Market Condition Report – May 2010

Thank you to our friends at First Centennial Title for providing May’s Market Condition Report below.  Market changes seem to be afoot.  From May’s report…

OVERVIEW: Demand and supply stabilized from May to June. Key indicators signaled a pause in the recent positive trend (seller perspective). Prices, which appeared to have firmed, posted marginal declines. This unexpected weakness may be short term.

MARKET SPEED: The pace of the market, which had been rising consistently, has peaked in the short term. The best performing Reno sub-market remains the perennial favorite, Fernley SFR, returning a Market Speed of 34 (down 12 points from last month). This is a significant slowdown. The slowest is Yerington SFR at 8 (down 10 points from last month), also a significant retreat.

MONTHS SUPPLY: This key measure which had been declining (market tightening) has now reversed and has begun to rise. This implies a stabilization in current demand/supply realities which would dampen the prospects for a sustained market recovery.

IN ESCROW (FUTURE CLOSINGS): SFR and Condo inventory in escrow in decline. This suggests that the recent surge of closings is not being replaced by new escrow entry signaling a slower market.

Click on the report below to view.

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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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34 Responses to Market Condition Report – May 2010

  1. Avatar skeptical says:

    I would encourage the perennial bottom callers to take a hard look at the May data.

    May should have been much stronger, as it was still fully under the influence of the expiring tax credit. In fact, it should have been stronger than April, as it benefited by the buyers who pushed their purchases to the left to capture the credit.

    This negative turn in the trend of significant indicators does not augur well for the market heading into the summer selling season. Perhaps I was a bit too optimistic….

  2. Avatar smarten says:

    skeptical, you’re not keeping your eye on the ball. On several occasions you’ve stated that the key to market stability will be July’s [and not May’s] numbers. IMO nothing has changed. Let’s just wait and see what July’s and August’s numbers reveal, shall we?

  3. Avatar Norton says:

    “short term”. Our friends at First Centennial say all these downturns are “short term”. How do they know that they are “short term”?

    Maybe they are. But maybe they are not.
    What clairvoyance do our friends at First Centennial lay claim to, Guy?

  4. Avatar LikeBigBottoms says:

    Just read the report. Definitely the bottom. Time to load up on some Reno RE.

  5. Avatar Sully says:

    One of the things that Markets are best at is price discovery — the determination of a price for a specific item through basic supply and demand factors. Without the heavy hand of the government intervening, the residential real estate market is about to experience what price discovery is all about . . .

    http://www.ritholtz.com/blog/2010/06/2nd-leg-down-in-housing/

  6. Avatar Sleezy says:

    I’m glad i decided to put off my next purchase until next year. There should be some even better deals this winter,

  7. Avatar DownButNotOut says:

    Sleezy – there should be some better deals for some time to come. I don’t mean to go all Japan on you readers, but this isn’t going to turn around as a typical bottom that then starts to go up anytime soon. Absolutely none of the signs point to that.

    Waiting until July / August numbers? Don’t hold your breath.

  8. Avatar Ralph says:

    I find it amusing how the bubble distorted almost everybody’s thinking about house values. Everybody seems to think that there is some God given right to appreciating house values. I bought a house in Reno in 1985, way way way before this bubble. I sold it in 1995 for ZERO gain. There was nothing unusual or unique about this house, and there was nothing unusual or unique about my experience. Don’t take my word for it. Go spend some time on the assessor’s website and look at what houses sold for in 1985, and then see what those same houses sold for 10 years later.
    And those were normal times. Not in the wake of the most massive housing bubble in Reno’s history.

  9. Avatar inclinejj says:

    More people shut out of the market!!!

    Seven-Year Lockout Policy for Strategic Defaulters

    WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.

    “We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

    Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

    Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae’s Selling Guide Announcement SEL-2010-05.

  10. Avatar bob_c says:

    and to think they used to pursue these liars
    for damages

    what a candy ass punishment

  11. Avatar skeptical says:

    Suddenly things on the RRB aren’t so cheerful. Contrast that with the posts of a month or two ago. We were in the midst of the primary boost that was to be provided by the stimulus, but the permabulls seemed oblivious to that fact.

    Now, things look a bit different.

    Who knew that the withdrawal of the stimulus would have such a quick and direct impact on the RE market? Certainly not a few prominent bottom callers.

    Where are they now?

  12. Avatar Sleezy says:

    Skeptical the market has bottomed in the very low end price segments.. 125k< IMO… It’s the the rest of the market that remains somewhat over-valued …

    I would look for the houses in the 200-300k range to be selling for at least 25% less come next year.

  13. Avatar Zen says:

    Sleezy,

    If a 200K house is going to sell for at least 25% less next year, which means 150K or less, how could a 125K house today have bottomed as you stated? Wouldn’t it too feel the downward market pressure?

  14. Avatar Sleezy says:

    25% less would be 150 not 125. Further, i didnt say every house listed at 125k< is priced right or bottomed..

    You will still find overpriced homes at 125k <

  15. Avatar smarten says:

    So “the market has bottomed in the very low end price segments.. 125k<?” But, “i didnt say every house listed at 125k< is priced right or bottomed…You will still find overpriced homes at 125k<.”

