August median sold price, units, DOM, and $/sq.ft.

49 comments

1. 

   September 9, 2009 at 8:19 PM

   MikeZ

   Wow, $179K median. And that’s with an $8K tax credit in place propping up prices. $170K must be right around the corner.

2. 

   September 9, 2009 at 8:27 PM

   CommercialLender

   Where is BB anymore? He called this spot-on a long time ago. Or, is he posting as a new name? Well, he was right. I have to admit I did not think it’d go as low as he said, low, but not this low.

   $179K and that’s the tail end of the season. I shudder to think of where we’ll be oh, say, in January.

3. 

   September 9, 2009 at 9:41 PM

   FutureRenoHomebuyer

   Downward price trends continue. Good for prospective buyers. Notso for prospective sellers.

   A July/August bump seemed baked in due to seasonality factors, 1st timer tax credit running out, and the relative bargains out there. National media wants everyone to believe the bottom is in. This is no bump, though. Nov/Dec might show pretty gruesome numbers.

   After all this time watching the Reno RE market, it’s still stunning to see distressed sales (REO +short) comprising 70% of sales. Until that number comes down, it will continue to be a buyers market, and patience will be rewarded with continuing discounts.

   This is a housing depression, no two ways about it. Short of pure exhaustion (no more houses left to foreclose upon), does anyone see a catalyst that will turn this market around?

   And with all that said, there’s still tons of denial. Just check the listing prices in Newlands Manor, or Montreux, or even Somersett…. Go figure.

4. 

   September 10, 2009 at 6:30 AM

   Reno Ignoramus

   Long time readers of this blog will recall that for years the median price was calculated on a metric that included houses and condos. Then for some reason, a few months ago, Guy changed the metric to exclude condos. If we use the old metric, which seemed to work just fine for more than two years, the median is down to $166,500. Bantering Bear always took exception to the new metric, calling it changing horses in midstream to make the median price look better than it really was.
   A median of $166,500 puts the median price down about 60% from it’s all time bubbled up high in Q3 of 2005.
   Guy, it would be nice if we could get some priceband info, such as how many properties sold below $100K, below $200K, $300K, $400K, etc.

   Thanks, Guy.

5. 

   September 10, 2009 at 6:38 AM

   SkrapGuy

   70% of all sales continue to be either REO or short sales. And that is with only about 30% of all NODs ever going to TD. Can you image what this market would look like if say 60% or 70% of NODs ended up being actual foreclosures? RI pointed out the other day that there are now somehing like 6,000 properties that have had a NOD recorded that are somewhere in limbo between NOD and TD. What if just half them came on the market as REO? What would 3,000 new REOs do to this market??

6. 

   September 10, 2009 at 8:58 AM

   Bear Hunter

   So, where is the BanteringBear? Hope the Bear is OK.

7. 

   September 10, 2009 at 9:16 AM

   homepop

   My fear is that the federal government is going to insert itself even more into this process, with the aim of propping up home prices by any means necessary. This can drag out a housing recovery for years, if not decades…but they cannot see beyond the next election.

8. 

   September 10, 2009 at 9:46 AM

   Sully

   The gov’t, fed reserve (et all) have done everything they can; they are out of bullets – just haven’t told anyone yet.

   China is now a net seller of treasuries, how long before Japan is also?

   Keep printing Ben, we may need to use the dollar for firewood soon.

9. 

   September 10, 2009 at 12:03 PM

   homepop

   Sully,

   Bankruptcy courts can be given the power to wipe out hundreds of thousands of dollars of mortgage debt, thereby preventing foreclosure.

   AND/OR

   The US government can make the underwater people whole by giving them a check in the amount of what they paid for their house minus what it is worth today and modifying the subsequent balance.

   I have seen/heard both of these options mentioned in the past week or two. The responsible taxpayer gets hosed either way.

   HP

10. 

    September 10, 2009 at 12:10 PM

    johnny

    here’s a chuckler..

    the builder had a unti for sale at 176k, I offered 160k CASH
    They countered with 173k.. I walked!

    see ya!

11. 

    September 10, 2009 at 1:41 PM

    Guy Johnson

    R.I.

