The Reno-Sparks Association of REALTORS has released July’s market report. Lots of good info contained in it. I particularly like the graphs in this report. Check it out here: Monthly Market Talk – July 2009
Related posts:
July 23, 2009 – RSAR 2nd quarter market report
April 30, 2009 – RSAR releases inaugural Monthly Market Report
Future Reno Homebuyer
Guy,
Great info. Great to see an analysis of sales by price point (pg. 3). Market looks like it’s wanting to stabilize. Question remains: how much is the normal summer seasonal buying affecting the numbers?
Also, “market affordability” (pg. 5) remains a bit subjective, imho. Projecting 4.1% growth in prices since 1999 — based upon what? In this, the greatest of all housing bubbles, one might be lucky to just draw a flat line. After all, credit and unemployment (and inflation) were much more favorable to rising real estate in 1999 than they are today.
I wonder if it’s smart to pay higher than 2002 prices for a home in this market?
Lastly, market absorption (pg.7) shows a “balanced market” and 6.5 months inventory. But with the tsunami of foreclosures continuing (demonstrated by record for NOD’s in August, bolstered by shadow inventory) I think supply won’t be an issue for any imminent buyers. I think 6.5 months inventory is a pipe dream.
Bottom line: it always pays to note the source of any data (as well as the source of funding for the research and analysis). Low end feels like it’s firming. Above $200k, though, should feel comfortable in waiting until late winter or later. And nobody should expect a “V-shaped” real estate market recovery, barring further deployments of dollar bills from the helicopters from Bennie and the Feds (not to be dismissed).
WorriedGuy
There just isn’t the income-wage-job base in the Reno-Carson area to support the price of homes at about $350K and above. The exorbitant property taxes, on top of debt needed to be assumed for mid to higher tier properties, can not be sustained without adequate income. This is why sub-$350K homes are being snapped up while above that range is dead and languishing. Some recent slashing of prices by banks recently in high profile areas are a testament to what is really happening. Sure there could be a couple high net worth buyers here and there, but on the whole the lack of sustainable income overall is the answer. Unfortuantely, property taxes are now putting a huge weight on these mid to higher tier properties. Moreover, the evisceration of interest on savings by inept and corrupt monetary policy is another weight on income. I see no relief for falling home prices for several more years above $350K.
bob c
The fed is trying to inflate their way out of this crisis. (I can’t blame them)
Lets say we get to 5% inflation…..then over time
the inflation itself will hold the real estate
market flat (even though in real terms you
are losing 5%/year) but in absolute terms people
will be inflated out of their underwater positions.
By artifically holding interest rates low, there
is no ‘easy’ way to ride through this inflation;
without delving into areas like commodities (which
are a non mainstream asset class). Reported inflation rates and actual rate are why even the
TIPS market isn’t that attractive.
10% inflation would accomplish the feds goal quicker. They fear a Japan style ‘deflation’,
but either way in real terms we are all going to
lose some of our standard of living over next several years.
I don’t even golf much here in the bay area anymore, because its a 6 hour ordeal. I hear
some of your courses are fairly empty mid week
and such. A ‘relaxed round’ with little waiting
sounds too good to be true. And then a buffet
afterwards. That is the ‘life’.
Guy Johnson
Great commentary, guys.
Grand Wazoo
So how is 8430 Castlehawk doing in all this Sturm und Drang?
B M
I agree.
billddrummer
I’ve maintained for some time that median incomes in Reno/Sparks are now the primary drivers for home prices. No longer can buyers expect lenders to wink and nod while they pad their incomes, hoping that appreciation will pull them out of the Option ARM teaser rate before the reset (or the recast) is upon them.
Which is why, in my opinion, the market below $200K is healthy and balanced, but above $350K is moribund.
If you don’t have equity in your existing residence, you can’t put down a large enough down to afford the bigger, nicer house (since piggyback 2nds are rare now). So the move-up market is becalmed. And with the number of homes that are underwater, even at lower price points, the prospect seems remote that the move-up market will show any life soon.
Income has (finally) become the primary driver for mortgage money.
Which is the way it should have been all along.
John Newell
I agree with billddrummer. When I first started reading the RRB, I believed there was a real estate bubble, but I did not believe the market’s fall would be as dramatic as what we have seen. I was not looking at median income as a key factor to the market correction. Over the last couple years, I have been swayed to Bantering Bear’s position (which has been advocated by others on here as well) that the median income in Reno/Sparks, and thus real affordability, will pull the market lower than just a correction to pre-bubble conditions.
If BB is reading this, I join those who send hope that you are well. We miss your insight and comments.