    “I would look for the houses in the 200-300k range to be selling for at least 25% less come next year.” But of course Sleezy [aka Derrick, our stucco oracle] didnt say every house listed in the $200-$300K range is overpriced…You will still find underpriced homes in the $200-$300K range.

    Now this is advice you can take to the bank, wouldn’t you agree?

  16. Avatar inclinejj says:

    Considering the banks are doing multiple BPO’s for the same property, I am seeing REO’s come back on the market for WTF kind of pricing.

    An area of homes, Well the houses in the area are listed from $449k to $499k just got a couple homes listed for $575k and $579k. Walking thru the homes they are pretty much identical. I also notice out of town agents, the double kiss of death, listing for much over the last closing comps.

  17. Avatar Zen says:

    Sleezy,
    You stated, “the market has bottomed in the very low end price segments.. 125k< IMO…” and then also wrote, “I would look for the houses in the 200-300k range to be selling for at least 25% less come next year.”

    In response to your statements I asked, “If a 200K house is going to sell for at least 25% less next year, which means 150K or less, how could a 125K house today have bottomed”.

    In your next post you said, “25% less would be 150 not 125. Further, i didn’t say every house listed at 125k< is priced right or bottomed.”

    To be clear, the 125K number I used was not my calculation of a 25% reduction on a 200K house, it was referring to your calling the 125K and less housing market bottom.

    So I ask again if you are saying that their will be a 25% reduction in housing that is currently priced between 200K and 300K, how can the current housing market from 125K and less have bottomed? Such a dramatic change in the housing prices just above the 125K limit that you stated should cause downward pressure on the current 125K and less housing.

  18. Avatar CommercialLender says:

    Hi, All.

    Something very odd is going on. May housing data plummeted for KB and others and even the NAR was short of [believeable] explanations as to why existing home sales suprised to the downside. Yet the tax credit, typical spring buying season, very low rates, price reductions in many markets, many gov’t and Fed stimulae, and an official end of the recession all were supposed to boost sales.

    No, this market is not at all healthy. Sorry, Smarten, but IMO we are headed for a housing double-dip and likely a lengthy flat period thereafter.

    ****

    Ralph,
    While your point is well taken, and thank you for it, I disagree with your perspective that the period of 1985 to 1995 “were normal times”. We had the 86 tax law, 87 stock market crash, the massive S&L debacle and a fairly deep recession all in that time period. Your 85 valuation likely went higher for 3 yrs, then plummeted until 1993, then increased back to parity by your sale in 95. If I could be so bold, and if these are in any way analogous times, we are somewhere today right around 1990.

  19. Avatar smarten says:

    HI CL, nice to see you’re back [some of us missed your commentary].

  20. Avatar DownButNotOut says:

    Smarten – I respect the heck out of your contributions here, but would you admit if you were wrong about your market thesis? ie- if things tanked would you still be a proponent of IV being insulated, or a bottom in the lower end markets? Or of $xxx housing price(pick your number)being stable on the low side?

    Just trying to prep you buddy.

    I don’t see an end to this mess for some time. It’s why I revert back to our political will in many of these posts. We can fix this sooner, faster and more efficiently if we let the free market dictate prices, as opposed to government slight of hand. But most of us don’t want to understand what part our electoral plays in this mess.

    And sooner than later we will regret those we’ve put in charge.

  21. Avatar smarten says:

    DBNO –

    If I were wrong would I admit it? I’d like to think I would, but…

    I don’t think I’m wrong. I said that IMO the low point of the market AS A WHOLE [at least as depicted by median sales price] was reached a year ago May or so. I said that IMO the market would scrape along the bottom for the next year or so. In fact I’ve predicted it will continue that scraping through the rest of the year, and I stand by the prediction. But I also said that the market could very well take another dive down the road – what I refer to the “W” effect. So if that happens, I won’t be shocked.

    Everyone needs to do what’s best for him/her and I respect that. I think IV is on the mend; personally there’s been nothing that’s come up for sale that I wished I would have waited for instead of acting when I did; the mortgage market is looking a whole lot more appealing than a year ago this time, my refi applications are in place and if I’m lucky…; and by and large I’ve appreciated being able to enjoy my surroundings instead of living somewhere I didn’t really want to live because I was holding out for that something really special at the lowest price in a generation.

    I was never in this for the short term so like others on this blog, if the market as a whole drops another 20% or so in value, although it’s an interesting topic of conversation, won’t be directly affected.

    With that said, IV sales volume is now double what it was a year ago this time and inventory is down about 20%. Obviously something is going on here.

  22. Avatar guess who? says:

    Smarten: “But I also said that the market could very well take another dive down the road – what I refer to the “W” effect. So if that happens, I won’t be shocked.”

    Please site for those of us whose memories are apparently not so sharp exactly where you stated that.

    I sense backtracking. Some have been pretty candid, honest, and ready to eat crow when necessary. Smarten, you are the chief bottom caller and have never used the letter “W” in any of your posts until this last one.

