Below is the latest Market Condition Report from our friends at First Centennial Title.
June’s “Percent Selling” slipped a point from May, but three out of five (60%) Washoe County escrows still successfully close. June’s median sales price rose in Reno and fell in Sparks compared to May’s numbers. And months supply of inventory continues to decline.
Reno’s “Market Speed” moved up from May by 2 points for both SFRs and condos. Recall, First Centennial Title defines market speed as: “the rate of conversion of listings to closings. The higher this number, the faster the market is converting. The area with the highest speed is the "quickest" area. All other things being equal, areas with the highest market speed are the most desirable to buyers.”
That would be Fernley, according to the table below.
Click on the chart to enlarge.
Mello
If the most desireable area to buyers is Fernley, then that tells us a lot about who the buyers are these days.
FutureRenoHomeBuyer
Fernley is the closest “nice place to live” to NAS Fallon, which has a big population of military and government civilians with good incomes and job security. Fallon had that lukemia cluster a few years back, which discourages many from living there. Fernley is within a reasonable commute to Fallon, and is sufficiently far from Fallon to make the moms happy enough to live there.
If Reno were within a reasonable commute distance to NAS Fallon, I suspect the Reno RE market downdraft would be less severe than what we are now observing. FWIW….
billddrummer
I think Fernley is attractive because prices there have fallen 60-70%, and more than 20% of the homes are in foreclosure.
It’s not an indictment of the people buying there, just a reaction to really low prices.
Mello
That was my point. The great majority of buyers now are buying at the low end of the market, and with prices down 60-70% from what was cheaper than Reno to begin with, Fernley has the appeal. You can buy a very decent house in Fernley for less than $100K now.
big baby
quick note from MAUI (SOUTH KIHEI)…
while vacationing here in maui I made a point to check out some properties.. you know the ones they hang in the windows at realtor offices?
after doing a little math it seems next to impossible to find anything decent here for under $400 sq/ft.. with many of the nicer homes/condos going for $600sq/ft and UP!
How does a nice 1,200 sq.ft condo, with ocean view (1 mile from the beach) for 899k sound?
cheers!
smarten
Well Derrick goes to Maui and instead of staying in Kaanapali or Wailea, he opts for Kihei. Kind of figures.
Thanks for letting us know you’re vacationing and looking at real property!
Phil
Anybody beside me thinking that we will see still lower prices and we are simply in the eye of the storm? Looking at mortgage rates, unemployment rates, and sub-prime mortgagess still in the pipeline — I find the downward pressure will make prices even fall further.
Where is the demand coming from? I see investments picking up (a co-worker bought a second house) and have to wonder is the cycle starting again?
The stock market is in a bit of a rally, for which I have to wonder why?
Tom
My MBA son who is now a New York investment banker
(shudder) tells me this rally is short-term due to favorable bank and brokerage firm quarterly profits reports, and the newly-gained ground will likely fall back in smaller chunks next week.
But who knows, I did better with running horses at the track than investing in the market.
Sean
Financials are still hurting in the long term. This rally has no backing to it and this fall or early next year we will be down around 500 s&p and 5000 dow as unemployment goes over 10%, states, counties, cities, and businesses start defaulting on thier bonds and retailers really start hurting during the holidays. After a quick glace at today’s NOD just Wells Fargo had around $5million in NOD TODAY! including 2 up in incline/crystal bay, and 1 or 2 in arrowcreek plus a half dozen scattered throughout reno/sparks. We are a long way from seeing the bottom of this!
FutureRenoHomeBuyer
OK,
So let’s acknowledge that the stats seem to be ticking up, as per Guy’s most recent posts. How much is related to the recent mortgage arbitration laws, etc… is still to be determined. The bottom end does seem to be searching for, well, a bottom. Medium to top end still looks catatonic, though.
But who is this clown Ron Bell? I try to survey every site I can find on Reno real estate, but this guy is a shameless shill. See his latest take at http://renohomevoices.com/
“Buyer’s entering this bloody Reno bank owned-foreclosure home cage fighting style arena (under $200,000.) and trying to buy Reno bank owned homes had better be prepared for multiple offers and offer 10-20% higher in many cases…. The average sold price on Reno bank-foreclosure owned homes is generally higher than the original price.”
Don’t know what his angle could be, but if anyone out there could possibly corroborate his farcical claims, I’d like to hear it.
reno newbie
he recently told us arrowcreek has bottomed……..laughed until we cried.
Reno Ignoramus
NODs for this month got off to a very slow start. But they have come roaring back with 144 NODs just in the last 2 days.