    Here’s the breakdown of August sales as requested:
    <= $100K 21% <= $150K 41% <= $200K 63% <= $300K 84% <= $400K 92% <= $500K 95% Note: these percentages are cumulative. Regarding the changing of the median number to exclude condos, yes BB was pretty bummed out. I think that's why he left the blog. 😉

12. 

    September 10, 2009 at 6:28 PM

    bondstevenbond

    long live the Bear!

13. 

    September 10, 2009 at 6:59 PM

    FutureRenoHomebuyer

    Guy,
    Very useful follow up, thanks. ~37 units sold above $400k is an upside surprise for me. Am I too negative?

    Meanwhile, I’m waiting for the Bear to come on down from the top rope with an atomic elbow. My guess is that he’s on vacation, and wifey is keeping him away from the internet. (mirror imaging…) If he’s gone for good, though, we all obviously miss him.

14. 

    September 10, 2009 at 7:22 PM

    Reno Ignoramus

    Thank you Guy for the info. We have seen these percentages holding for many many months now. Interesting that one-fifth of all houses now selling are under $100K. The market over $400K continues to be largely a figment of those sellers imaginations. Four years ago, a house selling for $400K was not far off the median price. Today the $400K and up segment comprises only 8% of all sales. Truly a redefining of what “high end” means now. How very interesting to see what the Reno-Sparks real estate market looks like without Voodoo loans available at the mall kiosk.

15. 

    September 10, 2009 at 7:38 PM

    MikeZ

    RE: “1st timer tax credit running out, and the relative bargains out there.”

    The $8K credit almost hooked me, a $15K credit would definitely do it for me. If that passes, I see myself buying next year.

16. 

    September 10, 2009 at 7:44 PM

    Reno Ignoramus

    Another important aspect of this market also continues on. That is that 70% of all sales continue to produce no “move-up” buyer. Almost 50% of all sales don’t even have a human being as the seller. Washington Mutual and Country Wide might sound like they are human, but they are not.
    Until this aspect of the market changes, and returns to the normal market dynamic where the seller of the $200K house moves up to buy a $400K house, and the seller of the $400K house moves up to buy a $600K house, etc. the upper end of the market is going to continue to be the dead doornail that it is now.

17. 

    September 10, 2009 at 7:56 PM

    Norton

    Sure why not have a $15K tax credit? Why not a $30K tax credit? Why not just send everybody a check for $50K? Tax free of course. It’s not like the country needs the tax revenue or anything. Let’s prop up and bail out the housing markets at whatever cost.

18. 

    September 11, 2009 at 5:11 AM

    southworth

    A tax credit still won’t help if you cannot get financing. We just sold our house in Washington State and want to buy in Reno. We have 60% down payment for a $190,000 price range, have regular social security income, have six figures in the bank in addition to the down payment, have a 800+ credit rating, have no credit card debt or car payments, but the banks will not qualify us because of a negative $200 monthly cash flow on a rental property and the fact that my spouse’s business (a sole proprietorship) does not have two years operation in Nevada. At least this is what they said. I thought that qualifying would not be a problem with the amount of our down payment, our credit history, and what we additionally have in the bank. Perhaps if they change the rules on the tax credit, we can find something we can pay cash for.

19. 

    September 11, 2009 at 6:09 AM

    Irv

    Southworth,

    For whatever it is worth, here is how the bank’s loan officer would look a your financial snapshot:

    First, your spouse’s business is unfortunately too young to be deemed creditworthy as a repayment source, so it is disregarded. Usually two to three years of income tax returns, showing stability of an income level, will be required. The net income will be averaged. They look for ongoing income streams, not savings in the bank, in terms of justification for making the loan.

    Second, debt-to-income ratio is going to limit your available debt service income to roughly 1/4th of your monthly social security income, which appears to be your sole source of income.
    (Savings in the bank don’t count, but this is a subjective plus for you, as it shows the loan officer you do have an emergency fall-back fund; however, the debt service formula still must be met. The loan officer cannot bypass that rule, because there are too many pieces of new business to consider that will meet that rule, for him to waive it. Loan officers strive to avoid criticism by their team leaders for making decisions outside of standard criteria, when there is other new business to write that doesn’t require a waiver.

