Last week I posted July’s sales numbers for Reno and Sparks. In that August 3rd post I conceded that it was probably a bit early to report the numbers, as agents continue to enter their sales data into our MLS for many days following the end of a month.
I revisited the numbers this afternoon and saw quite a few July sales had been added since Monday last week. The current total is 496 units sold for the month of July [recall last week that the number was 457]. July’s 496 SFRs sold did not exceed June’s 526 sold, but it is still not too shabby.
Interestingly, these 39 additional sales left July’s median sold price unchanged at $180,000.
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So, I have returned from the Inman Connect Conference. Regular readers know this is my favorite conference. It’s a great venue to meet the innovators, technologists, visionaries who shape the real estate industry’s future. Last week’s was my 5th Inman Connect and it did not disappoint. As an added bonus I was selected as one of the most connected (online) real estate professionals as part of Proxio’s Most Visible Professional in Real Estate search. That was fun recognition. The selection panel took into account my LinkedIn Connections, my Facebook profile, and my Twitter Followers. Feel free to connect with me on the online social medium of your choice.]
I’m sure the blog also contributed to my being selected, so thank you all for your participation in the blog.
Gotta run. I have a closing this afternoon.
inclinejj
Guy these are the geniuses who told the media tell the consumers it is time to buy..Real Estate only goes up up up..
billddrummer
To inclinejj,
I stumbled across an old Home Seekers Tahoe RE magazine (I know it’s old because WaMu and Countrywide had full-page ads). I was curious about how old the issue was (Vol. 4 No. 13). Went to the website, and the most recent production schedule published was for 2007.
Is that when properties stopped going up up up?
BTW, some really nice, really expensive homes in the issue I looked at.
But I wonder if it’s still being published?
Unbelievable
Median pricing has bottomed….
billddrummer
To Unbelievable,
You may see median pricing rise, as more higher value distressed homes are sold.
What is troubling is that more TDs are entering the pipeline than leaving as closed sales.
Just another data point that bears watching.
Is it a sign that the market is recovering?
Au contraire, mon ami.
Still sick.
billddrummer
88 TDs filed since 8/1/09
How many closings from repossessed property?
Anyone know?
billddrummer
I did a (very) rough check for deeds recorded since 8/1/09 where the grantor was a lending entity and grantee was an individual or trust.
I located about 50 deeds representing sales from banks to individuals, which leaves more than 30 in standing inventory through 8/11/09.
That doesn’t include any properties that were left over from last month.
So the momentum in new TDs seems to be outpacing the number of closed sales.
Still.
Anyone else have any better way to figure this out?
smarten
So now we can’t rely upon the median sales price as an indicia of a market bottom, simply because it no longer is dropping?
billddrummer
To Smarten,
I don’t know, perhaps it’s a floor, but I doubt it.
RRB Fan
I find the median price to be of limited value since it doesn’t really tell us anything about the nature of what is being sold (# of br, ba, sq ft, lot size, etc). A reversal in median price my merely signal a shift in where the volume of sales is coming from … in this case to more expensive homes. It won’t tell us anything about whether those homes are selling selling for more or less than previously. For that you’d have to look at both the average house size and corresponding average $/sq ft over time.
smarten
This was my point. For years the “standard” as to the state of the market was the median sales price. As unit sales plunged, the median sales price became less relevant. Some time ago I suggested price/square foot might be a more accurate guide with adjustments for special features/the lack thereof. I was chastized, especially in Incline Village, because there are few subdivisions here and a good portion of homes are “custom” and thus unique. DOM is deceptive and unreliable tool a number of reasons, one being the number only applies to the very small percentage of homes that actually sell [versus the vast majority that have languished for eternity].
So I again pose the question; when is it we will know when we’ve reached market “bottom?” Could we already be there for segments of the market and if so, how will we ever know?
Gene Makes Sixes and Eights
“How Will I know, How Will I know…”
Whitney Houston comes to mind, wringing her hands and wailing away.
But seriously, we won’t know until the prices start to creep up again, then we will know that we were there and have left.
How many times in a row can field numbers come up? Ask a double-up player — Nobody knows.
inclinejj
I been saying that price per square foot was a better barometer of value then anything else
After all the Insurance business has been using this method for years.
If you can buy it for less then replacement value of the house alone, not counting the lot you got yourself a pretty good deal
CommercialLender
Smarten,
My take on psf as a house valuation metric is that in a softer market like the current, a higher relative psf figure serves to scare buyers away or cause them to not bother looking at a particular house in their initial search phase. I believe they look at psf on MLS, websites, etc. and tend to rule out the higher end of the range quickly. Sucks if you are the seller of a house wanting top dollar for your high end fixtures, special designs, etc. because that is a very limited buyer today, yet there are so very many listings fitting those supposed high end descriptions. One or 2 actually sell, and poof the median majically goes up, but is this a trend to higher psf sales?