    If you’re going to backtrack and start writing your own revisionist history, at least proclaim it loudly from that mountain top near your Tahoe chalet.

    This market is going lower, and you know it. The bottom was NOT May 2009. So, just fess up, eat crow, and move on. Anything less is uncivilized.

    As for the I, I, I, Incline, Incline, Incline, me, me, me references in your post. Well, most of us just don’t care.

  23. Avatar Sleezy says:

    Smarten

    Just admit it already .. You overpaid for your house in incline..

  24. Avatar Sleezy says:

    Newsflash smarten…

    Prices have not bottomed

  25. Avatar smarten says:

    Guess Who, Sleezy, Derrick, whomever…

    Sorry I don’t maintain an archive of my past posts so I can instantly refer to thm. Nevertheless last February 11 [ http://renorealtyblog.com/2010/02/rough-week-in-iv.html#comments ] I posted the following:

    “1. I never said that the IV SFR market as a whole ha[s] recovered;
    2. I never said that since May of last year the market has done anything other than scrape the bottom;
    3. I never said that IV SFR market would be immune from a double bottom;
    4. I never said that IV was immune from foreclosures nor short sales…”

    Is that good enough?

  26. Avatar MikeZ says:

    [skeptical] May should have been much stronger…

    Plan B: If the price data continue to show stability – even increasing prices – then claim the increase should have been bigger, thus the market is actually degenerating.

    See you next month, I can’t help but wonder what new reason you’ll come up with.

  27. Avatar HighlyTrainedRealEstateAnalyst says:

    I’ve been reading this post for a long time without commenting, but after reading this latest round of brilliant analysis I have come to the conclusion that I too am qualified to predict what’s ahead in the Reno real estate market. You see, I have been reading Smarten’s posts very closely and I feel that I am ready to take the plunge and do some “predicting” of my own.
    I can, with certainty, say that prices have bottomed, unless for some reason they trend upward. Also, I can predict with 100% accuracy that prices will either rise or fall in the next 6 months – even if you account for government intervention. Furthermore, I can now say for certain that the ideal time to buy real estate will occur at one of three points in time: The past, the present, or the future.
    Now there’s some analysis that you can take to the bank – if it hasn’t been seized by the FDIC.

  28. Avatar Polly says:

    Very good comment Highly Trained. Your point is right on. A fine retort to the Masters of the Universe who have overtaken the blog and turn every thread into their own personal arrogant self-pontification on the condition of the housing market.

    90% of all comments on this blog now come from the same 10 or so people who say the same thing over and over and over. And if someone dares come on the blog and say something that does not comport with the Masters’ self-annointed Truth, they get blasted. And they never come back.
    The blog has become a broken record.

  29. Avatar Anonymous Coward says:

    Re: Polly,

    You certainly have a point.

    But I for one still enjoy reading the blog, and appreciate the efforts, input, and perspectives of the “regular” posters.

  30. Avatar DownButNotOut says:

    Maybe you could contribute something interesting Polly?

  31. Avatar smarten says:

    Polly –

    Where were you when Mr. BB and his gang of 10 or so said the same thing over and over and over? When if someone dared to come on the blog and say something that did not comport with these Masters’ self-annointed Truth, they got blasted [and I mean REALLY blasted]. When turned every thread into their own personal arrogant self-pontification on the condition of the housing market? Me thinks you don’t have much of a memory.

    And BTW but for Mr. BB and maybe Derrick, I don’t believe I’ve ever “blasted anyone.” So who else are you referring to?

  32. Avatar MikeZ says:

    You know, “Polly,” I agree with much of what you wrote.

    And now I challenge YOU to make this blog better.

    Please, present your opinions BUT be prepared to back them up with more than name-calling.

    Personally, I would welcome another SERIOUS, INFORMED, INTELLIGENT point of view here.

  33. Avatar DownButNotOut says:

    So if you blast this blog for blasting new writers opinions, does it make you better or worse than those your commenting on? Which brings up the question; why read it if you feel this way?

    IMO it’s just the summer doldrums that comes with talking about the same subject matter.NBD.

    To reiterate Anonymous Coward – I for one like to read the comments. Even Polly’s.

  34. Avatar HighlyTrainedRealEstateAnalyst says:

    My only intention was to add a little light hearted humor to the post. As long as it is kept respectful, I enjoy a good debate. I tend to align with BB’s viewpoint on most matters, but I like to read all viewpoints, and I certainly respect the fact that all of you are willing to “stick your neck out” and make predictions. As you can see by my post – I’m not. The reason I’m not willing to make a prediction is because the game is rigged. The Federal Reserve creates money out of thin air, gives it to the banks for around 1%, and then lends it to consumers at a rate of between 5 and 30 percent (depending upon what the loan is for). Combine that with a congress that seems to have completely forgotten the fact that we live in a Constitutional Republic, a Supreme Court that wants to create laws, and an executive branch that has no problem ruling by dictate (Executive Order); who knows what these yahoos will do next. I could go on, but I’ll stop now because this is a real estate blog.
    Anyways, I do enjoy reading ALL of your posts so long as they are respectful, and I’ll try to chime in down the road with my highly trained analysis!

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