A 31% increase in the month-over-month number of homes sold in April stands out as the big news this month. I, as well as many agents in my office, can attest to the increase in client activity lately. These numbers seem to support our perception.
The median sold price also increased for April, with a noteworthy gain 3.5% over March. This market has not seen a month-over-month increase of that magnitude for quite some time.
All good news, however, on the flip side the inventory also increased. With more than 300 homes added to the MLS in April (a 7.2% increase over March), we now have 4,456 homes for sale.
Here are the latest numbers:
| Month and Year | # Homes For Sale | Median Asking $ | # Homes Sold | Median Sold $ |
|---|---|---|---|---|
|
Apr 2008 |
4,456 | $299,000 | 316 | $269,000 |
|
Mar 2008 |
4,155 | $299,900 | 241 | $260,000 |
| Feb 2008 | 4,024 | $299,925 | 221 | $271,632 |
|
Jan 2008 |
4,097 | $307,000 | 191 | $268,000 |
|
Dec 2007 |
4,144 | $315,000 | 249 | $275,000 |
|
Nov 2007 |
4,511 | $318,900 | 231 | $286,000 |
| Oct 2007 | 4,878 | $320,000 | 267 | $287,000 |
| Sept 2007 | 5,023 | $325,000 | 270 | $285,000 |
| Aug 2007 | 5,474 | $329,484 | 348 | $295,000 |
| July 2007 | 5,422 | $335,000 | 351 | $295,995 |
| June 2007 | 5,382 | $339,000 | 378 | $300,000 |
| May 2007 | 5,189 | $339,995 | 427 | $296,000 |
| April 2007 | 4,942 | $344,450 | 393 | $295,000 |
| Mar 2007 | 4,685 | $342,500 | 391 | $297,000 |
| Feb 2007 | 4,427 | $340,000 | 334 | $285,000 |
| Jan 2007 | 4,708 | $343,700 | 336 | $279,950 |
| Dec 2006 | 4,566 | $345,000 | 347 | $293,995 |
| Nov 2006 | 5,199 | $349,200 | 330 | $300,000 |
| Oct 2006 | 5,654 | $349,900 | 422 | $300,000 |
| Sept 2006 | 5,967 | $354,000 | 396 | $301,000 |
| Aug 2006 | 6,256 | $356,200 | 393 | $310,000 |
| July 2006 | 6,125 | $360,000 | 416 | $324,750 |
| June 2006 | 5,949 | $364,801 | 473 | $329,000 |
| May 2006 | 5,407 | $369,900 | 432 | $318,750 |
| April 2006 | 4,626 | $369,000 | 415 | $317,000 |
| Mar 2006 | 4,295 | $369,900 | 437 | $329,000 |
| Feb 2006 | 3,899 | $374,900 | 326 | $315,250 |
| Jan 2006 | 4,245 | $370,000 | 325 | $325,000 |
| Dec 2005 | 4,040 | $375,000 | 385 | $319,900 |
| Nov 2005 | 4,432 | $376,448 | 443 | $331,000 |
| Oct 2005 | 4,694 | $376,700 | 559 | $335,000 |
| Sept 2005 | 4,567 | $380,000 | 603 | $336,500 |
| Aug 2005 | 4,370 | $385,700 | 695 | $334,950 |
| July 2005 | 3,860 | $387,000 | 677 | $345,000 |
| June 2005 | 3,411 | $384,500 | 607 | $335,000 |
| May 2005 | 3,113 | $375,000 | 717 | $326,000 |
| April 2005 | 2,808 | $365,000 | 650 | $315,000 |
| Mar 2005 | 2,611 | $350,000 | 660 | $309,000 |
| Feb 2005 | 2,198 | $348,250 | 411 | $301,000 |
| Jan 2005 | 2,078 | $349,000 | 381 | $295,000 |
Note: The median table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, NV and Sparks, NV. Residential data includes Site/Stick Built and Condo/Townhouse. Data excludes Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – May 2008.
One of our readers, CBam, graphed the units sold and median price numbers above. See his trend lines by clicking on the charts below. Thanks, CBam.
I really appreciate the Blogger participation I’m seeing here. Another reader just sent a spreadsheet graphing the number of homes sold as a percent of those available for sale (see below). On this chart he also graphed the monthly change. His analysis: “It looks like if May can exceed 8.3% of homes sold, there could be relief in sight. If May [‘s absorption rate] is 5% or lower, probably 6 out of next 8 months will see declining medians.”
