Regular readers know that Diane Cohn provides the Reno Residential Update at the beginning of every month. I’ve always found these reports to be very useful. Now that I’m reporting on Central Reno, I thought I’d produce the same report that Diane does, however specific to my reporting area. Again, my area includes Southwest, Old Southwest and Caughlin Ranch. For consistency and ease of comparison with Diane’s analysis of the entire Reno market, I’ll use the same price bands of <$300K, $300K-$500K, $500K-$1M, $1M-$2M and >$2M. I will also report the same metrics that Diane reports. These include: number of homes sold; average days on market; percent of asking price; median sales price; number of new listings; market absorption rate; total number of listings; number of months supply of inventory; percentage of expireds; and number of pendings.
Going forward, I intend to provide these metrics on a monthly basis. Subsequent posts will then provide a direction of the market as compared to the previous month’s numbers.
The table below contains February’s metrics.
| <$300K | $300K-$500K | $500K-$1M | $1M-$2M | >$2M | |
| homes sold | 19 | 13 | 12 | 0 | 0 |
| days on market | 129 | 185 | 118 | – | – |
| % asking price | 95% | 88% | 93% | – | – |
| med sales price | $199,000 | $378,000 | $611,500 | – | – |
| new listings | 54 | 42 | 35 | 9 | 0 |
| absorption rate | 35% | 31% | 34% | 0% | 0% |
| total listings | 193 | 182 | 143 | 29 | 8 |
| months supply | 10 | 14 | 12 | unlimited | unlimited |
| expired listings | 24% | 26% | 14% | 11% | – |
| pending sales | 27 | 18 | 18 | 1 | 0 |
It will be interesting to see how central Reno stacks up with the market as a whole. I have a feeling that the absorption rate for central Reno is more favorable than Reno’s overall market absorption rate.
Data courtesy NNRMLS, February 2007
Fran Bailey
Hi Guy,
I find no standard in the industry for how months supply is calculated. How are you calculating it?
Reno Ignoramus
Thanks Guy for this info. It will be very helpful to have this info moving forward.
Can you please explain what you mean by “absorption rate” and how it is calculated? Is that the number of listings that sold and were also allowed to expire or were withdrawn as a percentage of total listings? Quite clearly, the number of listings that actually SOLD (as opposed to withdrawn and expired)as a percentage of total listings is substantially less than the “absorption rate”. Likewise, the number of pendings as a percentage of the number of listings is nowhere close to the “absorption rate”.
ALso, are these numbers just for SFR, or do they also include condos?
Thanks!
Guy Johnson
Fran and R.I.,
Thank you for your questions and comments.
Fran, I am calculating “months supply” by taking the total number of listings (inventory) and dividing by the number of homes sold for a one month period. For example, in the under $300K price band above, we have 193 homes currently listed, and 19 homes sold for the month of February. At the rate of 19 homes selling a month, we have a 10.2 month supply of homes in the under $300K price band.
R.I., the “absorption rate” is derived by dividing the number of homes sold for the month by the number of *new* listings for the month. I will check with Diane to see if this is the same calculation she is using for “absorption rate”.
And, in answer to your last question, I am looking at all residential properties. These include (single family site/stick built, condos, townhomes, and manufactured homes).
Again, for consistency, I will verify with Diane that these are the same property types included in her reports.
These reports will become more useful as time goes on, and trends begin to develop.
Reno Ignoramus
Guy,
Is there any way to break out the downtown condo sales from these numbers? The reason I ask is that there is the Palladio asking $550 a sq. ft. and three blocks away off of Center Street there are small 1940s era houses asking but a fraction of that price. The condo sales are going to skew some of these numbers. Also, I think a lot of readers have an interest in watching the downtown condo sales figures. This is an emerging market for Reno in many respects and it would be helpful if these numbers can be kept separate.
Again great thanks to you and Diane for providing this info. I do not believe there are any other realtors in Reno willing to make this info available to the public.
Guy Johnson
R.I.,
You raise a good point. …and one I’ve given some thought to. As you probably are aware, from an “area” standpoint, listings on the MLS are categorized under pre-defined “service areas”. These service areas can loosely be thought of as neighborhoods. The defining boundaries of these neighborhoods can not be modified (at least, not by me).
As an example, the part of Reno on which I have been reporting consists of service areas 140, 160, 161 and 163. These areas are named (from an MLS perspective) Southeast, Old Southwest, West Southwest, and Southwest, respectively.
Until you posed the question today and I investigated, I had incorrectly thought that downtown Reno was in area 160. Upon closer inspection of the (not so precise) service area map, I see that downtown Reno is actually in service area 120 (Northwest Reno). From the map I have it is difficult for me to see just how far south area 120 extends before it becomes area 160 (Old Southwest), but certainly the downtown condos fall into area 120 (Northwest Reno); again, as far as the Northern Nevada Regional MLS is concerned. Additionally, I confirmed this by looking up a few of the Palladio listings and seeing that they are listed under area 120.
So, what does all of this mean? Well, regarding your concern, the newer condo projects will not skew my numbers because they are not included in the areas that I include in my search criteria. However, going forward I will not describe my monthly residential report as including downtown, for this is not the case. From a blogging standpoint, however, I will continue to write about downtown subjects (new businesses, happenings, condo projects, etc.)
Thanks for the question.
Grand Wazoo
Some reliable asking vs. selling prices on the new downtown condos would be of interest to many here I would say.
Fran Bailey
Thanks, Guy. I asked about how you calculate month’s supply because an article came out yesterday by syndicated real estate columnist, Lew Sichelman, that had a calculation for month’s supply that didn’t make sense. For more details read my March 4th post on my blog, ChicagoMetroAreaRealEstate.Com. Keep up the good work!
GreenNV
I find it fascinating (and encouraging in my particular case) that Downtown Reno is holding out better than the fringes. Maybe buying the Versailles or the Hasienda or the Boston Whaler along with 3000 of your closest neighbors in a new development was not too wise in the long run – they are all your future competition when you try to flip or unload the property. But unique properties like Newland Manors seem to be doing OK.
Lindie
I’m not so sure we can say the Old SW is doing all that ok. Perhaps the reason the median price in the Old SW has not deteriorated like it has in the newer flipper infested neighborhoods is beacuse not much is selling there. If not much sells, the median does not move much.
As of 3/8/07, there are 90 SFR listings in the MLS in the Old SW. Only 5 of them have an offer. That is just 5.5%. If not one more listing were to come on the market, it would take 1.5 YEARS to sell off this current inventory.
If the Old SW is the shining star of the Reno market today, then the market is in pretty bad shape.
Guy Johnson
Lindie,
Thanks for reading and thank you for your comment.
One thing I wanted to note is the difference between the way you’re computing Months of Inventory and the way I do it.
It seems that you are dividing the number of Active listings by the number of Pendings at a point in time. The way I compute Months of Inventory is by dividing the number of Active listings by the number of homes that sold in a month’s time.
For example, for the month of February, I see that 10 SFRs sold in the Old SW area. Using your 90 SFR listings, that would yield a nine-month supply of inventory.
Not quite the 1.5 years you computed, but a lot of inventory nonetheless.
Again, thanks for reading and thanks for your input.