Page one of today’s Business Section of the Reno Gazette Journal featured an article titled Home Sales Drop 36.1 Percent. In fact, according to the article, Nevada’s 36.1% drop was the largest percentage sales decline in the nation, for the fourth quarter of 2006, year over year. read
The next largest declines were 30.8% (Florida); 26.9% (Arizona); and 21.3% (California).
I suspect Nevada’s figure is skewed by Las Vegas’ market. In an attempt to get a more accurate number for the Reno market, I pulled residential sales data for Reno-Sparks only. The raw data appears in the table below:
| Month | # Homes Sold | Median Sold $ |
|---|---|---|
| January 2007 | 276 | $290,000 |
| December 2006 | 319 | $297,000 |
| November 2006 | 318 | $300,000 |
| October 2006 | 409 | $299,900 |
| September 2006 | 384 | $299,900 |
| August 2006 | 371 | $305,800 |
| July 2006 | 410 | $322,950 |
| June 2006 | 463 | $325,000 |
| May 2006 | 425 | $316,000 |
| April 2006 | 411 | $317,000 |
| March 2006 | 434 | $328,000 |
| February 2006 | 320 | $317,250 |
| January 2006 | 325 | $325,000 |
| December 2005 | 385 | $319,900 |
| November 2005 | 443 | $331,000 |
| October 2005 | 559 | $335,000 |
| September 2005 | 601 | $336,500 |
| August 2005 | 695 | $334,950 |
| July 2005 | 677 | $345,000 |
| June 2005 | 607 | $335,000 |
| May 2005 | 717 | $326,000 |
| April 2005 | 650 | $315,000 |
| March 2005 | 660 | $309,000 |
| February 2005 | 411 | $301,000 |
| January 2005 | 381 | $295,000 |
Using this data yields a 24.6% sales decline for fourth quarter 2006 compared with the fourth quarter of 2005. Not as bad as the RGJ reported for the state, but still a large decline nonetheless. Feel free to draw your own conclusions about whether we’ve hit bottom. One thing to note from the data above, the current numbers for homes sold and median sales price are now below those figures from two years ago. Posted by Guy Johnson.
BanteringBear
The numbers don’t lie. Sales are plummeting, and so are prices. 4 of the 8 houses on the circle I am living on, sold in 2005 for WAY too much. Zillow, which is on the high side in it’s Zestimates, already shows all of them underwater, some by more than $35k. These are average at best 70’s tract homes in a noticeably aging neighborhood. I would venture to say that two of them are upside down $100k right now. Judging by their vehicles, I don’t imagine these folks have that kind of equity, since these were starter homes for them. So, they are STUCK. Not a smart decision after all since they could have rented something much nicer for around half of the price, and banked the difference each month to save for a healthy down payment. There was simply little value for the price they were paying, and huge RISK. But, like most who bought at the peak, they thought real estate in Reno would go up 20% per year until the end of time. They should have suspected something was not quite right when neighboring homes sold, in the 1990’s, for less than 1/3 of what they were paying. One of the homes was flipped for almost $100k profit in less than 12 months! This sort of appreciation was completely abnormal, unsustainable, and phantom really. Now, the chickens are coming home to roost. The final nail in the coffin will be the drying up of the easy money. Qualified buyers are becoming an endangered species. This spells bad news for sellers. They better get religion and price things attractively, otherwise they might never sell. That’s right, NEVER. Not all homes in this market are going to sell. There are too many for too few buyers. And just wait till the big builders start selling for what seems like insanely low prices. The resale market will dry up. And what many don’t realize, is those builders can afford to sell those homes for LESS than it cost to build. They have the resources. Toll Bros. is looking to walk away from land options in the area, signaling what’s on the horizon. Things are just warming up.
Reno Ignoramus
Let’s take a look at the condo market in Reno-Sparks. As of tonight, in the over $300K price range for condos in Reno-Sparks, there are 142 listings. This number is a substantial increase from six months ago because now the developers of the Palladio and the Montage and Riverwalk have brought their inventory to the MLS. So now added to the usual numbers of Fleur d’ Lis and Trianna and Arlington Towers and Park Towers are these new listings.
There are 142 condos in this price segment. Four have a pending offer. So that’s a whopping 3% of the listings with a pending offer. At that rate of absorption, there are THREE YEARS of inventory. And this does not count all the inventory offered by other condo developers that is not in the MLS. Add these developer condos to the mix and there are probably FIVE YEARS of inventory.
Only two things can happen in this situation. One, sellers/developers drop their prices in an effort to stand out in the midst of the condo glut. Or, two, sellers/developers hold their prices and continue to sell at an anemic rate.
If not one more listing were to come on the market from today forward, at the current rate, the next President of the U.S. will be starting his/her campaign for re-election in 2012 by the time the last condo for sale today is sold.
John
I am looking at purchasing a new home in the first phase of the new Mountain View Estates subdivision,located off Ferrari McLeod Blvd. This new subdivision is next to the recently sold out Lennar housing development on Socrates. The new home I am considering is a 2955 sq. ft 2 story model with 4 br. and 2-1/2 ba. It sits on an approx .16 lot. With some upgrades, I expect my sales price to be $455,000 and supposedly the home as an appraisal value of $517,000. Consiering the surplus of homes on the market and declining sales prices, would this purchase still appear to be safe or a smart move for me?
Samuel Pharris
I think that Reno is worst place to buy since
we were once a boom housing market. Boom
situations are always the worst hit since
in boom areas prices always go through the
roof in value. vegas was another example of
a boom housing market went bust with home
values dropping drastically.
In Boise Idaho, home prices are actually
sustaining very well and that area is a
great place to buy since prices are lower
than Reno/sparks and surrounding areas.
In fact Boise was either up a couple
% or lost only one or two compared to here.
The reason is that Boise is a great place
to live and prices of homes are more
affordable and Boise was not a boom town
like Reno/Vegas.
Check out Boise as great place to live
and buy a great home at a good price. I think
the average price of homes is about 210,000.
For that 400 something thousand home here in
Reno, you could probably get the same home for
much much less.