Allen Murray
Mike Z, I can appreciate your prediction, but I don’t see it either. Its too early to say we’ve hit bottom but I think the lower end might be there. When do you think we will hit $210/220K?
downtownjunkie
I primarily invest in commercial but did have a couple single family rentals that I sold in 2004. I don’t pretend to know the exact bottom median but wanted to take a best guess for the record.
You, on the other hand, seem to fit the typical flipper spot on. Based on your attack, it seems like you are stuck on your most recent flip.
I apologize again to all for my prior 2 posts. And Derrick-you should check your math buddy.
DERRICK
Wrong downtown junkie, I flipped my fair share of homes during the boom.. its safe to assume I made MORe than a few pennies.. as far as me being stuck in my current home.. Please don’t make me laugh .. I paid cash for the house I live in now more than 5 years ago.
You hardly impress me! heh heh
MikeZ
When do you think we will hit $210/220K?
I think that’s our target range right now, based on what current area incomes can support with conventional financing.
Next year, the target would be higher. Assuming 4% wage growth, 220K/230K in ’09, 230K/240K in ’10.
Allen Murray
I don’t think I quite follow you Mike. Right now we are at $269K median, you say we will hit a $210/220K median. I ask, when do you think we will hit that median? This year?
John Newell
GreenNV,
You are right that the banks/servicers usually won’t discuss loss mitigation strategies until after the loan is in default. Because of this, I would not be surprised to see NODs continue to grow even if NOSs and TDs fall. Based on some feedback I have been receiving, and a training I went to put on by Chase’s loss mitigation folks, it appears some of the servicers are finally getting serious about finding alternatives to foreclosure.
Allen and Others,
As far as the bottom, last year I thought we would have reached it by now. However, despite some optimism over April’s numbers, I do not believe that we are at the bottom now. Given the changing loss mitigation landscape, and the possibility of government intervention, I believe that any prognostication concerning the bottom is suspect until we understand how much such interventions will help (or hurt) the market.
Allen Murray
So John, do I understand correctly, you do not believe that we are at bottom yet, but don’t want to guess as to when we might get there?
I’m not trying to bust anyone’s chops, I enjoy hearing everyone’s opinions on whether or not now is a good time to buy. The tone of this board seems to be changing in that now we are discussing the bottom, and several agree that the lower end bottom is here. Mike Z thinks $210/220K is possible, I don’t see it happening. I think $240K may be possible this winter after the spring/summer surge, but I wouldn’t be surprised if it holds steady this winter also.
Greenspan said yesterday that the worst of the credit crisis is over, the dollar is coming back and gold is getting weaker. I agree its too soon to say, but things are looking up.
Sully
Same article, two paragraphs down:
Greenspan also said U.S. house prices still had a long way to fall and that it was unlikely they would stabilize by year-end, the sources said.
Allen Murray
Thats true Sully…care to make a prediction as to the low median in Reno and when???
John Newell
Allen,
I chose my words with care — I do not “believe” we are at the bottom — but I am the first to admit that I do not know this. History may prove that we are at the bottom now (if we can ever agree as to what “the bottom” means). But based on the types of sales we are seeing (many REOs and lower end properties), the number of TDs that are just now, or will shortly be, on the market, and the overall economic slowdown, I am not confident the worst is over even if congress does provide relief for those pesky sub-primes borrowers.
Sully
OKay – Jan 2009 210-220K. 🙂
My crystal ball has a short in it and not working very well. Also it might help if I was actually looking at median priced houses, to see what is offered at current prices. I have been looking in 400 – 600K range and can see some room for price reductions.
John Newell
In the same spirit of Smarten and Sully predicting “the bottom” in January 2008, I will predict $237k median on October 11, 2008. My reasons are:
1. October 11 is my birthday,
2. I wanted my predicted low median to be lower than the $240k Allen mentions above, and
3. I also wanted to see if Derrick will mock my prognostication of $237k. I have not been mocked by Derrick yet, so I thought it would be fun. 😉
Oh, and if I am wrong, I plan on enjoying my birthday anyway. 🙂
Allen Murray
Haha, it will be interesting. I think Smarten’s prediction was Jan ’09, correct me if I’m wrong. If we agree that the low end has hit bottom, and the mid range is next, this past March at $260K may in fact be the low median. What does my secret admirer Bantering Bear think?? Is the sky still falling?
John Newell
Yeah, I meant January of 2009. I guess typing 2008 has become habit.
DonC
I’m not sure how you guys are guessing when the bottom will come, even when the guess is obviously tongue in cheek. Just curious as to what you tie it to, if anything.
I understand that historical data aren’t always helpful, but FWIW I think Schiller’s data suggests most housing busts consist of two big down years followed by two smaller down years and then five or ten years of bumping along a bottom. Along the way there are of course small ups and downs. If the peak was say January 2006 that would put the bottom some time in January 2010.