    That 1/4th of your SS income must cover the loan payment, property tax, HOA fees (if any) and homeowner’s insurance on the house. If your SS income is perhaps a hypothetical $1,600 a month, that leaves you with $400 a month for housing. Assume on a $190k house, that about $3,000 per year covers property taxes, homeowners insurance and condo or HOA fees. That is $250 per month, leaving you with $150 per month for debt service to come frome that 25% of your monthly income allocable to your housing costs, under the traditional formula. That won’t cover much of a mortgage, unfortunately. You will need a $70k mortgage, by your numbers, and that could cost over $340 per month for a 30 yr fixed at current rates, with your down payment and credit score. So you see it doesn’t formulate for the lending officer.

    On these small loans to modest means applicants, it is hard for the loan officer to push the ratio, since the margin for living expenses is so slim. Your savings helps, and do shop around — try the major banks, on a direct lender basis. I know that some can go to 35% debt-to-income ratio for an 800 credit score borrower, if you can prove up reserves, and if you are their banking customer. For cases where the monthly income leaves a larger living expense margin after debt service, they will even go to 40%, again if you can prove-up significant reserves not earmarked for retirement living expenses, and if you are worthy customer with them.

    If that doesn’t work, I suggest you rent until your wife’s proprietorship income will count in the formula. Come April of 2010, she will be filing her 2009 tax year 1040, so she will have another year to show for her earnings. By then prices won’t likely be going up in Reno anyway.

    Good luck.

20. 

    September 11, 2009 at 7:20 AM

    Gerry R.

    Foreclosures up 18% from last year? This meltdown is just getting legs under it, There’s not even close to being enough tax credits to offset the coming equity loss…

    Seems to me that prices will only be getting better for perspective buyers….

21. 

    September 11, 2009 at 7:30 AM

    WorriedGuy

    Can someone share with me their thoughts on what might be a fair price at the current market for a 1990’s type Southwest Reno home with about 3,000 Sqft. on about a 1/3 acre. Thanks.

22. 

    September 11, 2009 at 7:56 AM

    southworth

    Irv – Thank you for your thoughtful and helpful explanation. This is all very frustrating, but rules are rules, I guess. What I am finding interesting is that rents in Reno (for anything decent) are more than our projected house payment based on the numbers I provided. Arghhhh!!!!!

23. 

    September 11, 2009 at 9:03 AM

    Sully

    WorriedGuy, I was looking in that area for a long time and finally gave up, as the asking price was far higher than I felt it was worth.

    That being said, I would guess a fair value would be around 300K for the house you described, depending on upgrades (the nicer the nice the higher the price).

    RI, BB or SkrapGuy might have a better insight as they have been here longer!

24. 

    September 11, 2009 at 9:24 AM

    CommercialLender

    Southworth,

    You have an interesting post. Try all-cash buy or a seller carry behind an otherwise all-cash. It would take the right seller, of course, one who does not need every nickel of cash out and values passive income, and certainly not a foreclosed bank as seller. Also try FHA (I’m not a single family guy and don’t know that much about FHA). Finally, recall renting is the new owning! It is very highly probable both rents and home values will continue downward for at least another 9 months in Reno, while unlikely mortgage rates will skyrocket in that time, so a 9-12 month rental would not be a bad option for now.

25. 

    September 11, 2009 at 9:45 AM

    WorriedGuy

    Thanks for the reply Sully. I was thinking around $325K myself. $105 per sqft.? But unfortunately you are correct, unless you can pick a home up through foreclosure, it seems that flippers are trying to get $400K out of these type of homes in the Southwest Reno area.

26. 

    September 11, 2009 at 10:02 AM

    WorriedGuy

    Also, even if you got the home in Southwest Reno for around $350K. I have noticed that the property taxes on these homes are up around $5K in some cases. So that would be nearing 1.5% to 2% property tax per year on what you paid for the home. This is getting around FL levels in property taxes and good luck on a reassessment. So this is a factor in why these homes are not moving.

27. 

    September 11, 2009 at 10:13 AM

    RRB Fan

    Worried Guy … I’ve also been looking in the same area and have set my target price at $100/ft sq, but unfortunately anything that is nice is quite a bit more. Take a look at 1791 Three Mile Dr. — you get a lot of house but no usable yard. Personally I’d want something smaller — say around 2K sq ft, but there is literally nothing compelling that is newer in that size for 200K.

28. 

