The million dollar and above market in Reno/Sparks

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When I posted the May’s numbers a couple weeks ago (see May median sold price, units, DOM, and $/sq.ft.) the big news was that the median sold price had dropped below $150,000 for the first time since February 2000.  However, lying a little deeper in the data was the fact that five properties sold for greater than $1,000,000.00 during the month.

Why is this noteworthy?  Because May continues the trend observed this year of increased sales at the million-and-above price point.  Since the first of the year there have been 23 such sales.  If sales continue at the pace seen thus far this year, then we should round out 2011 will more than 40 sales at or above $1,000,000.00 – reversing the downward trend in units sold since peaking in 2005.  (See the table below.)  [Incidentally, 17 of the 33 sales in 2010 occurred in the second half of that year, so 2011 looks on track to easily surpass 2010’s and 2009’s numbers.]

Sales at $1M and above
Year Units Sold
2011* 23*
2010 33
2009 39
2008 65
2007 121
2006 142
2005 162

* partial year

Cash only

What is driving these luxury purchases? Falling prices? Bargain shopping? Pent-up demand?  Hedging other investments? Whatever is the answer, it certainly is not the availability of jumbo financing.

Jumbo loans are difficult to obtain today.  And even if jumbo financing were available, some buyers would elect to purchase with cash regardless.  Consequently, we see that nearly half of the sales in this price stratum were all-cash purchases. (See table below.)  And the remaining sales were either owner-financed or partially financed with a conventional loan (Note: current conventional loan limits are $417,000).

$1M+ Sales in 2011
How financed? Units
Cash purchase 11
Conventional financing 10
Owner-financed 2
total 23

48 percent of the $1M+ sales this year have been purchase for cash.  Compare this to 2005 when cash purchases made up only 10 percent of the sales at this price brand.

Bargain shopping

Can bargains be found at the over-a-million price point?  Absolutely.  However if you’re looking for bank-owned properties in this price range you’ll have a tough time finding them.  Unlike the Reno-Sparks housing market as a whole, where distressed properties (bank-owned and short sales) comprise the bulk of the inventory and sales (nearly 70 percent); at the over-a-million price point distressed properties are seldom seen.

In looking at the current listings and sales priced at $1M and above, we find the distribution by type as follows:

Sales by Type
Type of Sale listings sales (2011)
Bank-owned 2 1
Short sales 10 2
Equity sales 105 20
total 117 23

But “bargains” can be found in other ways. In looking at the sold price per square foot at the million and above price band, we find that median sold price per square foot is currently 25 percent off its peak reached in 2006.

Sold Price per Square Foot
Year Average Median
2011* $236* $233*
2010 $259 $247
2009 $263 $251
2008 $316 $304
2007 $321 $306
2006 $322 $318
2005 $312 $312

* partial year

Clearly these high-end properties are selling below their peak pricing, however the 25 percent decline observed in the sold price per square foot is not nearly as great as the 60 percent decline observed in the market as a whole.  But perhaps it is enough of a discount?

Your thoughts

I am still curious as to what is driving today’s purchasers of these luxury properties?  I would love to hear your thoughts.

And if anyone has recently purchased one of these million-dollar properties, what motivated you to do so?  And what were/are your concerns purchasing at this price point in this market?  Would love to hear from you.

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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35 Responses to The million dollar and above market in Reno/Sparks

  1. Rubiconer says:

    The better question Guy, is how many houses that sold for $1 million in 2005 are now selling for $700K, or less, today?

    And, what were these $ 1 million dollar houses of today selling for in 2005?

  2. Storey says:

    “perhaps it is enough of a discount?”

    I don’t know, Guy. Is 25% off of absurdity enough of a discount?

    The reason that the median price is down 60% is because prices got to an absurd level. High end houses got just as absurd. If a house absurdly priced at $400,000 in 2005 was today offered at $300,000, would that be enough of a discount?

    Don’t get blinded by dollar signs. Absurdity came at all price levels.

  3. Martin says:

    Guy, are these numbers just for Reno/Sparks, or do they include Incline Village?

