Sales in June 2008 were actually up 2% from the year prior. Activity in the under $300K range improved again as it worked its way down to nine months of inventory. The $300K-500K range gained some ground, declining to 11 months of inventory from 15. The $500K-1 million category crept along much like last month and still favors the buyer with well over two years of inventory. The $1-2 million range choked with only three sales and an increase in inventory to 78 months, while the $2 million plus range had a burst of activity with three closings. Full report.

Data courtesy of NNRMLS, June 2008. Report includes Stick-Built Single Family, Condo/Townhomes, and Real Property Manufactured Housing in Reno-Sparks (Area 100).

Sealed bids will be accepted through 5 pm on July 1, 2008 for an upcoming multiple home auction involving several luxury properties in Somersett.  Six properties built by Sage Crest Builders and Knotty Bear Construction ranging from 4,000 square feet to 6,200 square feet in size will be on the auction block.  Somersett has always been a tough sell.  Will the buyers be there?

Last week the Telegraph UK ran an article about the Royal Bank of Scotland’s recent red-alert to investors on the state of global credit. They are predicting a full-scale stock and credit meltdown as central banks worldwide are paralyzed by inflation. I know to some this may sound extreme, but the article make some good points, and the comment stream that follows is pretty insightful. I’m curious to know what you guys think about the current state of affairs. (And yes, you can talk about oil.)

Noah Rosenblatt over at Urban Digs, who watches Wall Street like a hawk on behalf of Manhattan real estate, is also seeing signs of deterioration.

Even ritzy Aspen, Colorado, has begun to feel the pain (minus the $36 million sale to the Russian oil tycoon, of course).

The State of the Nation’s Housing Market 2008, courtesy of the Joint Center for Housing Studies at Harvard University. The summary in a recent California Association of Realtors newsletter, courtesy of my good buddy Jeff Brown, summarizes as follows: 

"HOUSING DOWNTURN SLOW TO REVERSE, BUT DEMAND EXPECTED TO CLIMB OVER NEXT DECADE. Record numbers of foreclosures, coupled with tighter lending practices, will make it more difficult for the country to recover from the current housing slowdown, but immigration growth is expected to create a demand for more homes over the next decade, according to a new study released Monday by the Joint Center for Housing Studies at Harvard University."

American Express says late payments on credit cards are on the rise (thanks, RI).

Calls, showings and open escrows seem to be way up in our office these last two months. Something JoAnn said to me about the popularity of her lower end listings, plus what I’ve been seeing the numbers lately prompted me to take a look at neighborhoods around town by different price bands to better understand what’s selling and where. Here’s what I found:

A few notes: Northwest included MLS areas 120,121, 122, 124 (roughly north of I-80 from the University to Verdi). Southwest included MLS areas 123, 160, 161, 163, 164, 165, 171 (roughly I-80 south to St James Village and west of 395 to Belli Ranch). North Valleys included MLS areas 119, 130, 131, 132, 133, 134, 135, 136, 137, 138 (roughly north of McCarran up 395 including Sun Valley, Cold Springs and up to Rancho Haven). Sparks included MLS areas 180, 181, 182, 183, 184, 185, 186, 187 (roughly all of Sparks from I-80 north to Palomino Valley and east to Patrick). Southeast included MLS areas 115, 140, 141, 142, 143, 173, 174, 176 (roughly I-80 south and east of 395 to Pleasant Valley including the Virginia Highlands). Number listed represents number of new listings entered between January 1, 2008 and June 22, 2008. Number sold represents closings within that same time period. Average sold price is for homes actually sold during that period, while DOM equals days on the market for homes that actually sold during the same period. Sale to list price ratio represents last list price offered and does not account for prior price reductions. Still active is just that… homes still offered for sale on the MLS in each price category/neighborhood as of June 22, 2008.

What’s most interesting to me is to see the distribution of activity given the price points in the various neighborhoods. While in most areas the majority of activity is in the under $300K price range, in the Southwest it’s $300K plus. It’s also interesting to note which areas are beating down inventory levels and which areas are not. Just a little reminder that there’s opportunity in every market, good, bad or ugly.

Sales in May 2008 were off 24% from the year prior, again. Activity in the under $300K range held steady with 10 months of inventory and a significant jump in pendings from 490 to 570 (237 of which are short sales). The $300K-500K range lost a bit of ground, bumping up to 15 months of inventory from 12. The $500K-1 million category experienced an uptick in average price along with fewer days on the market, but still favors the buyer with well over two years of inventory. The $1-2 million perked up with a higher average price and a decrease in inventory to 22 months, while the $2 million plus range had no activity at all (except for four pendings). Full report.