John Newell
Don,
Irrational speculation, mainly. Sounds a lot like the boom, huh? 😉
Allen Murray
Good point Don, I also think we will be at the bottom for a while. I consider bottom to be the point where prices cease to decline. This may be the case in the under $300K range now. The mid and upper range has a ways to go perhaps. If you use median sales price as a rough indicator, I think August 2005 was the peak. This August will be 3 years of decline if this April’s numbers turn out to be an anomolie. Obviously, we won’t know until after the fact. I do know that the realtors and lenders that I know are all busier now than they have been in some time. As a possible buyer, I figure if we are near bottom now and think we will be here for a while, now is a great time to buy with inventory is high and rates are low. Will this be true 3 years from now?
MikeZ
don’t think I quite follow you Mike. Right now we are at $269K median, you say we will hit a $210/220K median. I ask, when do you think we will hit that median? This year?
No, Allen, I said I think we will hit a low 200s median. I’m looking to 2010 as the bottom.
Current wages support a median of 210K-220K. Assuming 4% annual wage growth, we’ll be around 230-240K in 2010.
As I’m sure you realize, there are many variables.
If inflation roars (and I think that’s almost unavoidable), that will drive rates up and the median down further.
Was that clear now?
BanteringBear
What’s become exceedingly boring, are the incessant attempts by certain posters, with anchor houses, to goad others into committing to dates in which they believe the housing market will bottom. Nobody knows. But one thing’s for certain; the return to fundamentals.
Housing prices will, once again, represent what local wages afford, with a possible overcorrection due to the severity of the bubble. Again, I won’t be surprised to see the median drop below $200k. Inflation is quite high, and could prevent such a low number, but a return to 1999 prices in inflation adjusted dollars is “in the bag”.
smarten
Allen states that although the under $300K segment of the market has bottomed, the mid and upper range segment has a ways to go.
Just a question.
When did we start tracking the Reno/Sparks SFR market by segment medians? I’m not saying this is a bad idea – it’s just that I find it amusing how some on ths board are dissecting the median by segments in order to support their view the market has bottomed.
Now not only must we define what exactly represents a “bottom;” we must define exactly what represents a “segment” so we can apply our “bottom” test. And then of course, all agents in the marketplace must adhere to the same definitions so we all speak the same language.
I don’t know about you but…
Reno Ignoramus
70 comments ago, I pointed out that the only segment of the market with any signs of life is the under $300K segment. I pointed out that the upper end segment is dying on the vine. Sales over $500K comprised only 8% of all sales last month. Sales over $300K comprised only about 30% of all sales. My point was only to highlight that the only vitality in the market is in the (relatively speaking) cheap seats.
Others created the notion that the much hoped for “bottom” must surely have arrived in the cheap seats, and then, of course, it must surely just be around the corner for the rest of the market. These are the folks who have created the fictional notion that one price segment of the market can have bottomed while other segments have not. Maybe what we will hear next is that prices in the one mile radius east of Virginia Lake have bottomed but prices in the one mile radius south of Meadowwood Mall have not. Listening to this is akin to listening to the political spin doctors on TV hype their respective candidates. You wonder how they can say it with a straight face. These folks offer nothing to support their view of the bottom having arrived in the cheap seats other than their opinion that the cheap seats must surely now be cheap enough and can’t get any more cheap, and their obvious personal hope that the market is done deteriorating.
Allen Murray
Smarten makes a good point, there are many definitions of “bottom”. The general rule on this blog seems to have been median sales price. If we define the peak as summer 2005, that’s when the median sales price was the highest. If we say that most buyers in Reno are in the under $300k range, then perhaps we have hit bottom for the majority of buyers in Reno and the prices in that segment will not decline any further. Some people look at inventory, some looks at sales volume, all should be considered.
And BB thanks for finally making a prediction along with your usual badmouthing of other posters, at least you finally have something to say for a change. And for the record, I would be very surprised if median falls below $200k.
SmartMoney
I think a lot of people will be surprised just how low prices get. But, if you look at history, that’s ALWAYS the case when a bubble collapses. When the NASDAQ fell from 5,000 to 3,000 we saw similar talk, it then rallied and then collapsed to 1,200. Well below fair value. If this bubble does what every bubble in history has done, then house prices will collapse to well below fair value at the end. Unless it’s “different” this time???
ClaudeR
I believe you are quite right SmartMoney. Every bubble collapse has been marked by people calling the bottom all the way down. There appears to be some posters here whose personal financial interests show through. These are the people who tell us the bottom has been reached in the lower price ranges and then propphesy that the bottom will spread to other price segments. Sort of like locusts or something.
