rule 105’–it was named that because it stipulated Lehman had to put up collateral equal to 105% of its volatile investments. The collateral valuation side was what prompted the run through the UK shell.

    At least, that’s the way I understood it.

  33. Avatar anti-idiot says:

    For what it’s worth, from this point forward I am disregarding any post by DonC. I just cannot subject myself to the misinformation/illogic any longer. Here are some recent examples:

    1) Lack of move up buyers must mean the bottom is in!

    2) Foreclosures and short sales have the same impact upon housing supply/demand as organic sales.

    3) “Given the size of the economy, government intervention to date has been the proverbial sparrow’s burp in the middle of a typhoon” [this despite the fact that Fannie, Freddie, and FHA underwrite or insure >75% of all mortgages in this country.]

    4)”the huge slug of cash Fannie and Freddie are releasing when buying all the defaulted loans. That money has to go somewhere.” [this of course directly contradicts point 3, which is also a direct quote of DonC]

    Can’t we have some kinda quiz or fact check gizmo on this site? I’m just tired of the tired bloviation that seems to pass as fact on this site.

    All the bulls can keep jibber jawing. If they are so confident we’ve seen bottom, then why are they not out there buying up all of Reno/Sparks, instead wasting time on an internet blog. They keep telling the realists that they have to pony up to the plate and buy before they have a right to voice their opinion, while they sit idle and tell everyone what a great time it is to buy.

    hmmmm…. I wonder how many of them are realtors….”

  34. Avatar DownButNotOut says:

    Derrick – you spelled idiot wrong. Refer to the first word of this paragraph for the correct spelling.

  35. Avatar Jessy says:

    I’m not saying that I agree with DonC in the slightest but there is something to be said about a contrarian view. Bottoms tend to be when the most people are bearish and when the data looks the worst. That said, the housing market has so many headwinds coming up that it’s just not logical to think a bottom is in just yet.

    Also, I appreciate the views of everyone on this blog, not just the ones I agree with. This blog is great because of it. Keep the comments coming, DonC, Smarten, everyone.

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