September was an interesting month. While actual results turned out better than expected after such a dismal pendings check a couple weeks back, only the low end looks halfway healthy. Above $500K? We have over two years to infinity in terms of standing inventory, and sales were off 36% from September 2005. read
What does this mean to buyers? If you’re looking for anything over $500K and don’t have an immediate need to move, watch the market closely these next months. If other buyers don’t come in and pick up the slack, and if sellers don’t withdraw from the market, then prices may reduce substantially in some cases. If you have to move or see a great deal on the perfect house, negotiate hard and plan to stay in the property for many years.
If you’re looking in the $300K-$500K range, you still have a lot to choose from and some neighborhoods are experiencing more desperation than others. Get recent data on area closings before making an offer, and again, negotiate hard and plan to stay. Now is not a good time for speculative purchases… just buy a house to live in it unless you’re a professional investor.
If you’re shopping the under $300K range, understand that this segment is motoring forward better than any other in our market. I would again watch your favorite neighborhoods closely, keeping in mind that some may start dropping into this price range for the first time in years. If you need to buy now, negotiate the best deal you can and plan to stay.
This is my interpretation… what do you think?
Perry
Hi Diane,
I think you’re right. I believe that NW suburban under $400k needs to give up $25k across the board. The 3,2,2’s between 1000 and 1200 square feet should be priced around $270k to get some movement. Even at that price you can’t do a 20% down and break even on rent.
Here’s one 2325 Crestone 06/17/2005 $402,000 now listed at $350,000. Motivated? Keep your eye on 7214 Glenmore Ct. paid 08/19/2005 $585,000 listed at $665,000. This house was actually in foreclosure at one point, didn’t make it to auction. In order to move I bet this house needs to be listed at $525,000. The backyard has no landscaping.
Mike Van H
I think that explains why I havent really seen much of a change in my neighborhood, which predominantly has homes ranging from $200,000 to $300,000. And since most homes $300,000 and under are located within the McCarren loop, even with home new developments like Brighton Manor, Virginia Lake Crossing and the Washoe Med affordabe housing project near the RGJ offices off of Kuenzli, I predict there will be a refocus on properties within the McCarran loop, and a defocusing of new subdivisions far on the outskirts, such as Sommersett and Wingfield Springs, where homes in the $200,000-$300,000 range is sparse.
That already seems to be happening, I can see that homes in my area sell fairly quickly, while how many empty homes sit out at Sommersett again?
NVMojo
Holy Moly! Check out this mortgage fraud investigation going on in Indianapolis! Hopefully similar transactions haven’t occurred in Nevada although one has to wonder. Houses around Traner Middle school selling for $265,000. really make me wonder, especially when you look at them.
http://www.nytimes.com/2006/10/06/business/06mortgage.html?ei=5090&en=ffa2a8f2e3f3aed1&ex=1317787200&partner=rssuserland&emc=rss&pagewanted=print
nvmojo
From Colorado regarding potential mortgage fraud:
snip…
“‘The (real estate) industry’s biggest problem right now is loan fraud,’ said Chris Mygatt, president of the largest residential real estate company in Colorado.”
“‘We have been seeing many more homes on the market, and average prices (in most months) are going up, which does not make any economic sense,’ said independent broker Jerry McGuire.”
“Two days ago, a broker severed a listing agreement with the seller of a home priced at $850,000 because the broker suspected he was involved in a fraudulent sale. ‘For five or six months, the home received zero offers,’ Mygatt said. Out of the blue, the seller received an offer for $1.1 million, $250,000 above the asking price.”
“Mygatt suspects the buyer will pocket the $250,000 and let the house go into foreclosure. But before that happens, the home will be listed as a $1.1 million sale, helping to skew the Metrolist numbers higher, he said. He said these kinds of deals, often with lower-priced homes, are becoming increasingly common. ‘This could not work without appraisal fraud,’ Mygatt said.”
“Mygatt said he thinks about 25 percent of the near record 31,450 unsold homes on the market will ’statistically never sell’ because their mortgages are higher than their potential sale value. That means those houses eventually will end up in foreclosure, he said.
snip…
http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5046223,00.html
out of towner
Does anyone have any input about the South Meadows area? Most of the existing homes seem to be over $500k (2500sq ft+) but KB homes is selling 3000 sq ft new ones in the low 400’s. Does anyone think this area is as over inflated as the NW?
Reno Ignoramus
Here then is what the inventory is:
below $300K …….. 8 MONTHS
$300K to $500K ……. 1.1 YEARS
$500K to $ 1 Million …… 2.25 YEARS
$1 million to $ 2 million …. 2.6 YEARS
over $2 million ………. A lifetime supply
Looks like vapor lock to me.
Essentially nobody is buying in the over $2 million price range. Ok, who cares?
Almost next to nobody is buying in the $ 1 million to $ 2 million range. Would it be fair to say that there are basically no first-time buyers in this price range? So, all the buyers in this range are also sellers. Sellers in the:
$500K to $ 1 million range. Where there is 2.3 YEARS of inventory. This rather explains why there are no buyers in the $ 1-2 million range. These “move-up” buyers cannot sell their homes. Would it also be fair to say that there are very few first time buyers in this category also? ( I understand there are still the valet runners making $35K a year getting stated income liar loans for $500K that would put them into the bottom of this category, but they are getting fewer and fewer.)So, basically all the buyers in this category are also sellers. Sellers in the:
$300K to $500K range. Where there is over a YEAR of inventory. These “move-up” buyers can’t sell their homes either. This rather explains why there are so few buyers in the $500K to $ 1 million range.
Where the action is, if you can call it that, is at the bottom of the market, under $300K, where there are some first time buyers. And even here, there is 8 MONTHS of inventory and only 20% of the listings have a pending offer.
If the best the market can do now is give the bottom segment seller a 20% chance of selling his house, where are all the buyers going to come from, especially as we move up the price range?
(Please don’t pull out the worn out story of all the rich Bay Area people. If that were the case, then this market would not be as ugly as it is).
Reno Ignoramus
Perry:
Interesting post on the house at 2325 Crestone. Also interesting is the sales history of this house. Originally sold new on 12/28/01 for $187,904. Sold to current owner on 6/17/05 for $402,000. The prior owner timed the bubble perfectly. Bought at the beginning and sold at the top for $214,000 gain. More than doubled in 3.5 years. This is what the REIC said would go on for the rest of our lives.
Current owner timed it as badly as possible. Bought at the top. Now selling for $52,000 (or more) less than he paid.
Let’s say he gets an offer for 97% of asking, or $339,500. Let’s say he then incurs 5% seller’s sales costs, which brings him down to $322,525.
He is now underwater $79,475.
This is not the way the REIC said it would work,is it?
Reno Ignoramus
“Faced with rising inventories of unsold homes, Hovanian Enterprises said it plans to ax executive and field jobs to improve its bottom line and weather what the home-builder describes as ‘the steepest decline in new home sales in our memory'”.
” In an internal memo to employees, CEO Ara Hovanian said an unidentified number of staff reductions were necessary in order to remain healthy, as the nation’s eighth largest US homebuilder grapples with the broad downturn plauging its industry.”
The Star-Ledger
October 7, 2006