Calls, showings and open escrows seem to be way up in our office these last two months. Something JoAnn said to me about the popularity of her lower end listings, plus what I’ve been seeing the numbers lately prompted me to take a look at neighborhoods around town by different price bands to better understand what’s selling and where. Here’s what I found:
| SOLD PROPERTIES RENO-SPARKS: Jan 1, 2008 – June 22, 2008 | ||||||
| # Listed | # Sold | Avg Sold $ | Avg DOM | Sale/List | Still Active | |
| Northwest | ||||||
| 0 – $200K | 63 | 31 | $177,838 | 126 | 91.36% | 60 |
| $200K – $300K | 274 | 114 | $254,788 | 137 | 95.84% | 216 |
| $300K – $500K | 206 | 74 | $352,641 | 190 | 94.84% | 202 |
| $500K + | 102 | 20 | $763,050 | 166 | 94.94% | 134 |
| Southwest | ||||||
| 0 – $200K | 42 | 15 | $138,850 | 219 | 91.17% | 51 |
| $200K – $300K | 115 | 56 | $269,615 | 149 | 93.43% | 113 |
| $300K – $500K | 258 | 116 | $378,389 | 179 | 95.12% | 261 |
| $500K + | 464 | 107 | $959,117 | 209 | 94.32% | 617 |
| North Valleys | ||||||
| 0 – $200K | 586 | 182 | $149,193 | 119 | 95.66% | 484 |
| $200K – $300K | 439 | 148 | $237,173 | 132 | 97.98% | 383 |
| $300K – $500K | 128 | 26 | $337,673 | 172 | 94.67% | 128 |
| $500K + | 11 | 0 | $0 | 0 | 0.00% | 19 |
| Sparks | ||||||
| 0 – $200K | 337 | 83 | $165,562 | 118 | 95.80% | 295 |
| $200K – $300K | 560 | 250 | $248,220 | 121 | 96.89% | 428 |
| $300K – $500K | 294 | 85 | $373,542 | 150 | 95.64% | 267 |
| $500K + | 117 | 14 | $636,050 | 136 | 96.67% | 123 |
| Southeast | ||||||
| 0 – $200K | 188 | 55 | $137,117 | 116 | 94.65% | 165 |
| $200K – $300K | 251 | 106 | $254,284 | 143 | 95.99% | 193 |
| $300K – $500K | 269 | 87 | $370,642 | 140 | 95.84% | 236 |
| $500K + | 81 | 6 | $591,916 | 149 | 96.51% | 86 |
A few notes: Northwest included MLS areas 120,121, 122, 124 (roughly north of I-80 from the University to Verdi). Southwest included MLS areas 123, 160, 161, 163, 164, 165, 171 (roughly I-80 south to St James Village and west of 395 to Belli Ranch). North Valleys included MLS areas 119, 130, 131, 132, 133, 134, 135, 136, 137, 138 (roughly north of McCarran up 395 including Sun Valley, Cold Springs and up to Rancho Haven). Sparks included MLS areas 180, 181, 182, 183, 184, 185, 186, 187 (roughly all of Sparks from I-80 north to Palomino Valley and east to Patrick). Southeast included MLS areas 115, 140, 141, 142, 143, 173, 174, 176 (roughly I-80 south and east of 395 to Pleasant Valley including the Virginia Highlands). Number listed represents number of new listings entered between January 1, 2008 and June 22, 2008. Number sold represents closings within that same time period. Average sold price is for homes actually sold during that period, while DOM equals days on the market for homes that actually sold during the same period. Sale to list price ratio represents last list price offered and does not account for prior price reductions. Still active is just that… homes still offered for sale on the MLS in each price category/neighborhood as of June 22, 2008.
What’s most interesting to me is to see the distribution of activity given the price points in the various neighborhoods. While in most areas the majority of activity is in the under $300K price range, in the Southwest it’s $300K plus. It’s also interesting to note which areas are beating down inventory levels and which areas are not. Just a little reminder that there’s opportunity in every market, good, bad or ugly.
MikeZ
Do those sales figures include or exclude sales back to the lien holders?