No. Buyers seek relative value today in part because they can obtain more quality for less money, in part because they fear the appraisal must come well valued or they won’t get the loan, and in part because buyers today are much more frugal than before.
So, if there’s a nieghborhood with $x-$y psf values and a house comes on the market for $y or even more – despite its nice fixtures and unique issues – it’ll sit and sit. Its buyers’ psychology that in a frugal time they want to be in the ‘cheapest house in the nicest neighborhood’ versus having the nicest house in a particular neighborhood. Flush times seem, to me anyway, to produce the latter while tight times the former. The latter explains Arrowcreek, Somersett, et.al. where people were buying the best they could afford, thus the medians went up and rapidly so in the boom. The former – today’s market – produces buyers in a more meager strata, thus an occasional well priced home in a very nice neighborhood moves all the while tons of mid-ranged homes in lower strata neighborhoods sell, thus the rapidly declining medians to date.
In my opinion, the median uptick we experienced recently was that there are a few strata-straddlers who realize they can now pick up the proverbial ‘cheapest house in the nicest hood’ that they could not afford during the boom, however I don’t believe that necessarily means many more higher strata sales are around the corner. It will take some time for the whole of the buyer universe to become euphoric again enough to go buy up mass volumes of the higher strata homes.
Thus, I estimate a long, flat cycle with psf metrics playing an important role in the initial valuations of potential buyers. I agree with you that psf metric is a very good place to start for the lionshare of today’s buyers, the frugal ones. So, if these high psf sellers want to sell, they need to realize they are in a tenuous spot at best marketing high end fixtures and special luxuries in a mostly frugal market with low buyer demand. Consider the used car and boat market: in flush times, people add aftermarket parts for a pretty penny but in frugal times they sell used but nicely fixed up cars/boats with little to no mark up on the aftermarket parts. Just like a luxury home with all the bells and whistles. I don’t care how nicely the car/boat/home is fixed up, if the cost is not within a reasonable range of the other competing cars/boats/homes on the market, and representing a very good value, it won’t easily sell.
Sure, there will always be the occasional Smarten type buyer who gets a well sought out Smarten type deal. However, I don’t think we’ll see this buyer demographic returning en masse for a very long time, and thus the medians will bump along flat for a while and psf metrics will play an important role for a long time.
I hope my ramblings make sense.
RRB Fan
CL … excellent points. I’ve been looking for both a SFR and some rental property for a while now — I started back in 2005, but didn’t find anything compelling. I’ve always been doing the $/sq ft calculation and looking to get the ‘cheapest house in the nicest hood’. This applies equally to my future home and investment property.
For my home I’ve narrowed my choices to Somersett + surroundings, golf course areas of Sparks, and the SW/Old SW. The former all offer new homes while the latter feature established neighborhoods with in town convenience. For nearly new construction I’ve set my threshold at $70/sq ft for a condo/TH and at $100/sq ft for a SFR. I came up with the former # from the Village courtyard that sold for ~$176K (168K + 5% auction fee) and the latter based on sales at the court house steps. So with these numbers as a filter, what can I get in the Reno / Sparks market?
So far nothing at the quality level that I desire. Newer, larger sized condos (not Smithridge or Gault) in South Meadows/Double Diamond/Galena are selling at ~$100/sq ft. In the Villages some pending sales are at ~$85/sq ft and Pulte has one new home in the Vue at ~$95/sq ft. On the SFH front, in Bella Rio the last few homes in this unfinished development are at ~$108/sq ft and this is for a tiny lot with no view.
In terms of older homes, in Old SW and am shocked that near tear downs are priced at $200K for 1,000 sq ft or less. I did find one 1960’s home in the SW with 2K sq ft in original condition with a good floor plan plus an unfinished walk out basement and a large lot. They were asking $329K and it ultimately sold for $300K which is more than I was willing to pay.
Love to hear your comments, suggestions, and feedback.
Sean
I have noticed this month that so far notice of defaults are on pace to beat the june record of 951. So far we have 472 and its only the 13th. We if keep up that pace we will go over 1000 NOD’s this month. So the pipeline of inventory isnt emptying anytime soon. Unemployment still rising. HMMM
smarten
RRB Fan –
What you suggest is basically what I went through when I was looking for a home in Incline Village. I tracked what SFRs were selling per square foot, and developed a range [$x-$y/square foot (rather than under $x/square foot)] I used as a guide. The nicer or newer the location or construction; the better the neighborhood; the closer to $y/square foot I would be willing to pay.