The new foreclosure mediation law requires the trustee to furnish some new forms to the property owner as of July 1. It may have been that this new requirement caused a slowdown in the first two weeks of this month. Time will tell.
Sully
FRHB; ron bell is partially correct. He did cherry pick his sales. I found several houses in the under 200K range with a long list of offers, etc. Even cash couldn’t shake them. So, I moved up a tad – not a problem and offer was less than listing.
In the under 200K arena (esp. under 190K) its a mad house. I’m talking foreclosures, not short or regular sales. Additionally, the area these fast sellers are in is a factor, either age or quality or distance,etc.
In reading the article, he makes it sound like all the Calif investors should get here by this weekend or they will miss the train.
I don’t agree, for one this is a prime time of year for sales, many buyers have been looking for 1 or 2 years and are tired. Like smarten, many have found a “wonderful” house for a fair price and don’t want to wait for the “fair” house at a wonderful price.
So if you’re interested, we still have maybe 18 mos. before any real sign of a bottom is here. Thats not to say the lower end hasn’t already bottomed, but the higher end has barely started!
With continuing unemployment, tax short falls, etc. the economy needs to stabilize. So far all the govt has done is stabilize Goldman Sachs. Until all this other stuff is worked out of the system, there will be no measurable real estate bottom (IMO).
big baby
Smarten-
South Kihei is basically Wailea..
actually my condo was in Wailea but I spent a lot of time in kihei. as it was only a 2 mile drive.
big baby
btw you haven’t seen rediculous HOA fee’s untill you have been to hawaii!!
that cute little condo I mentioned for 899k, had an HOA fee of $1,080/month!
WOW!
big baby
Sean-
dow 5,000? PLEASE!!! don’t make my side split from laughing!
CommercialLender
Lets not forget in all this bottom calling that the bottom for sub-$200K will very likely occur at a different time than the bottom for $300-500K or other strata. We might be at some sort of bottom or near it for the sub-$200K because there are a ton of buyers, investors and cash-rich tire kickers who feel they are getting ‘relative value’ from their own recent memory, can cash flow on a rental, can finally pick up a 2nd home, can downsize, etc. But we are no way close, not even remotely close IMO, to a market-wide bottom in the mid to upper end, luxury, $1M+, etc. What few sales are occuring in that range now are results of temporarily low rates and the typical spring/summer pre-schoolyear bounce. No new ground covered here.
smarten
So a question CL –
Let’s take Montreux.
In the Renaissance sub-division sales prices at the peak of the market were going for $1.2M. Recently there has been at least one sale at barely over $600K and at least one more is pending in escrow at an asking price which isn’t much higher.
Let’s take one of the newer golf course custom homes [in Montreux]. If memory serves, at the market peak there were a couple of sales at $2.5M+. Recently there have been a couple [of similar homes] at $1.6M or so.
So are you telling me that comparable properties in these two subdivisions are going to drop appreciably more in price over then next 18 months? Or could it be that just like your typical $190K Reno/Sparks SFR, we’ve just about bottomed out pricewise?
IMO the problem with identifying a “bottom” is exactly what particular piece of data are we all relying upon to tell us when we’re there? Although we may be nowhere near the “bottom” in the high end of the market, I personally think the prices I’ve pointed to in the portions of Montreux I’ve identified aren’t going to drop a whole heck of a lot more.
Now are there delusional sellers in Montreux who are still trying to get peak pricing? Absolutely. Are they going to sell at these prices? Probably not. But that doesn’t mean the buyers of the particular properties I have identified have overpaid because the high end of the market hasn’t “bottomed.” Rather IMO, it is the rest of Montreux that will drop to the price levels these examples have fallen to.
I have gone through these examples to make the point that opining that “the high end of the market” hasn’t yet begun to drop in price; or has 18 months to go before it reaches bottom; may not be accurate when we’re talking about something very specific.
If any out there disagree, then what you’re really saying is that the purchaser[s] of the $600K Renaissance SFR I’ve identified have overpaid because a comparable home will ultimately be selling for a good 35% less. And I for one don’t believe it.
CommercialLender
Smarten,
Likely we’ll have to ‘agree to disagree’ as I do with your post. For what its worth, I actually hope you are right, though!
(BTW, your post leads one to read you are putting words in my mouth: “…the point that opining that “the high end of the market” hasn’t yet begun to drop in price; or has 18 months to go before it reaches bottom…” was your language, not mine.)
Just like I am experiencing in the commercial business – a peak 18ish months after SFRs, and likely a bottom roughly the same distance out – it is both logical and becoming statistically accurate that the higher end strata of homes in some/most/whatever markets are peaking and declining at different times. Note, I never called a time nor called a % decline. Might very well be low-end bottoms out at X% off the peak while upper end homes end up bottoming out at X-Y% of the peak, and certainly at different times.