Diane Cohn
MikeZ, these are MLS sales only and don’t include anything auctioned on the courthouse steps to the best of my knowledge. However I’m sure they include a great deal of bank-owned properties.
Reno Ignoramus
Thanks for the numbers Diane. I note that almost 25% of the entire market is now listed below $200K. Almost 55% of the entire market is listed below $300K. Only about 22% of the market is even listed above $500K. I note that you don’t even supply separate data anymore for the $ 1 million and over market. There is no point, as that segment is rapidly becoming an irrelevancy.
Marla
RI, if 55% of the market is listed below $300,000, and 22% is listed above $500,000, then about 23% of the market must be listed between $300,000 and $500,000. I find it equally as interesting that now about 78% of all sellers are asking less than $500,000. Not 1 seller in 4 is even ASKING $500,000 now.
I agree that it makes most sense to focus on active listings, as that is the best indicator of what is to come.
Robinson
Wow almost 80% of the market is now listed below $500K. It seems like it was only a few short years ago that a $30K/yr. warehouse worker with a fog up a mirror loan could buy a $500K house with no money in the bank, a crappy FICO, and no down payment.
Come to think of it…….it was only a short while ago a $30K/ yr. warehouse guy could do that….
smarten
Thanks Diane –
This data reveals that the ONLY real part of Reno/Sparks where properties are selling >$500K is the Southwest. True, according to your numbers 3/month have sold in the Northwest and 2/month have sold in Sparks [compared to nearly 18/month in the Southwest] but I think these are such diminimus numbers that they can be disregarded [at least when it comes to examining the >$500K segment of the market].
In future reports I wish you’d post median rather than average sales prices. At an average sales price of $959K, it gives the appearance there’s still a healthy segment of the market selling >$1M.
Also, I’m confused by your “still active” numbers. Again concentrating on just the Southwest, 464 listings of which 107 have sold YTD, yet 617 of them are still active? Can you please clarify?
Sully
DOM is 209 days, shy of 7 months. Control data covers 174 days, full month behind. Sounds like none of the new listings have sold and all the sales were prior to Jan 1.
Sully
I meant listings that were listed prior to Jan 1.
smarten
Sully –
Unless the way the Reno/Sparks MLS calculates DOMs has changed, we’ve observed before that the data is corrupt. Agents will relist simply to give stale listings a bump, and then there’s always the effect of musical [agent] chairs which start the DOM time period all over again. Furthermore, by definition DOMs ONLY apply to properties that actually sell. What about the DOMs for the vast majority that don’t?
Same problem with sales prices as a % of listing prices. The system only calculates a % based upon the LAST [in a series of] reduced listing prices. What about as a % of the initial listing price?
Now throw out average sales price [which IMO is not an accurate barometer of sales prices] and what really are we left with other than raw numbers for listings/sales?
Don Cooper
The observation about the distribution of activity seems to have missed the background probability. Most of the houses in the SW are listed at >300,000, so it shouldn’t be a shock that the majority of the activity is in that range. Basically it’s an area of higher priced homes.
The bias is in favor of the lower priced homes, and the strength of that bias doesn’t seem all that different than in other areas. In the SW the >500K homes make up 53% of the listings but only 36% of the sales whereas the 200K – 300K homes make up 13% of the listings and 19% of the sales. That seems consistent with the SE where the 300K – 500K homes make up 34% of the listings and 35% of the sales and homes listed at >500K make up 10% of the listings and 2.4% of the sales.
The information is interesting but the prices just seem to reflect the fact that some areas have more expensive houses than others, not that some areas are “better” than others. But then again I may be missing somehthing obvious …
SkrapGuy
I agree with Smarten that there is not really all that much insightful in this data. We all know that the sales/list percentage is of dubious value since it does not reflect the sales/original list percentage which would be far more insightful. The average price is less helpful than median because of the likely skew resulting from extreme sales at the tails. And everybody knows, without having to make reference to a chart, that the most expensive houses are located in the SW.