Ultimately I ended up paying a little bit more than $y/square foot. I chose to do this because the cost/square foot to replace was higher than $y.
So I would recommend you not cast your under $100/square foot number in stone. Use it as a general guide. If something really nice comes along that you like and the price/square foot ends up being $115 [to use an example], I wouldn’t dismiss it simply because it exceeds your $100/square foot “target.”
I think you’re on the right track and wish you the best in finding something you’re happy purchasing.
DownButNotOut
It’s my opinion that the best buys will always be at a slightly higher $/sf. That’s because these are the most desirable houses in the grouping. It works for the time you own it, and pays dividends when it comes time to sell.
Unbelievable
is there any possibility a bank would entertain an offer of 120k CASH… on a condo priced @ 160k?
Or would I just be wasting my time?
ditz
Unbelievable:
Try it. Bank will more than likely counter. That said, cash is cash. You never know.
billddrummer
To Sean,
I’ve noticed that myself, but there has been a sharp dropoff in TDs compared to last month. So far just over 100 TDs have been filed, compared to over 400 in July.
Is this a one-off, a dog days lull, or something else?
reno newbie
lots of open houses in reno on saturday. something special going on?
Tom
Lots of open houses in L.A. tomorrow, too; reasons are:
“first-timers” Tax Credit period about to end, and bankers want a cut-off so they can process loan apps;
Selling season soon coming to an end;
Nice weather predicted for tomorrow, not too hot.
Free Falling
I noticed all the open houses this weekend too. It seems to me that the realtors are now seeing enough buyer interest for it to be worth their time sitting an open. Signs of a bottom. It is also interesting that this blog seems to be getting more talk about buying. More signs of a bottom.
The metric I have always paid attention to is “month’s supply”. I’ve noticed that the number of “For Sale” signs in Somersett and elsewehere in the NW is down considerably. Many of the custom homes which went into foreclosure have been sold and the landscaping is once again being maintained. If all the bears on this site are still waiting for the high end to capitulate, they need to look out the window. The high end has capitulated here. Another sign of a bottom.
I didn’t see number of listings in Guy’s month end post.
Grand Wazoo
How is Diane’s Somersett house doing? Has the high end really capitulated?
SkrapGuy
Diane’s house is back on the market, again. It has fallen out of escrow twice it appears. Price is back to $525K.
The number of houses for sale in Somersett on the MLS (IDX version)tonight is 128. This number has been bascically steady for the last 3 years. Not sure it is totally accurate to describe Somersette as “high end” when 80% of all the listings there are under $500K, and almost 50% are $300K or less.
The poster child for Somersett woes remains 1900 Russell Pointe Ct. The owners of this house have mnore than $900K into it, have it listed for $450K as a short sale, and can’t attract an offer. Maybe when this house sells for a 55% haircut, we can call it capitulation. Are we at the point now where $400K constitutes the “high end”?
Martin
With the median seeming to be creeping along at $180K, we may well be at the point where $400K constitutes the “high end”, or at least the lower edge of it. When a house sells for 2.25 times the median, that may well be the high end. Anybody who defines the “high end” as houses in the, say, $700K and over segment and who suggests that capitulation has happend there, needs to take a better look out the window. That segment of the market remains dead. as. a. doornail.
Raymond
There are 338 houses on the MLS listed over $700K in Reno-Sparks. 16 of them have a pending offer. (I am not counting the ones listed as ‘short sale pending’since most of them never go on to close, and many of them have been showing as pending for months on end). That is 4.5% of all non distressed listings in this price range with an offer. That is pretty dismal. But you really wanna see dismal? There are 185 houses listed for more than $1 million. 3 have an offer. That is 1.6% of listings with an offer.
Capitulation in these price segments? Oh please.
smarten
We continue to have this discussion –
Raymond reports, “there are 185 houses listed for more than $1 million. 3 have an offer. That is 1.6% of listings with an offer. Capitulation in these price segments? Oh please.”
Perhaps not price segment capituation, but likely price capitulation insofar as these three properties are concerned. And assuming you’re one of these three perspective buyers, what do you care that the other 182 sellers in this price segment haven’t yet capitulated price wise?
It’s all relative.
Reno Market Watcher
All of this weekend’s open houses were part of Reno/Sparks Associated of Realtors “City-wide Open House”… a poorly planned and poorly marketed attempt to get buyers out to see houses. How are realtors expected to sell homes when their local association can’t even pull off an event like this?
I went to the Web site to try to find open houses in my neighborhood but all I got was an error on the search.