In my area here in the SF bay, my ‘hood of $800-1,000psf homes that were selling strong until just a few months ago, have now had the bottom in sales start falling out. Homes are now sitting, falling in value, with many now asking $550-600psf, DOMs way up in relative terms, and this is maybe 18 months or so after blood in the streets of Stockton, Brentwood, Dublin, et.al. So, higher end markets are in fact reaching peaks and likely bottoms at different times, at least here.
I still think you got your good deal in IV. That does not mean you bought at the bottom in IV, just that you, as well documented in other posts, got the very best deal you could secure in the current market. And you said you could stomach any further drops. Great. Could Montreaux or IV drop another 35% as you question in the near term? Absolutely, though your full 35% further drop sounds too much. But never say never. Could also stay flat, or even go up. But to say that since Reno is getting resistance at the sub-$200K level therefore IV must also be in or at the bottom (my words), that’s likely not what will be proven in the end.
My gloomy suspicions are based on further job losses en masse, lower bonuses for white collar workers, more distress in many business sectors (again thinking white collar), forced distress like prime resets and having to move for job reasons, evidence of upper end sellers now capitulating for various reasons not the least of which might be they’ve run out of savings, and taxes on the ‘rich’ all serve to scare away mid to upper end homebuyers. It all adds up to loss of buyer confidence in strata that heretofore was resistant to correction. Thus, I personally don’t think the mid or upper end has reached bottom in the vast majority of markets, IV and Montreaux included, while it might possibly be true we’ve reached a bottom in Reno. Final note, perhaps the mid to upper end bottoms are much shorter in duration before they begin to climb once again while low to moderate end homes have a comparatively longer bottom. I think this scenario will be highly likely.
I hope you are correct, but for now, we’ll have to agree to disagree!
David Jonhston
This is the 1st time that i am seeing Fernley as the most desireable area.
Worried Guy
One must also consider what the NV Legislature did a month ago. The fact is the egregious nature of their actions has put more pressure on housing prices in NV as people certainly can go and look elsewhere.
FutureRenoHomeBuyer
Worried Guy,
What actions of the legislature do you refer to (outside of the mortgage arbitration law)? Could you elaborate?
Sully
smarten, you’re overstating your case. You compared a 600K (down 50% from peak) sale to a market that would drop yet another 35% for a total decline of 67% ?
I think what CL and myself was referring to was a “fair market value”. I imagine 50% down from the peak is pretty close to that.
But as you have been looking in IV for 2 years, I have been looking in Reno/Sparks for two years.
I can tell you for a fact that (in general) there are far too many 30 – 40 year old houses listed for far too much (per sq ft) simply because they are located in some south area – west,suburban,old,etc.
Most of these need about 80 – 100K in modernization work and a complete re-landscape job.
So using Montreux as an example is cherry picking the high end market, when in reality these are exceptions not the rule.
DonC
CL and Smarten – I probably just don’t understand things very well but it seems you aren’t really disagreeing about anything other than the definition of the market.
I can agree with Smarten that a few homes are priced to sell and probably won’t fall much more. I can also agree with CL that “the market” — as that term has traditionally be defined for housing — for higher priced homes still hasn’t bottomed.
Employment still stinks. Bank loans are hard to get. And we haven’t seen the latest wave of Alt-A foreclosures. All these things will put continued downward pressure on housing prices. The difference, as I see it, is that foreclosures have put a lot of lower end inventory on the market but not (yet) a lot of higher end inventory. So at the lower end sales are brisk and prices are down. At the high end sales are non-existent and prices haven’t dropped.
Seems to me that Smarten is looking at the few “must sell” properties at the high end, defining these as the market, and is concluding the market has bottomed. It also seems to me that CL is looking at the vast majority of listed properties at much higher price points which aren’t selling, or are selling at very low rates, defining this as the market, and is saying that prices need to decline (say to the level of Smarten’s houses). I think they’re both right. Just depends on whether you want to use a stock market type definition of the market where housing is fungible (and where the last sale makes the market) or the more traditional definition of the housing market that treats every house as a unique property (and where the market is defined by averaging sales of many houses).