I fail to understand how we can conclude the “bottom has been reached in the below $300K price segment”. What supports that? Is it no more than just a personal opinion that prices in that segment can’t fall any more? What about the hundreds of REO properties that are about to hit this segment of the market? Do we just ignore that?
BanteringBear
Allen Murray, like hordes of other industry shills, is employing a tactic known as “fuzzy math”. It’s quite common in times of desperation. But there is no such thing as a “new paradigm” when it comes to real estate. Prices will simply revert to the mean which, unfortunately for Allen, is not close at hand.
PS Allen:
If you indeed attended college, which I will take your word for, why is your reading comprehension, and memory in general, so poor? I didn’t “finally” make a prediction. I have been sharing these same sentiments for well over a year. In fact, that’s why you started your shoot the messenger attack posts. Remember Allen? Surely a well-educated nail pounder like yourself wouldn’t forget now, would you?
DonC
SmartMoney – Funny you should mention Nasdaq. We were just talking about how in fall of 2000 everyone in tech was so convinced things would get back to the highs at the beginning of the year in six months. It’s now 2008 and we’re not even close. So yes when the bubble bursts things can take a while to get sorted.
However, I’m not sure a housing bubble is like a stock market bubble, assuming of course that the monetary system doesn’t melt down. People need to buy houses. Seems like prices over time will be related to population, interest rates, and available lots.(One thing I found interesting in the Shiller data is that the cost of construction has been very stable over time).
Does anyone know the historical relationship between median income and the median house price in the Reno area?
MikeZ
Does anyone know the historical relationship between median income and the median house price in the Reno area?
That’s the critical question, isn’t it?
Absent the hordes of rich, migrating Californians, who will buy the homes in Reno? People who live and work here, of course.
Here’s some historical data for Reno: http://tinyurl.com/54kct2
It’s easy to see the various pre-bubble trend lines and, if you believe in reversions to mean, it’s also easy to see where we’re headed.
BanteringBear
Historically speaking, house prices in Reno run around 3.5 times household income. Household income is roughly $45k per year, so that would put median prices at $157.5k.
Just a little glimpse of what’s to come. And this assumes that median income doesn’t decline. With the greater depressions scenario, there’s no telling how low prices could go. Always remember, there are cities in the country where houses are free. Yes, free.
MikeZ
Historically speaking, house prices in Reno run around 3.5 times household income. Household income is roughly $45k per year, so that would put median prices at $157.5k.
My numbers are: median *family* income ~$50K, 3.5 times median income = -$175K. 20% down gives us a median home price ~$218K.
That’s what current median family income would seem to support.
DonC
BB and MikeZ, thanks for the information. Very helpful. Since I do believe in reversion to the mean, at least for housing, I guess we have a way to go. (Of course there are the black swans so you never know).
BB, I’m not big on the deperssion scenario. I think you see a depression when you have a financial meltdown which I don’t see happening. Further out, I’d hope we don’t see a repeat of the strange result of the last eight years of having median incomes fall during an expansion.
just bob...
Why isn’t anybody talking about material costs? I don’t see concrete comming down that much as our partner in economic crime to the west is a huge user of building materials.
and..
Unless we are headed for a depression I don’t see housing values strictly derived from median household incomes. There is a reason why retirees from California come here-it’s a nice place to live and offers great tax advantages. If everyone could afford a home, why rent.
I am calling 250K as the lowest we go.
MikeZ
Why isn’t anybody talking about material costs?
Between the 15 mos. of standing inventory and the owners waiting for better times to list, the next 18-24 mos, maybe more, worth of houses are already built.
At this point, the market doesn’t care what they cost to build, only what the buyers can afford.
BanteringBear
MikeZ:
While I generally agree with all of your posts, I think you’re miscalculating price to income. The historical price:income ratio is defined as “The median single family home sale price divided by the median family income for the metro area.” The assumption of 20% down with a 30 year fixed is already built into that price.
As far as household income, the $45k number is the best I could find, but who trusts government statistics anyway?
DonC:
I’m not a fan of the greater depression scenario either, but things are going from bad to worse, economically speaking. While you don’t see a financial meltdown happening, I am watching it in real time. I shudder to think of how many institutions, both large and small, are insolvent.
Allen Murray
I have a feeling Bantering Bear has been shuddering since he left the womb……..
smarten
Allen, as a follow up to your previous question as to “how close are 15 year rates to [my] 4.5[%] target?”
