Each month our friends at First Centennial Title Company provide me with their Market Condition Report.
According to August’s report, “The pace of the Reno market has resumed overall positive movement.” Seven months supply of inventory is (has been) holding steady. Demand is up. However, so is the number of failed escrows. “Closing probability” dropped five points in August, and now sits at 54% for Reno and Sparks.
To see the entire report click on the picture below.
bob c
all the listings i’m watching are being gobbled
up—is everyone out there writing offers today?
(hence no comments?)
WorriedGuy
A lot of listings I am watching are sitting with weekly price reductions. We have got a long way down to go yet folks. The banks are playing Tom Foolery with Mark-Model vs. Mark-Market…
“It is up to banks and bank regulators the extent to which problems that have affected loans actually are reflected on the books,” said Richard Parkus, analyst at Deutsche Bank. “The fact that we don’t have 10 banks a day going under is not a reflection of the fact that things are not as bad as we thought.”
Check this article out at FT.COM with the headline : “Fed wants picture of banks’ property exposure”
Doubtful
bob c you seem to be always here to tell us how your watch list is just disappearing before your eyes. Hmm, my watch list has nothing on it but houses with price reductions.
Maybe you ought to buy today, before you get priced out forever. Maybe even offer more than asking, just to be sure you don’t get aced out in a bidding war.
Back2Basics
It really depends on what your “watch list” consists of. I tend to believe Bob. My husband and I lost our shot at FOUR properties this summer (two just in the last two weeks) because they went pending literally hours before we were able to sign our own offer. All of these properties had been on the market 7 days or LESS! These are decent sized homes with decent yards (2200-2800sf, 4-5 bedrooms) in family friendly locations, and under $280K. I guess I just have really good taste, and when they’re listed at the right price, they go like hotcakes. We didn’t think we had to be quite so quick on the draw in such a buyer’s market.
So like I said, perhaps it does depend on what’s on the “watch list.”
For now, we’ll continue renting month to month and hope the prices continue to slide downward this winter. And next time we’ll try to be quicker on the draw.
E. Edward
If you are one of those poor souls stupid enough to buy in this volatile market, Here’s another way to redeem some of that future equity loss and is always good entertainment?….
Just before you finish signing, Tell your Realtor to back out another point an a half out of there commission or no Deal…
Martin
I am far more inclined to believe that houses in the under $300K segment are moving since that’s where most (85%) of the action is. Of anybody who tells me that houses in the $500K range are being gobbled up, I am highly skeptical. Houses over $500K account for only 5% of all sales. Sorry, $500K and over houses are languishing, month after month after month, not flying off the shelf.
Krista
Houses over $400k are languishing month after month after month.
Gobbled up? That’s funny, real funny.
I live in a neghborhood where there are 4 houses for sale in the $400-$450K range, all within a couple blocks of each other. They all have been on the market since last winter, and they all have moss growing on the for sale signs. About every 3 weeks or so the realtors swing by to see if the for sales are still standing up. Gotta earn that commission I guess.
bob c
i was referring to the lowest priced properties
in the better or best neighborhoods (that aren’t
trashed)
DownButNotOut
In that respect you right BobC
CommercialLender
Bob C and Back2Basics,
Please tell. If you’ve been beaten out a few times in recent weeks, then there’d be no harm in telling which homes they were. We’d all draw some good points of discussion and get a great eduction on your experiences. I’m sure you recall the very detailed and fabulous dialogues involving Smarten’s recent purchase, so please share. Maybe Mike or Guy could research the buyers of these homes you lost out on to see what profile they fit to know who, at least in this small sampling, are gobbling up the homes in 7 days in this market.
johnny
I recently had my cash offer outright rejected like I told many of you already.
below is the reasoning I was given by the big boy who calls the shots. I’m not sure what to think of this, except laugh and move on !
“My Administrative Assistant passed your email along to me regarding your recent experience with putting in an offer on our last standing unit at XXXX. As the Managing Member, please allow me to clarify how we conduct our business.
I assume you have been watching our pricing, and understand we recently dropped our last unit by $10,000 to $175,000. We did so to stay within close proximity with the market, which we also watch carefully. However, since we also have X more units to build in Phase I, and another XX in Phase II we also have a long term responsibility to our existing and future homeowners, as well as to the members of our partnership.. Many of our buyers have spent more than the current market price. Therefore, we are not in the habit of severely reducing our price, or countering against very low offers. We take the high road, price our units fairly and competitively, and work with buyers that we perceive are serious in buying.
If you are still interested in Unit X, I would encourage you to make a reasonable offer through our realtor X, understanding that we do not randomly lower prices just to make a sale…We try to be fair with our existing buyers, while recognizing market conditions, and are not in a distressed or desperate position. XXXX is a great project, and we are committed to this property for the long-run.
Should you have any additional questions, please feel free to contact me directly.”
PriceItRight
To CL:
I agree with Back2Basics that properties which are priced right are getting multiple offers within days or couple of weeks (even in the $300K+ market). Here are few recent examples from the South Suburban Area.
