Reno Residential Update

Market Trends by Diane Cohn

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Oh boy, Lindie is going to have a field day with this one… After four solid months of improving results, the median price dropped from $310K in May to $298K in June. But the real surprise was the year-over-year drop off in activity. We’re talking 28 % fewer sales this June as opposed to last June. Oh, I can hear Reno Ignoramus ringing in my ear already… voodoo loans, kool-aid, what are you smoking? Believe me, there’s nothing like being skewered on your own blog. Derrick, please save me (but do a spell check this time, k? … 😉  read

16 comments

  1. smarten

    Thanks Diane –

    I especially like your two “scales;” market rating and price trend. Can you please share what data goes into each or is it just your subjective “feel?”

    And using your scales, should we conclude the market has bottomed once we experience “x” number of months where the rating and trend are 3s [and if so, can you fill in the “x”]?

  2. Reno Ignoramus

    Well, my friend. I’m not here to “skewer” you on your own blog. Any realtor willing to maintain a blog like this deserves not to be skewered. Hell, what she deserves is to get clients looking to work with an honest realtor. I mean, if somebody just insists on buying into a falling market, they ought to hire you to help them.

    June is very early in the year for sales volume to be heading south. We have clearly just completed our second consecutive Spring Non-Bounce. 2007 numbers are off 2006 numbers. 2006 numbers were off, way off, 2005 numbers. 2007 numbers are way way off 2005 numbers. So what now?

    The sales:listings ratio continues to be dismal. We continue to have YEARS of inventory in all but the very bottom segment of the market, and I note that even that segment is now showing an uptick in inventory. Perhaps the credit tightening and the lessened availability of Voodoo loans to the unqualified looking to buy houses they cannot afford is starting to show up.

    I just don’t know how anybody can look at a market that is selling 9% of its listings and say things are looking good for the future. How can YEARS of inventory herald a healthy market? How can 373 closed deals out of some 5,000 houses for sale be encouraging? I continue to suggest that if only one-third, just one-third, of sellers decide to REALLY get serious about selling, prices have to decline from here. Now if one-half get serious, well, watch out.

    As for your kool-aid habit, well, I appreciate that you spend too much time around your broker. Got any charts to share?

  4. Casa de Dolor

    Diane:
    When the time comes you will be the Realtor I will be talking to. Don’t get me wrong, I am a housing bear; a twelve-foot Kodiak with a bad attitude. However, your hard work, great attitude and honesty make you unique in this market. More later.

    Thank you for your blog.

  5. Lindie

    Let us mark the day and time. July 4, 2007, at 9:48 am. Derrick says goodbye to the blog because he has had enough of the negativity. As he links to the chart showing the stock of Hovnanian Homebuilders going into the toilet. Derrick always was a guy who refused to let the facts interfere with his housing market analysis.

    So Diane does this mean there won’t be any charts and graphs from your broker this month? No quotes from an “economist” at a title company telling us the bottom has been hit and prices are heading back up any day now? No bong hits from the Leslie Appleton Young Perpetual Kool-Aid Machine?

  6. Diane Cohn

    My dearest Lindie, I wouldn’t dream of depriving you of the material that you so love to rip, shred and gnaw on. As I stated in a previous thread, when the broker prints the next round of charts, I will post them. What will the numbers show? We’ll find out.

    To everyone else, I am bummed to see Derrick go. It takes a lot of guts to say anything positive on this blog because the grizzled cynics are out there, waiting to dine on our tender flesh. Sure, Derrick’s comments were fraught with typos (no doubt because he was texting at light speed on his Pocket PC… I bet he’s 22, one of the newly-minted google-riche who cashed out his stock options, moved here, paid out a tiny percentage of his overall net worth for a nice little place in Spanish Springs and now sits around managing his investments all day in between snowboard runs), but it was nice to have someone else out there looking at the positives.

    But what about the negativity on this blog? (And yes, I know that Derrick contributed more than his fair share to some of the flame-fests that erupted, and no, Guy and I did not make him up, although it’s a fabulous idea… why didn’t we think of that?) I’ve had people email me privately stating that they no longer read the comments because they’ve gone downhill, which makes me wonder if I need to create an editorial policy.

    So far I’ve been easygoing on comments, leaning toward a philosophy of free speech. I mean, if somebody takes the time to construct a post on topic, even if I disagree or it may be a little offensive, it still adds to the conversation, yes?

    And truly, some of the comments you all come up with are absolutely brilliant. Others are near worthless but for the color they add. In the end, I’m not sure what to do at this point… what would you do?

  7. Diane Cohn

    Smarten, the market rating and price trend scales are determined by subjective feel.

    What happens is that I pull data every month using the same template to create my report. When I replace last month’s data with the current month’s, I notice changes and call them out. Sometimes absorption rates improve, or days on the market go longer, or average prices change. If a change is significant, I call it out. The month-to-month report is a great way for me to keep tabs on the market in the various price ranges.

    Part of the posting process on Realty Times is filling out a little survey regarding market rating and price trend, which are opinions based on the results of my own market analysis.

    Unfortunately I haven’t developed an accurate model for predicting the bottom of the market (after x months at y you have z, the bottom). I do watch closely looking for patterns, but at this point I should really stop trying to call the bottom because as others have said, we won’t know until we’ve already passed it.

    My job is to see the market for what it is and help my clients who choose to buy or sell in this climate get the very best deal possible.

  8. Reno Ignoramus

    What do you mean by negativity?

    Is it negative to comment that less than 9 houses out of 100 are selling every month?

    Is it negative to comment that there are years of inventory in the market?