I also agree with RI that perhaps the most useful info to be had from this data is that based upon current active listings, we can observe that the under $200K segment is expanding and becoming a larger piece of the entire market.
downtownjunkie
I think the rules have changed as far as “re-listing” properties to increase visibility. They don’t let you do that anymore. Diane, Guy, any help?
first time buyer...waiting
I think the SW is a very desirable location and people are willing to pay to live in Saddlehorn, Arrowcreek, St James and Galena. The schools are good, easy access to Tahoe/Mt.Rose, etc…
Most of the people that state they are looking to move from California also seem to be looking in this area.
Therefore I don’t see that much change in the prices recently and I know people are still buying.
3 Wombats
For me the interesting data is the percentage below the last listing that the property is selling for. It doesn’t really matter where it started out, just where it ends up and on average how much below list price sellers are willing to drop.
first time buyer...waiting
I still see the SW, especially Saddlehorn, Arrowcreek, St James and Galena as very desirable to people, especially people moving in from CA. There have not been huge price drops and they still seem to sell. Custom homes sometimes for 250/sq ft and semi-custom for 200.
It’s close to Tahoe/Mt Rose and has great schools.
Reby
I’m with Smarten and SkrapGuy. The data supplied suggests that houses are selling for around 95% of listing. That erroneously suggests that sellers are getting 95% of what they are asking. When in reality many sellers are getting no where near 95% of their original asking price. The market is chuck full of listings that started out at, for example, $525K, then went to $499K, then went to $474K, then went to $450K, then went to $425K, and then finally for $405K. The realtor spin is that the house sold for 95% of asking. When in fact it sold for 77% of original asking. To me, knowing this info would be very helpful. If you have access to the MLS, you can find this info out for individual houses, but it is not reported in what is made available for public consumption.
3 Wombats
Reby, Yes, you are correct, the list/sale price does not reflect the optimistic price originally asked, but it does let me, as a buyer, know that any offer I make could be at least 10% under whatever the current price is. There was a time when we wouldn’t dare offer below asking if we really wanted the house.
A house originally listed for $525K and then sold for $405K just shows how out of touch the seller/realtor is with the current market. So perhaps it is a good indicator of how much market correction is still to come.
billddrummer
Great information, and a great site.
I posted this link to the Housing Tracker on Seeking Alpha, a stock and economic research site. One of their editors, Judy Weil, collects real estate information from all over the country to track trends in housing, mortgages, and builder activity, among other things.
In the discussion about sales/listed price, another statistic that’s overlooked is on foreclosed properties, the discount applied if you look at the last price a home sold for vs. the price at a foreclosure sale. I’m familiar with the Sparks Suburban/Spanish Springs areas, and if you go back in history on some of the foreclosed listings, you see discounts of as much as 30% from the previous sale price. Case in point: 5454 Desert Peach Drive, foreclosed 4/20/07 for $278,100, offered at $232,500. Sold 4/15/05 for $347,000. Current offering price is a 33% discount to the previously sold price.
When you gauge the impact of these deep discounts on non-foreclosed properties in the same neighborhoods, the effect on comps can be devastating. And it points to a virtual halt to both move-up buying and refinancing. Which tends to explain the reason the $300,000-$500,000 price band is so soft. I get 17 months of inventory in this price band, if you apply YTD sales to total listings. Now it’s true that the inventory in the Southwest is less, and may even be balanced at 6-9 months, but the overall outlook still seems weak to me.
Feel free to assault my logic here. I’m used to it.
Reno Ignoramus
billdrummer, you are quite right. I have posted previously that since about 75% of all “real” sellers now, those who are actually closing deals and not clinging to some delusional dream on wishing price, are either short sellers or banks, that 75% of real sellers are out of the market and not “move-up” buyers. And, it’s probably even a bit higher than that because no doubt some sellers may not be seeking a short sale, but are still losing money, like our hostess Diane.
The impact of thousands of foreclosures in the local market cannot be anything other than devastating to people trying to sell their house, and values in general.
And now, as we approach the hot season, I am beginning to see more and more visual reminders of the foreclosure problem here in town. The dead lawn, the dented and neglected for sale sign, and the lockbox on the front door is becoming a more and more common sight.