    September 11, 2009 at 10:27 AM

    WorriedGuy

    Actually, I looked at 1791 Three Mile Dr. Nice property. There is some yard there, but yes it is a bit limited. The home had a nice feel, but is really large. I guess these homes built in the 1980’s are grandfathered in for using wood in the fireplace? Anyways, maybe the price will come down over time.

29. 

    September 11, 2009 at 10:54 AM

    bob c

    it seems the bank owned properties are the only
    ones ‘priced right’

    i’m following galena forest, saddlehorn and
    adjacent areas and the bank owned properties
    are by far the lowest priced
    (i haven’t seen the properties), but it seems
    the bank wants a buyer
    (i’m looking at 400k range)—theres even bank
    owned ‘cottage’ in montreux for 499

    private equity homeowners seem like a waste of time and the 50% bank owned rate of sales last month confirms my observations (short sales are
    okay, too because the seller is not in denial)

    just doing my homework for 2-6 months out when
    i move up there

    hope you find a fair deal—it seems they are still out there

30. 

    September 11, 2009 at 11:01 AM

    WorriedGuy

    Another point on Three Mile Dr. Even if you picked up the property at $400K, you will be looking at a $7K per year property tax. Again, good luck getting that reassessed. Ain’t going to happen anytime soon.

31. 

    September 11, 2009 at 11:14 AM

    Reno Ignoramus

    The people who are asking $400K have not yet discovered that they are now in the upper 8% of the market. They still think they are ‘moderately priced’ because they think the upper end is $750K. They don’t understand that the $750K market essentially does not exist, except in the still delusional minds of the people asking those prices.
    Part of this is understandable in that the media never provides priceband info. Only this blog does that. The RGJ reports that sales are up YoY and the delusional take this as good news. The fact that 92% of all sales are under $400K, and that 84% are under $300K never gets reported in the media.

32. 

    September 11, 2009 at 11:34 AM

    bob c

    i’m agreeing with you guys

    400K gets you into the best neighborhoods
    these days

    and the property taxes in nevada are ‘attached’
    to the property and thus a huge consideration

    when you buy the property, you get the existing
    property tax basis….it is not re-assessed based
    on the new selling price (as it is here in CA)

    anything built during the mania (2001-2007)
    is going to have an outrageous property tax basis

    things built in mid 90’s carry a reasonable
    property tax basis—older properties are
    a case by case

    1.the banks know the value and want to move property
    2.short sellers are at least past denial and might
    be realistic to current market conditions
    3. private equity owners for the most part
    are living in the past

    in a macro sense……are we headed into a
    nation wide depression with cheap real estate….
    i can’t answer that. but if the U.S. is going
    to survive this recession in a reasonable
    fashion; its a good time to buy (in my opinion)

    correct me if i’m wrong

    bob

33. 

    September 11, 2009 at 11:53 AM

    WorriedGuy

    Nice how the NV legislature capped in those rates at the peak near 2005. Now those falling RE values still lock in higher property taxes. However, I guess they didn’t figure people would walk from their homes. Ooops.

34. 

    September 11, 2009 at 12:09 PM

    Martin

    It depends what you buy bob c. If you buy a Smithridge condo for $45K, then I would say there’s not a lot of room for major further downside. But you buy in the $400s, I would say there is significant room for further drops. If only half of the people who are listed at $400K and above are serious, really serious about selling, then they are going to have to lower their asking price. Only 8 out of every 100 sales now are for more than $400K. Those are not very good odds for a serious seller.

35. 

    September 11, 2009 at 1:49 PM

    CommercialLender

    If’ll you’ll permit macabre humor….

    Montage’s lender, CORUS, had been declared brain dead this afternoon and is currently being harvested for its organs. MB Financial of Chicago took over more than a $1B in deposits and branches today, while the FDIC is hastily preparing other parts-sales to other bidders. Rumors have swirled in recent 24 hours that Steven Ross and partners (Related Cos. – $$$$ sized CRE player) were approved as a “bank” ostensibly to take over a part or the remaining CORUS assets…….

36. 

    September 11, 2009 at 3:30 PM

    Downtownjunkie

    6375 Wetzel in Montreux:

    $650/month HOA
    $575/ month Property Taxes
    1707SF 2br/2ba for $499,900
    $4k/month…

    Starting to make me giggle a little. I expect this to be the most expensive 2 br house in Nevada!

37. 