Data courtesy of NNRMLS, May 2008. Report includes Stick-Built Single Family, Condo/Townhomes, and Real Property Manufactured Housing in Reno-Sparks (Area 100).

So the buzz around the water cooler this morning was the lead article in this morning’s RGJ.  Apparently, in a new report issued by Global Insight/National City, Reno-area home values have now declined to point where they are now just below what the report considers absolute fair value.

The report determines “fair value” based on typical house prices, interest rates, household incomes, population densities and historical prices over the last 25 years.  The RGJ article also contained a chart showing how Reno’s downward median sales price curve has now met the “Statistical normal value” curve for homes in the area.

According to the report, the value of Reno-Sparks area homes for the first quarter of the past four years has been…(see table below)

Sales in April 2008 were off 24% from the year prior, but activity in the low end continues to improve. The under $300K range decreased to 12 months of inventory with another big jump in pendings from 370 to 490. The $300K-500K range came down to just over 12 months of inventory showing improved activity once again. The $500K-1 million category had a slight uptick in activity but still favors the buyer with well over two years of inventory. Over $1 million is slow, with 4-5 years of inventory. If you’ve been waiting for the bottom in the low end, this may be it, as current pendings, sales and activity will probably result in a further reduction of inventory next month. Full report.

Just a little taste of what happened last month… 336 homes sold at an average $310,925 after 151 days on the market. 4,269 still for sale. The median price was at $263,169. Remember, I include manufactured home classifed as real property. The detailed report should be done soon.

Is it just me, or does the 5:30 commute on 395 from South Reno to I-80 seem lighter to you these days? Yesterday I had lunch with some colleagues at a an upscale restaurant in South Reno. I arrived at noon and ended up waiting a half hour as the rest of my party was running late. The restaurant was near empty. By the time my party arrived at 12:30, I think only four out of 30 tables had people at them, eating lunch. This fine restaurant used to be filled with professionals. I hope a lunch crowd this small isn’t typical for them because if it is, the business won’t be able to support itself.

The other day I took my daughter to Meadowood Mall so that she could pick out her birthday present. All the stores were open, but very few people were out shopping. I don’t know if that’s normal for a Monday after 5:30 pm, but my daughter noticed immediately that no one was around and remarked that she’d rather shop on the weekends when there were more people.

That same evening we hopped over to the Sierra Summit, where again, hardly anyone was out. The Abercrombie store was fully stocked with four employees, lots of inventory, pricey halogen lighting, an expensive stero system, and we were the only ones in the store. As a former business owner who used to run payroll and pay all the bills in a retail location, I cringed on behalf of whatever corporation owns this store and wonder how long this can go on.

I had a long conversation with my financial planner back East who manages my 401K. He was so concerned about the sorry state of the credit markets, the housing markets, and all the ripples yet to unfold throughout US and world as result of this mess, that he called to suggest another line of income I could pursue to help me get through these next few years. I wished I had recorded the conversation for podcast because he was so well informed… but then again, for you regular readers of the blog it would just serve to confirm what you already know.

Noah Rosenblatt over at Urban Digs in Manhattan recently posted an update on the credit situation from the front lines.

Meanwhile, back in Reno, 89511 is beginning to seriously correct. I’ve seen a couple of bank-owned properties hit the market recently at real lowball offering prices. One, 770 Sandoval, a 3000+ sq ft home in Southwest Vistas, decent inside, hit the market at $499K, producing at least four bids for its banker owner. My clients bid higher than asking, but not high enough, and another party walked off with the escrow. I imagine this property will close in the lower-mid fives, but we shall see. Its cousin, 410 Octate Circle, another bank owned property, at 2500+ sq ft recently closed for $490K. Even Arrowcreek is not immune, as one of the bank owned Bella Terra homes listed for $200K less than the two neighbors for sale down the street, someone promptly stepped in with a strong offer and opened escrow. Just perusing MLS sales in that area since March 1, I see 18 sold, 14 of them under $1 million. Of those 14, the average sale price per square foot was $190, with a low of $153, and a high of $274. That’s pretty dismal for Area 165, one of the most popular, upscale neighborhoods in town.

But the big shift I’m seeing now is that banks are getting serious. Once they take back the keys, they list them low, respond quickly, take the best offer and open escrow. No more hemming and hawing… they seem to finally be getting down to business, and this will be the year that they blow them out the door.

Buyers in this market need to be poised to pounce on these best deals, they need to be prepared to compete and they need to be highly qualified with fantastic credit scores and 20% down. Sellers, I’m sorry, but if you have bank owned properties in your neighborhoods they will be comp killers. Until we flush the foreclosure pipeline, banks will drive down prices to meet demand.