Apparently right after my last post to you on this subject, mortgage rates took a demonstrable dip. On page 2C of today’s RGJ there’s an advertisement by Eldorado Savings Bank offering conforming 10-year fixed 4.75% primary OR vacation home purchase or refinance loans! Now the advertised APR is 5.29% which tells me there are probably a couple of percent of loan origination fees involved; and these are for 10 instead of the 15 years I targeted; but 4.75% is getting pretty, pretty close.
For those reading this blog who may be interested, 80% minimum LTVs required for purchases; 75% for refis.
Allen Murray
Good info, thanks Smarten. Are you getting serious about buying now if the right deal comes along?
smarten
Allen, I think I stated in a previous post I am seriously considering doing something within the next six months or so.
We’ve contacted a real estate loan broker who’s getting us pre-qualified for the type of loan product we can afford and will agree to [we’re not going to chase over priced jumbo/arm products just to finance a purchase]. Like most people, we have our own particular problems to deal with. Since we’re looking at properties well in excess of the conforming loan maximum [$417K]; and we don’t have mutliple hundreds of thousands of dollars to place down; and whatever we buy is likely to become a project; we need to be creative.
Meanwhile we have located a property we’re interested in and are currently doing due diligence. Don’t know how things are going to work out, but this may all be for naught given prices are still too high and I doubt the seller is going to come down as low as we think he needs to – but at least we’ve exited the renter freeway.
Will keep you abreast.
DonC
Just Bob – I mentioned that Shiller’s data indicate housing construction costs are very stable over time. I found that surprising. Perhaps new techniques?
In any event, at the moment construction costs should be going down. Labor shortages should ease and material costs should likewise be going down. This from a recent article in This Old House: “Between January 2007 and January 2008, framing lumber fell 15.6 percent, insulation 3.6 percent, and wallboard a whopping 22 percent.”
BB – I just saw tihs Krugman oped. Timely considering the discussion. He even mentions Steve Forbes in 2004 claiming that oil at $70 is a bubble whose bursting will make the tech crash “look like a picnic.” (I guess Steve is going to successfully predict 36 out of the last one oil bubbles). Go Steve!
http://www.nytimes.com/2008/05/12/opinion/12krugman.html?hp
BanteringBear
Thanks for the link DonC. I’ll agree to disagree with Krug.
DERRICK
median income info you are getting is 6 years old.. factor the 4% wage growth you mentioned mike and its quite different..
the closest thing I can find to the median is 45.5k which is a 6 year old survey… now lets factor in 4% wage growth on top of that, which gives us a median of about 55K
55k x 3.5 = 192k
20% down= gives a median price of 230k.. but as we ALL know.. not everyone reports every penny they make on taxes,, if anything they report less than what they made.. ]
If your going to say what wages can support median price wise .. I say its minimum 240k and higher
Bill
Astounding! Month over month increases. Wow! Reno continues it trend. Or, does it? Have we forgotten to look at same sells year over year? Asking prices are 86.8% of April 2007 a decrease of 13.2% year over year. Nationally, the 1st quarter shows a decline of 7.7% in prices…. That’s 30% annualized decline nationally, my realtor friends! Reno? People here will wake up to the declines as foreclosures continue to increase (as they are doing), and California people stop coming in droves with a handful of money; as their houses there in many areas are now priced below Reno. So, to sell their house there and buy one here for half what they sold theirs there for, is history. I think most of your blog here is supported by the overly optimistic exuberant realty community. Not too accurate in my opinion.
SkrapGuy
“overly optimistic exuberant realty community” ??
Uh, Bill, you must be new here. I suggest you spend some time and read through the recent and archived posts of Reno Ignoramus, Bantering Bear, MikeZ, Lindie (although she has not posted in quite a while)and myself. Smarten and GreenNV have also predicted falling prices. Many others offer quite accurate commentary about the market here.
Perhaps you got this blog confused with Chase Nation, which does fit your description. This blog has consistently been anything but the “exuberant realty community”. In fact, Bill, some of the “hostile pessimists” on this blog have been uncanny in their accurate predictions of this market meltdown. Anybody who has read here since this blog’s inception and paid attention has probably saved themselves hundreds of thousands of dollars.
BanteringBear
Normally I wouldn’t respond to the stucco oracle, but I have to correct Derrick’s post as I don’t want new readers to make the mistake of believing his inaccuracies.
Wages HAVE NOT increased with the rate of inflation over the course of the past 8 years, but have been stagnant, and even declining. This has been widely reported and well documented by the media, etc., and also talked about in great length on this blog and others.
Furthermore, and for the last time, when talking about historical price:income ratio, it is defined as “The median single family home sale price divided by the median family income for the metro area.”
It’s that simple. It doesn’t mean that you take the number, then add 20% to it. The 20% down with a 30 year fixed is assumed.