  4. Raymond says:

    There are 120 properties listed on the MLS at $1 million and over. 7 are showing as “pending”, but of the 7, 5 are “pending short sale”.
    So I am not quite sure about the accuracy of your comment that “distressed sales are seldom seen” at the million and over price point. Granted the sample is small, but 70% of the current pendings in this price point are short sales, and thus by your definition “distressed”.
    The suggestion that there is little distress in this price range is not quite accurate.

  5. Marino says:

    So of the 120 listings over $1 million, a total of 2, or about 1.5%, are in escrow as an “equity sale”.
    This price segment is not exactly boiling over with activity.

    Also, I have another question for the thread:
    If you are one of the owners of one of these 120 properties listed at over $ 1 million, why are you selling? Are you “moving up”? or “moving down”? Or “moving out”?
    What are your future home owning plans?

  6. Sully says:

    “Also, I have another question for the thread:
    If you are one of the owners of one of these 120 properties listed at over $ 1 million, why are you selling? Are you “moving up”?”

    That’s a classic and I’m moving it to my saved memos folder! 🙂

  7. Guy Johnson says:

    The data in the post is for Reno/Sparks (MLS area #100), and does not include Incline Village.

  8. Guy Johnson says:

    Of those 120 properties, only 12 are distressed. Relative to the proportion of distressed properties in the market as a whole, where two-thirds or more of the listings are distressed, this is much smaller portion.
    That being said, you make a good point. Buyers gravitate toward value at any price point, as the proportion of distressed pendings exhibit.

  9. Marino says:

    Hey thanks Sully, I was wondering if anybody here would catch the ‘subtle’ humor……

  10. Raymond says:

    I guess with the non-distressed pendings being a whopping 1.5% of the listings in this price range, that most sellers in this range are not feeling quite distressed enough to move the market.

  11. Richard says:

    You will find more still delusionally priced houses at this far out end of the market than anywhere else. In fact, this is pretty much the only place in the market where delusion still exists to any significant extent. The bottom has seen complete capitulation. The mid-range has come to its knees. This $1 million and over sliver of the market has a lot more people who can hang on and hold fast to their delusional cogntions that it is still really 2006.
    Thus, this segment accounts for barely 1.0% of all sales. It is Potemkin Village in Reno. Not Incline Village.

  12. Carlo says:

    Here’s another reason why it is inaccurate to suggest there is little distress in the million dollar price range. Take a random sample of some of the listings in the $1 million and over range. There are a number of these properties listed for a price less than they were purchased for. But since they were purchased with cash, they are not listed as a short sale since there is no lender holding a mortgage. But the seller is going to take a loss nonetheless. That has to result in a certain amount of “distress” to the seller who is going to lose money, even though it does not show up as that anywhere on the MLS.
    For all of the anal purists who want to argue that these sellers are not really “distressed”, you can hold your fire. I get it. But you also get my point.

  13. Conrad says:

    $ 1 million dollar houses. Who cares?
    I’m sure a few folks also spent $80,000 for a car. Will there be a thread about that too?

  14. Walter says:

    The only guy on the blog who would have gotten excited about million dollar houses, the Emperor of Incline, has left the building.
    I’m sure he would said that the fact that 22 people could spend a million dollars for a house proves that the bottom is in and that its all upward from here.

  15. inclinejj says:

    And people spend over one Mil on cars..Has anyone ever seen that car auction show on ESPN???

    If you can truly afford a million dollar, car, boat, whatever, good for you..go for it

    Also factoring into the million dollar home is the NV Energy Bill, and taxes, insurance, other utilities..etc etc

    If you can handle the “monthly nut” good for you..

    There is a tremendous amount of money on the “sidelines” right now. Being I have seen two properties sell at the courthouse steps for cash between $2.2mil and $2.5mil in the last couple days.

  16. bob_c says:

    The million dollar class competes with the world market as much as it does the regional market. I’m not talking the ‘used to be million’ Arrowcreek or run of the mill McMansion. But ‘homes of distinction’ have a footprint outside the local market and probably more tied to the wealth effect and stock market.

