Housing Drops Again

General by Diane Cohn

Dscn9878_1UNR’s Bureau of Business and Economics Research just released their August report on local housing, and guess what? Another month of slowing. With sales off 41% from a year ago and the median down 10% to $325K, wait till they see September’s results given yesterday’s pendings. read

21 comments

  2. Todd Tarson

    How do current sales compare to data from 4 years ago??

  3. Wazzup

    I’m surprised that the article in the RGJ didn’t get your regulars all fired up.

    Excerpt:The median time it takes to sell a home grew 38 percent, to 80 days, in August compared with the same month a year ago.

    None of this comes as a surprise to Stephen Haley, president of the Reno-Sparks Association of Realtors and a Realtor for Dickson Realty.

    “There is some correction going on, but in terms of Reno being a healthy community, I think we are a very healthy community,” Haley said. “We have not had any major job layoffs, and every time we’ve seen a drop in values there has been layoffs. I don’t see that happening.”

    gotlots would say “no better time to lock in to declining value”

    Waz

  4. Elaine Hirt

    Ooooh…If I could get a seller to pay off my credit card debt, I could then much more easily afford a more expensive house. What a concept! I never would have thought about that until I read the Las Vegas article. Very interesting….

    Where’s my calculator?

  5. retromodernjeff

    Consider this fron SFChron:

    According to American Lives, a demographics research firm in Carmel, Calif., nearly 60 percent of the Californians who moved to Reno in the last few years had household incomes of $75,000 or above, far above Washoe County’s median income of $47,400.
    AND

    A recent study by the Public Policy Institute of California found that high housing costs are forcing one-third of state residents between the ages of 18 and 34 to ponder a move from their region or out of the state.

    AND this,

    PC Doctor, a software provider to the computer manufacturing industry, was relocating to Reno to escape the high cost of doing business in the Bay Area. About 60 percent of the workers employed at the 30-person firm moved with the company; only one moved back to the Bay Area, according to Suzanna Mak, president of PC Doctor

    That is who’s buying and affording Reno homes.

  6. Reno Ignoramus

    “Local boosters can call it a lull, or a pause, or anything else that sounds soothing. The fact remains that the Great Housing Boom of the early 21st century is over. This isn’t simply a local phenomenon, and it’s not confined to a few formerly ‘hot’ markets on the coasts. The biggest drop last month took place in the Midwest, where housing fell a full 12.2%. Who knew there was a bubble in Toledo?”

    The Philadelphia Inquirer
    September 22, 2006

    “Housing has just fallen off a precipice.”

    Mark Zandi, Chief Economist at Moody’s Economy.com
    September 22, 2006

  7. Reno Ignoramus

    “It’s obvious that the national slowdown has been worse than some of us wise-guy economists expected.”

    Ken Simonson, Chief Economist for the Association of General Contractors of America
    September 22, 2006

  8. Reno Ignoramus

    “The weakening housing market continued to take it’s toll on the industry Thursday as mortgage lender Countrywide Financial Corp. disclosed the possibility of thousands of layoffs.”

    Los Angeles Times
    September 22, 2006

  9. NVMojo

    and from the fed on potential of cutting interest rates:

    snip…

    A deluge of data showing a surge in the number of homes for sale and dwindling demand has some analysts acknowledging that the once-robust market is not just cooling from its record five-year run, but is headed for a deep-freeze.

    snip…

    http://today.reuters.com/news/articlenews.aspx?type=newsOne&storyid=2006-09-24T171129Z_01_L23793153_RTRUKOC_0_US-SECURITY-BINLADEN.xml&WTmodLoc=NewsArt-R1-MostViewed-1

  10. Mike Van H

    SIZE MATTERS:

    I have a simple way to gauge how the housing market is doing. It’s from a webmaster’s point of view, and is so simple.
    I built and now maintain a couple web sites for different realtors. Each day, my custom scripting downlods the MASTER MLS DATABASE from Northern Nevada MLS group, parses it, and uploads it to my two realtor clients’ sites.
    The math is simple…..the larger the database is in size, the more homes are listed on the market. The smaller the database size is, the less number of homes are on the market. Simple as that…the Database size is based on raw text, not images included with each listing, so it’s a real good indicator.
    Back in 2003, the Database was half the size it is today. This year it’s bloated, over a gigabyte in size. It was growing in size every day until two weeks ago.
    BUT, and this is the GOOD NEWS; Since last month, the database has been steadily getting a little bit smaller each day. Smaller database means less listings in it….simple math. So either people are pulling their listings, they are expiring at a rapid rate, or some people are actually selling their homes.
    So things are starting to adjust to the current market conditions, which I think is good. Right?

  11. RenoIgnoramus

    Mike: Can you tell from your data how many listings come on the MLS every month, how many are withdrawn prior to expiration, how many expire, and how many sell?
    Such information would be quite helpful and useful to people trying to get a fuller understanding of the market.

  13. Reno Ignoramus

    Insider: Those are asking prices, not closed sales prices. Big difference. And this site does not provide any of the info I asked Mike about.

  14. gotlots

    Let’s take a look at the biggest bubble neighborhood in Reno/Sparks. Otherwise known as Somersett. Biggest bubble neighborhood because every house there has been sold since the buuble started to inflate in 2001-2002.