Worried Guy
FutureRenoHomeBuyer,
The NV Legislature raised taxes from car registration to sales taxes and also gas taxes in Washoe County. There are many more including business licensing. Then, the NV Legislature decided to take it upon themselves to make a power grab on Washoe and Clark county property taxes. That is a real slap in the face to future and existing property owners in those counties. It might just well make the homes in those counties and the state less desirable versus other jurisdictions. There are other places to buy a home in the United States where you might not have the local state government trying to drain your wallet. Those jurisdictions compete with Reno for home buyers and thus the the crooks in Carson could have well reduced the desirability of Reno/Las Vegas housing markets. It is something to consider. What will come next? They change the property tax cap and up go those taxes as well? Let alone the Washoe County property assessor is by far one of the worst. At least take a look at Douglas County.
smarten
DonC, I agree with your assessment. And that was really my point – what exactly do we define as “the market” or the market’s “bottom?” I think in today’s marketplace one can find excellent values at all price points – values that may very well NOT go appreciably lower [whether/not we’ve reached “bottom”].
Now FWIW, I saw one of my IV agents this afternoon and she told me she’s busier than ever! In a town that measures 10 SFR sales/month as a “market,” she told me she’s now representing 18 [that’s EIGHTEEN] sides in pending sales. They’re probably mostly lower end SFRs/condos but nevertheless – EIGHTEEN?
Buyers seem to be returning to the IV market and according to Guy’s stats, that also seems to be happening in Reno/Sparks. This has to be the first sign of any housing recovery.
FutureRenoHomebuyer
Smarten,
Volume is necessary before any recovery. It feels to me, however, that there isn’t much volume in Reno above $400k. Candidly, though, I still haven’t found a good source where activity is broken down by price level, so I’m happy if anyone can point me to a source. Lots of media articles regarding the moribund state of the jumbo loan market support my view.
It is volume that will lead to the final downdraft and restore stability to the market.
So, I guess I agree that the volume is a necessary predicate for a bottom, but it is not sufficient. What I believe is necessary and sufficient is delusional sellers above $400k finally smelling the coffee and capitulating. Searching my favorite neighborhoods in old southwest Reno, I see no sign of that happening yet. Most still seem to believe that they are special, and that their special home can still command 2006/7 prices. When I see 4 bedrooms in Reno being offered at $750k+, I see no bottom in sight.
OBTW, as long as unemployment is above 10%, I don’t expect any violent snapback in home prices. We’ve moved from a financially induced downturn to an economically induced one. And the extent of unemployment is yet to provide its full affect. IMHO.
Raymond
The unemployment rate in Washoe County was almost 12% in June. That is the highest since records have been kept going back to 1976. And as we all know, the official number always understates the real number, because it does not count those out of work people who have stopped looking for a job, and it does not count all the underemployed people who are either working for a wage far below what they used to earn or working less than full time.
This is not irrelevant to the state of the market. This blog has a definite “upward” bias in that most of the posters here appear to be certainly more well off than the average JSP, and I think that sometimes skews the perspective here. This blog has very few posters who appear to be working for low to middle wages.
(This blog also appears to have absolutely no women posters, which I find somewhat interesting.)
re novice
Ray,
Big generalization, and if there were more women here, I’d be blasted for sexism, but,
chicks don’t dig real estate
Unless
1) they’re trying to figure out if they’re interested in you… or
2) they are agents
inclinejj
Remmeber this..The job losses this time around are across the board..It isn’t one industry..Every industry, is taking the hit and slowing down..WAMU all those people are pretty much out of work> Granted that Chase needed the branch network but those employees are low on the pay scale..
How many Realtors who spent spent spent during the boom got the easy cash flow tap cut off? Loan and mortgage people? How many people lived and used home equity to live the lifestyle of the rich and famous..
I think this down cycle maybe has 2 or 3 years left..
IV has some unique issues..Not that many building lots in town, aging housing stock, Properties bought to be torn down and rebuilt, A very high number of 2nd homes in the area etc
billddrummer
Don’t mean to hijack this thread, but Corus Bank may be seized shortly:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aOLknByL33iI
The article points to nonperforming condo loans in FL, NV and AZ, along with loan losses, a lack of capital, and low liquidity.
Montage owners, look for a new logo on your next mortgage statement.
big baby
“Remmeber this..The job losses this time around are across the board..It isn’t one industry..Every industry, is taking the hit and slowing down..”
Last I checked healthcare jobs were still growing…
big baby
“For all of 2008, the economy lost nearly 2.6 million jobs while health care added about 372,000, the bureau said.”
big baby
“Buyers seem to be returning to the IV market and according to Guy’s stats, that also seems to be happening in Reno/Sparks. This has to be the first sign of any housing recovery.”
umm.. buyers have been returning to the reno market for the last 9 months.. while the median has tumbled….
while it may be a sign of recovery, it doesn’t signal any uptick in median pricing… infact quite the opposite
DH
Quick question. How does the possible seizure of Corus Bank affect the Tanamera resorts / Barone group condos? The HOA and/or existing new units. Thanks.