Below please find the May’s Market Condition Report from our friends at First Centennial Title.
May’s Highlights:
- A reduction in the number of failed listings [those listings that failed to sell; i.e. Expireds and Withdrawns] has caused the “failure” line to fall below the closing line for the first time since mid-2005.
- Another big jump in the “percent selling” number for May. Reno’s number is now 61%. [Recall “percent selling” is defined as closed transactions per month divided by closed per month plus failed per month (total market resolutions). This measure generates the market driven probability that a property will close as opposed to fail. Seller’s markets generate selling probabilities above 60%. Buyer’s markets typically perform below 45%.]
- Supply is holding constant; demand is increasing; consequently Months Supply of Inventory continues to decline.
John Newell
I would suspect that the “percent selling” metric is heavily influenced by REO sales, and I also would suspect that the “sale pending” category includes many short sales that are listed as “active/pending,” but will likely not become sales. From watching the listings, it appears that buyers are not responding to short sales (and/or the banks are not approving short sales) in the way that they seem to respond to REOs. Most of the price reductions seem to come from short sale listings, whereas REOs seem to move to pending fairly quickly unless dramatically overpriced. Maybe the buyers in the market are waiting for short sales to become REOs so they can deal directly with the banks. What do you all think?
billddrummer
To John,
Makes sense. In addition, banks have finally beefed up their loss mitigation departments, and aren’t interested in holding houses on their books any longer than they need to. I’m guessing that once a property is taken back by a bank, there’s a heavy push to get the thing liquidated, even at risk of a loss. It’s better than keeping a dead asset on your books that you have to pay maintenance on.
Short sales are a different matter entirely, and I’m not aware of any lenders who have a streamlined process for dealing with them.
Any other thoughts are welcome.
GreenNV
John and Bill, it seems intuitive that foreclosures should be moving pretty swiftly through the system, but the data fron the Center for Regional Studies does not back that up. We are at the longest default to resale figure in a year (182 days vs. 114 in November 2008). http://www.nsbdc.org/what/data_statistics/gis/data_downloads/docs/4Closure_Resales_0409.pdf Lots of other fun data to be mined in that chart!
John Newell
Mike,
That is a very interesting chart. Thanks!
MikeZ
Reno SFR median price is $183K, Sparks is $185K?
WOW.
Guy Johnson
John,
You make some good points. Yes, many of today’s short sales will not result in sales…at least not while listed as short sales. It is now taking between three and six months to receive a response from a short sale lender. Many Buyers simply do not have that kind of time frame available. And those Buyers that can afford to wait six months for a response from a lender will typically make offers on multiple properties and simply sit back back to see what short sale lender responds first.
Because of the frustrations endured by both sides of a short sale transaction, increasingly I am hearing of listing agents who simply refuse to take short sale listings; Buyer’s agents who refuse to show short sale listings; and Buyers who request short sale listings be excluded from their searches.
In comparison to the six months a Buyer may need to wait for a response from a short sale lender, with an REO (bank-owned) property, the bank typically responds to an offer in two to five business days.
In terms of DOM (days on market), you make another good point, namely that the REOs sell faster than the short sales. The REOs are typically priced to sell fast. In fact, we are seeing more and more multiple offer situations with REOs, as many of my clients (Buyers) will attest. Often these multiple offer situations result in above-list-price sales. …sometimes substantially above.
lukywnr
Guy,
Do the 437 condo’s listed include the downtown condo’s missing from the MLS such as Palliadio, Montage and Arlington Towers. If not then the actual number listed is wrong.
Guy Johnson
lukywnr,
I believe the answer is no. If a property is not listed on the MLS it doesn’t get picked up in the count as “listed”.