Sully
billddrummer-I, for one, agree with you.
Here’s an article from LA Times:
http://www.latimes.com/business/la-fi-homes17-2008jun17,0,2766175.story
….and then there’s this listing that came out yesterday in old south suburban:
80002730 – a 1966 vintage on 2 acres for $899,000; BTW zillows has this peaked at $823,000.
No delusions here! 🙂
billddrummer
Sully,
Great link, and it points to more pain to come.
What about people who live in the North Valleys or northern Spanish Springs here and commute to the south end of town (Double Diamond, South Meadows) to work? I know a woman who lives in Palimino Valley and commutes to the Sierra Power building every day. She drives (or did drive) a full-sized Toyota pickup. I don’t know whether she’s traded her truck in, but I do know that if she still has it, she spends over $100 a week on gas just for the commute. And she has three teenagers who have to be shuttled here, there and everywhere. So her fuel bill might be as much as $750 a month, compared to half that when she moved out there.
Gas prices will definitely impact values in the outlying areas of Reno.
Diane Cohn
Smarten, sorry about presenting averages versus medians, but I’m working within a statistical template which only provides averages. Still active means all current standing inventory, including the 464 added over the first half of the year in your example.
Downtownjunkie, yes, as of September 1, 2007, the MLS rules changed on pulling and relisting homes to minimize gaming the DOM number, so I think these are a little more accurate now.
billddrummer
To Sully and Reno Ignoramus,
Thanks for your support.
As an aside, in southern CA, prices have come down enough that buyers are starting to appear again. But there, starter homes cost $300,000. They’re experiencing a recovery of sorts in the ‘lower end’ for that region, similar to the things that are happening here with entry-level housing. Trouble is, that activity hasn’t yet expanded the number of move-up buyers. It may be that if you sell a house and get cash at closing, people are looking long and hard before committing to another home purchase unless driven by necessity–divorce, job change, etc.
Another corollary is that apartment rental rates in CA are starting to creep upward, in response to strong demand from displaced homeowners who need a place to live.
But I still think it’s too early to call a bottom to the CA housing market.
smarten
Maybe a bit off topic, but it does relate to the future of interest rates and our stucco oracle’s interest in oil futures.
I’m in a couple of oil and natural gas limited partnerships. These partnerships actually physically drill for oil and natural gas in Texas, Pennsylvania and New Mexico so management knows what it’s talking about when it comes to the subject. In this month’s distribution report to partners they state as follows:
“The Federal Reserve is finally taking steps to bolster the very weak dollar by announcing that further drops in interest rates will CEASE. There are signs that record high oil prices are fueling inflation. Interest rates will ultimately have to be INCREASED to relieve oil price pressure. Conversely, higher interest rates will also have the undesired effect of slowing the economy.”
Higher interest rates, inflation no longer in denial and a slowing economy do not bode well for a residential real estate market struggling to make a Phoenix recovery. To me, this is where the action is!
Marla
“Higher interest rates, inflation no longer in denial and a slowing economy do not bode well for a residential real estate market strugglig to make a phoenix recovery.”
Interesting quote from a guy who says the market bottom arrives in 188 days.
BanteringBear
“Interesting quote from a guy who says the market bottom arrives in 188 days.”
Yes, it certainly is isn’t it? I do wonder how such contradictions are reconciled in ones mind.
Don Cooper
While it’s been true for some time that the Fed easing would end I wouldn’t overdo the inflation risk. One, while non-core inflation is up substantially, core inflation is not. Second, we haven’t seen any wage inflation at all, and without that you won’t get the dreaded price-wage spiral.
I’m also not sure if what the Fed does on interest rates will have a dramatic impact on inflation this time round. Modest increases may not affect things, including mortgage rates, that much. Additionally, inflation this time is a global phenomenom, not a local one, so what any one country does won’t have that great an impact. The European Central Bank has signaled it is going to increase rates so we’ll see how that works out.
The bigger issue for housing is getting rid of all the excess inventory.