    Is it negative to comment that price per sq. ft. is dropping in every market segment?

    Is it negative to comment about actual situations, regarding actual houses in the market, as GreenNV/Jaded so accurately does?

    I hope that’s not what you mean. Because that is the reality of the market. If you are thinking about editing out accurate factual data, and comments based upon that data, just beacuse it does not make the market look so good, you will have lost everything you have accomplished with this blog over the past 18 months. You think you are losing readers now? Turn this blog into yet just another realtor spinjive shill site and watch your readers go. This blog stands out for its refreshing honesty. Don’t forsake that.

    Yes some comments are sarcastic. Some are extrememly insightful. Some are pretty worthless. Sort of like life in general. I think we can all sort through it all, take what is valuable, and leave the rest.

  9. MikeZ

    RE: “I bet he’s 22, one of the newly-minted google-riche”

    Judging by the My Space page I stumbled across many months ago, which seems to have been taken down or set private, you got the age right; nothing else.

  10. Mike Van H

    Haha I hope I am not one of the useless commenters out there on this blog that doesn’t contribute to anything.
    I wouldn’t change anything about your editorial policy Diane, but if you feel things get out of control sometimes, perhaps you can make a policy that no personal flames or attacks should be tolerated. For example, a while back Lindie, Bantering Bear and Reno Ignoramous completely trashed downtown Reno, saying walking around at night will get you burglarized etc. Those to me, are acceptable comments, because that’s their opinion about a topic we’re discussing. It actually opened up a great debate about downtown Reno and its weaknesses. It even inspired me to post a topic about the challenges of downtown. But, when everyone attacked Derrick when he explained his personal real estate endeavors, I really felt bad for the guy. Attacks from everything that he is made up to that he is full of sh*t to that he’s some rich millionaire with nothing better to do. Is that REALLY necessary? Especially when the original topic to that thread was median housing prices? Waaaay off topic and way unecessary. Yes, I know at times he was asking for it, but still that’s when we have to be adults and avoid the temptation. Just my two cents.

  11. BanteringBear

    I’m not even the least bit surprised that sales are off 28% YOY as compared to last June. If there were a 60% decline it still wouldn’t surprise me. Prices remain at levels unaffordable for the general public. Until we get back to affordability, the market will continue to deteriorate. The current situation is nothing more than a transition from a speculative mania (Ponzi scheme anyone?), to a traditional market.

    I took a drive up to Lake Davis (Plumas County, CA) yesterday. I don’t usually frequent that lake, but noticed something remarkable along the way. After taking the turn from highway 70 onto Grizzly Rd. (I think that’s the name), I was met with a barrage of for sale signs. It appeared as if over 75% of all homes on that one road were for sale. Seriously, it was nearly every home. I decided to count them on the way back. There were 28 for sale signs. That is an extraordinary number of properties for sale for just one street. Unbelievable.

  12. Perry

    I have to agree with some other posters that the tone of this board can be negative which is why I don’t really post that much either. When I first found her site I was excited because I thought it would be a place to exchange opinions and ideas about the Reno real estate market.

    It is not negative to discuss the reality of the current market. It’s not negative to post the true facts that paint a dismal picture of Reno Real Estate. Numbers don’t lie, they are what they are. What is negative is the gloating and arrogance that comes along with it, almost a sense of glee. It’s the superior attitude and contempt towards those who made money and now perhaps are going to loose it. It’s the attacking of anyone that holds an opinion that differs from your own.

    The Internet is a great tool that allows us to come together to share a common interest. The anonymity however, allows people who would otherwise be civil to act in a manner that is anything but. If anyone holds a positive or even slightly upbeat opinion regarding real estate they would be rightly cautioned before posting here because you will soon be reviled for your point of view.

    To Diane and Guy thank you for your work here. I’m not out to canonize you or anything, this blog is after all a marketing tool. To your credit, it’s been an honest one. You post information allowing people to draw their own conclusions.

  13. NAS

    BB: Your comment about the high volume of For Sale signage in one area caught my eye. Down my way (So. CA) there is a resort area, sort of a mini-Tahoe, called Lake Arrowhead. For years, the realtors have agreed not to post any signage. When you drive through the neighborhoods, nary a sign, almost eerie. Once in awhile one may be spotted, but that is the exception. The area has/or did have a large percentage of secondary homes with high turnover. Hence, if signs were posted, I think it would look like streets lined with white picket fences.

    I’m not sure what works best: Hanging it all out or forcing potential buyers to dig through flyers, newspapers and maybe walking into an office. As a buyer, I think I’d prefer “show me what ya’ got” and not play games.

  14. Allen Murray

    I agree with Perry’s comment above. I read this blog almost daily and do not post much since I don’t feel like getting into a negative debate with some of the more active posters on this board. I still cannot understand why some here seem to have a sense of glee when pointing out the state of the declining local market. Don’t get me wrong, I am impressed by the amount of research that goes into these quality posts and wish I had as much free time to do such research. On the other hand, I think you could ask any local supermarket bag boy whether or not local RE prices are going up or down and he would answer correctly. Can we quit beating a dead horse? Guy’s recent post on the short sale process was interesting. I was actually negotiating a purchase from a seller that was upside down that some might find interesting, but decided not to post since it didn’t fit the “theme” of this board. How about more posts like that, or if not, rename the blog “If you bought Reno real estate from 2005 to present, you are an Idiot”

  16. Lindie

    Careful 2sleepy, careful. There are some people here who don’t like it when you make reference to houses that have lost 55% of their value since 2005. It’s not “optmistic” enough. Makes it hard to keep up the denial.

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