    Go to the MLS link on Diane’s site and click on Somersett. Here’s a summary as of tonight:

    300K to 400K ………17 listings. ZERO PENDINGS

    400K to 500K ………12 listings. ZERO PENDINGS

    500K to 600K ………17 listings. ZERO PENDINGS

    600K to 700K ………19 listings. TWO PENDINGS

    700K to 800K ………13 listings. ZERO PENDINGS

    800K to 900K ………9 listings. ZERO PENDINGS

    900K to 1 Million …. 10 listings ZERO PENDINGS

    1 Million and over …15 listings ZERO PENDINGS

    Total: 112 listings. TWO PENDINGS.

    That’s 1.7% of the listings with an offer.

    I’ll say that again: that’s 1.7% of listings with an offer.

    All this talk about median prices and inventory in newspaper articles and elsewhere is interesting. But sales prices on deals that closed last month and sales volume in the past month are lagging indicators. Especially in a market deteriorating as fast as this one is.

    The most significant leading indicator of a market’s condition is the listings:pendings ratio. It is the only number that indicates what is going to happen in the future.

    How much longer can people go on pretending not to see what is apparent?

    1.7% is horrific as an indicator as we head on into winter.

    AND, folks, remember that this is just resales. It does not include the untold hundreds of new houses sitting finished and unsold and all the new inventory coming on the market in the next 180 days.

    Add in new inventory to the MLS resales and it is actually sort of mind numbing how bad this is going to get.

    If one seeks to lock in declining value in a house in Reno, there has never been a better time to buy.

  15. Reno Ignoramus

    Let’s now look at an older, nice, well-established neighborhood that includes Caughlin Ranch, found in the MLS as Reno West Southwest:

    300K to 400K …..7 listings. ONE PENDING

    400K to 500K …..22 listings TWO PENDINGS

    500K to 600K …..20 listings TWO PENDINGS

    600K to 700K …..14 listings ZERO PENDINGS

    700K to 800K ….. 9 listings ZERO PENDINGS

    800K to 900K ……7 listings ZERO PENDINGS

    900K to 1 Million ..12 listings ONE PENDING

    1 Million and over ..19 listings ONE PENDING

    Total: 110 listings SEVEN PENDINGS

    That’s 6.4% of listings with an offer.

    Well, that’s 4 times better than Somersett. But still pretty ugly.

    Let’s say that these numbers hold steady, which they have been for months now. If 7 houses a month actually sell, that is 1.5 YEARS of inventory in Caughlin Ranch, one of the nicest areas in Reno.

    Except in the lowest price range, we now have YEARS of inventory in Reno.

    The only good news for Caughlin Ranch is that the building is basically done there and there will not be hundreds of new houses glutting the neighborhood.

  16. nvmojo

    Even Paris is getting nervous about the US housing market trend:

    http://www.forbes.com/markets/feeds/afx/2006/09/25/afx3042854.html

    snip…

    PARIS (AFX) – Share prices closed slightly higher, recovering from Friday’s steep losses but retreating from peaks late in the session after fresh US data reinforced expectations of a housing market slowdown, which many investors fear could have an impact on the rest of the American economy, dealers said.

    snip…

  17. Wazzup

    Gotlots, interesting information re: Somersett. 112 listings with 2 pending. I was looking at price reductions for the past 7 days in Somersett, the have been 3 reductions, TOTAL! I wonder what those people are thinking? As you have stated before, it is going to get ugly.

  18. Uncle Tom

    The reason for the many listings but very few price reductions over time: these are not motivated people, rather they are waiting for a jackpot price and if none, they don’t have to sell. It is generally known that almost every boat in the Newport Beach marina is for sale, but that doesn’t mean those owners are motivated. They can sell or not, it doesn’t matter. I suggest to you that a large number of listings doesn’t necessarily mean that there are truly that many bona fide, motivated sellers in the marketplace.

  19. gotlots

    Wazz: There are two categories of sellers in Somersett. In one category are those sellers still waiting for the greater fool to show up and pay their absurd price. These are the people who still think it is 2004 and that they are entitled to their REIC guaranteed 20% annual appreciation. They could sell for less, but why should they they say. After all, real estate in Reno only goes up, you can’t lose on Reno real estate, Reno is different than the rest of the country, because it’s “unique” here. We are special because we are so close to Lake Tahoe, and there are so many rich Bay Area people coming here to buy their house. Funny, though, how the market seems to have run out of rich Bay Area people about a year ago.

    In the second category are those sellers who won’t price their house to meet what the market is saying, but rather have priced their house based on what they “need.” What they “need” is to get out of their badly timed flip without any damage. These are the people whose current asking price is already at the break even point for them. If they go lower on their price, they go underwater on their flip. They do not understand that it is not a buyer’s responsibility to bail them out of their mistake. These are the people that will ride the market down waiting for the fool to show up, not willing to acknowledge that they made a bad move that is going to cost them money, or who will decide to take their flip off the market and “rent it out until the market comes back in the Spring.” It is rather comical.

  20. Wazzup

    gotlots: Thanks for the response. I certainly understand both types of seller. I guess the “Reno Myth” still has many believers. I did some comparisons on some of the Somersett listings, many are underwater already and many are listed to “breakeven” if they get a full price offer. Here’s a link to a reality check for those Somersett sellers.

    http://thehousingbubbleblog.com/

    This is a very active blog, lots of real sad stories out there. As Cramer says, “hogs get slaughtered”. Booyah!

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