  17. Reno Ignoramus says:

    Toll Bros. and others were building “million dollar” McMansions in Reno in 2005-06. All you needed to buy one was a phony loan application and a fairly unlimited willingness to lie. Then the realtor, the loan officer, and the appraiser all winked at each other and went about the business of mentally spending the nice commission. Today the realtor is selling cell phones at the mall, the loan officer is running cocktails, and the appraiser is “semi-retired and consulting”.
    Half of the MLS listings over $ 1 million are remnants of this nonsense. There are few “homes of distinction” truly deserving of the label. A few, but not many.

  18. Mark M says:

    (There are few “homes of distinction” truly deserving of the label. A few, but not many.)


  19. inclinejj says:

    And we saw what happened to the Pseudo rich!!

  20. rory says:

    Yeah, there are very few homes of distinction in Newlands, Caughlin or the Southwest ranch estates. And certainly not a single estate worthy of a million dollar listing in Montreaux or West Washoe Valley. smh

  21. Cal says:

    hey rory, did you hear about another poor “victim” who was shot in downtown Reno this morning. This poor “victim” was just minding his own business strolling down Fulton Alley at 1:30 in the morning. A lot like the poor “victim” football player who was minding his own business just strolling out by the Freight House at 2:30 in the morning.
    We really need to do something about all these poor “victims” who are out minding their own business at 2:00 am when out of the blue somebody comes up and shoots them. This is starting to give downtown Reno a really bad reputation, what with all these poor victims getting shot.

  22. Stewart says:

    This most recent downtown shooting (it was about 15 hours ago….I think it is the most recent) was just a few feet down from Nando’s Renovation Project. Surely once the ziplines are in and the fast food court is up and running, all these shootings will stop. Surely.
    Really, they will.

  23. Johnny Cash says:

    I shot a man in Reno..just to watch him die!!

  24. June says:

    Hey Johnny, that is probably the most popular kareoke song at the West Second Street Bar downtown.

  25. Roxanne says:

    The reward for info on who shot the rapper last night is $2,000. The reward on the football player is $1,000. So does this mean that one rapper is worth twice one wolfpack football player?

    What do you get if you mix one group of Freight House wolfpack football players with one group of Knitting Factory rappers?

    A bloody rapppack?

  26. Martin says:

    I guess it is time, already, for the RGJ to reprint that story about how safe downtown really is that they ran after the football player shooting last week.

  27. John Carter Cash says:

    If the shooting happened in California.. And when the shooter gets caught

    Folsom Prison Blues

  28. InfrequentVisitor says:

    The last time I walked past Fulton Alley there was a street person urinating on the wall. Now it has moved on to gunfire?
    Ahh for the good ol’ days when the worst thing about it was the stench of urine….I remember them well.

  29. Ralph says:

    Since this is a real estate blog, allow me to ask a real estate question.

    Does the value of a condo in the Palladio or Montage or other lesser downtown condo buildings go up every time one of these shootings happens?

  30. Paul says:

    Reno just cant get their act together with respect to law enforcement. If you look middle class and have a nice car with CA plates you’ll get a ticket for a minor traffic violation. If you deal drugs in plain view on a downtown street corner the cops look the other way. That’s why Belvedere condo’s are worth less than a new car.

  31. Inclinejj says:

    Paul I have found it to be the complete opposite.. Reno PD and the Washoe County Sheriffs Office have always been professional and courteous.

    A couple times that I have been pulled over they let me off with a warning.

    It goes back to the oldest rule in the book. Treat people they way you want to be treated.

  32. Zen says:


    Same here.

  33. skeptical says:

    Looks like someone at the RGJ reads the RRB. Jason Hidalgo grabs the paper’s headline by plagiarizing Guy’s post. Nice.

  34. Skippy says:

    Hey Skeptical,
    Did you ever buy a house? I remember you were thinking about it earlier this year. I’ve missed your contribution lately.

  35. inclinejj says:

    Buying a million dollar house and not being able to afford upkeep, utilities and repairs, taxes etc. Means in reality you could not afford it in the first place.

    Its like buying a horse and not being able to afford feed and a saddle. But you have that good lookin horse in the back.

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