    September 11, 2009 at 7:09 PM

    bob c

    hoa and taxes are a killer —they better relist
    at 299

38. 

    September 11, 2009 at 7:13 PM

    WorriedGuy

    Houses are like printers…the printers get cheaper and cheaper, but the cartridges (HOA’s and Prop Taxes) add to a lot of more money over time.

39. 

    September 11, 2009 at 7:27 PM

    johnny

    How can a builder outright reject a CASH offer of 160k when they are listing at 173k?

    obviously this market still has a way to go before people become realistic.

40. 

    September 11, 2009 at 7:46 PM

    Downtownjunkie

    Even at 299k you are looking at 3300/month because of those pesky hoa and prop fees. The house would have to appreciate about 10% per year to cover that money pit.

    Everyone in Montreux is delusional but I see some homes just taken over that will be priced WAY lower when they come on.

41. 

    September 11, 2009 at 9:14 PM

    bob c

    thats why i will scower galena forest and saddlehorn (no hoa–probable favorable tax basis) and blow off montreux
    and arrowcreek

    who wants a home too ritzy to live in anyway–
    a cabin in the woods or a nice home with an acre

    wolf run or sierra sage golf over those
    stuffy country clubs anyday

42. 

    September 11, 2009 at 9:49 PM

    WorriedGuy

    Might want to remove Caughlin Ranch and Southwest Reno also. Prop taxes are a nightmare in that district. Saddlehorn-Fieldcreek are good, but the price of the homes are a bit up there at over $150 per sq. ft.

43. 

    September 11, 2009 at 11:01 PM

    Downtownjunkie

    I don’t need a big house-don’t want an acre. I like Montreux because of the maintenance free deal in the cottages and I LOVE to golf. I don’t even really care about the HOA. But to list a 2br home nowadays for $300/SF is ludicrous. The taxes are comical too.

44. 

    September 12, 2009 at 12:45 AM

    bob c

    worried guy we are on the same page

    saddlehorn-fieldcreek-galena forest it is 🙂
    location, location, location is worth $$$/sf

    junkie: what courses are the least crowded and
    most laid back (in your opinion) to look into
    a membership? i love to golf also—-often on
    a moments notice

45. 

    September 12, 2009 at 5:39 PM

    downtownjunkie

    I usually play weekdays (at a moments after lunch so my opinion may be not applicable if you schedule is different.

    Lakeridge fits into your description fairly well. I think a year membership/unlimited play is only $3-3,500. The course is nice and I often prefer it over Wolf Run and Arrowcreek (the other courses I frequently play). You usually don’t need to set up a tee time at Lakeridge. It is more crowded on Mondays and Fridays due to tourneys/events/large group plays.

    Wolf Run would be my next choice but it’s often windy in the afternoon -same as Arrowcreek.

    I agree with your opinion on the Montreux lifestyle. I think I will look at Fieldcreek/GF/Saddle.

46. 

    September 12, 2009 at 6:16 PM

    john

    give me a break you both have a handicap of 7000

    trust me, play miniature golf.

47. 

    September 13, 2009 at 3:51 AM

    FutureRenoHomebuyer

    Does anyone know a place where one can get good estimates for property taxes for a given property? I have long generally assumed that, in general, an older place will have lower taxes.

    After reading this discussion, though, it does seem to be quite a significant issue, with a great deal of variance for different neighborhoods.

    Also, do those higher property taxes result in better funded schools?

    Any help, info appreciated.

48. 

    September 13, 2009 at 6:31 AM

    Mike McGonagle

    FRH, start at he Assessor’s web site http://www.co.washoe.nv.us/assessor. Clink on Assessment Data – Real Property, click through the disclaimer, then search for the property by address, APN, or owner’s name. Then click on “Click here for the tax information from the Treasurer’s Office”. Click on the “Tax Assessments” tab. Your new tax bill will be the sum of the “Gross” numbers. The “Credits” are abatements to keep the actual tax bill from increasing over the cap rate. The credits disappear for a new owner.

    I believe the schools are funded on a per pupil basis, so higher taxes in a district do not equate to higher funding for schools in that district.

49. 

    September 13, 2009 at 7:38 AM

    Sully

    FRH; there is only one school district here – Washoe County. All funds go through it, so its highly unlikely one school will be better funded than another.