1. 15509 Quicksilver Dr: This bank owned 2734 sqft property came on the market in first week of June at a listed price of $295K. They got seven offers in five days. The highest bidder bought it for $335K.
2. 3471 Forest View Ct: This bank owned 2396 sqft property came on the market in first week of July at a listed price of $350K. They got five offers in two weeks. The highest bidder bought it for $351.8K.
3. 2744 Spirit Rock Trl: This 2153 sqft property came on the market as a short sale in third week of May. They got two full price offers within 48 hours. The closing occurred few days ago for $350K.
bob c
13315 fieldcreek lane 399 saddlehorn right away
1705 blue spruce 430 a few days after price reduction
224 earlham 499 st james 1st day on market
218 earlham 499 st james 1st day also?
625 rabbit ridge 339 arrowhead
3436 forest view lane 359 arrowhead
3446 white mountain court 369 arrowhead
i liked all 6 of these — there have been several more go around these that i didn’t like from photos
1405 joy lake is asked for 525 but at 1887 sf
it should be 450 lets watch
bob c
make that 475 3 car garage + sauna
PriceItRight
To bob c:
FieldCreek Lane is not part of Saddlehorn area. All three ArrowCreek (arrowhead!) properties you list are currently in pending-short-sale status. We don’t know if the bank will accept the offers on them. 625 Rabbit Ridge stayed on the market for a good period of time and got two offers in one week only when the price was dropped from $365K to $339K. The three examples in my earlier posting are very different in the sense that bidding war started as soon as they were listed on the MLS.
bob c
i’m 75% sure that i’m moving up there, so i’d
prefer the market stay down until i know for sure
(can’t buy if not sure) so i have no reason
to be a cheerleader
i can feel the change in sentiment here in san
jose, ca (doom and gloom replaced by the worst
is behind us) and already see solid evidence business has picked up in silicon valley
each day that passes minimies the risk that this
is a head fake…..business IS loosing up in
silicon valley (the recession is thawing)
bob c
thats why i’ll enlist guy’s expertise when i
have my funds and know for sure i’m moving
up there
in the meantime i’m amusing myself looking
at properties that seem to my liking that i
would pursue when i’m in the market
skeptical
BobC and PriceItRight,
Your viewpoints give pause and make me question my own thesis: $400k and above dead and likely to stay that way.
Maybe there’s room for both of our views, though. Except for a few properties in Saddlehorn/Galena, all your examples are below $400k.
Bottom line: with the huge glut of homes on the market above $400k, with the immense amount of foreclosures in the pipeline, with Reno unemployment at 12.5%, and with the slow part of the year for sales nearly here, anyone making a bid near the listing price in this market is foolish. If these properties are truly being snapped up above the ask, let em go. FWIW.
Irv
“These are decent sized homes with decent yards (2200-2800sf, 4-5 bedrooms) in family friendly locations, and under $280K. I guess I just have really good taste, and when they’re listed at the right price, they go like hotcakes.”
———–
Those examples fit into the financial demographics for Reno’s employment base, so it is logical that there could be multiple buyers in that price range. I don’t think there is anything magical or especially attractive about those homes, they just fit into what working folks in Reno can afford to buy.
PriceItRight
To skeptical:
I agree that with the rising unemployment it’s difficult to think of a recovery. But lower interest rates and government assistance are not trivial factors either. Who on this blog had predicted that median will stay flat for four months in a row? Also, the difference between the listing price and the offer should not be the sole criterion of judging the merit of a purchase. Although many sellers continue to price their property above the FMV, there are cases when the price is set aggressively, leading to offers at or above the listed price.
Back2Basics
I agree with you Irv. Most out there is still WAY overpriced, too little, no yard, or a dump, or an unclosable short sale. Given these options, there’s really not a lot to choose from.
The two that recently got away:
5420 Brittania Dr.–this was a short sale forever, probably got bought on the courthouse steps, and flipped.
4790 Pinesprings–smaller home, but nice location, yard, schools, etc.
Hopefully next year there will be more that the “working folks in Reno can afford to buy.”
Sully
bob c; arrowhead? Did you mean Arrowcreek?
WorriedGuy
Hey Bob C:
How about 55 Calla Lilly- Fieldcreek? Now pending after being reduced to $475K Nice home. Fantastic garage and backyard, but as usual these 90’s homes need a lot of upgrade in the bathrooms and kitchen. One other thing I noticed with these homes is there is always some quirky thing with the family or dining room layout…Like a step-up or weird 90’s type bar railing. Looks really outdated. And these homes in Reno from the 90’s are RARELY upgraded and they want top dollar. What a joke people.
Big baby
“I agree that with the rising unemployment it’s difficult to think of a recovery”
unemployment always lags any recovery, take an economics class.
WorriedGuy
Does a record drop in bank lending and consumer credit lag a recovery?..Anybody have a parachute?
Downtownjunkie
Since I have completely walked away from this, what do you think this property is worth?
6375 Wetzel Court, Reno, NV, 89511 – MLS ID#90012464
It was perfect for me but I could buy a much nicer/larger place in Arrowcreek/Fieldcreek for 500K
bob c
Somebody posted the high hoa’s there.
I’d be tempted, too, montreux. I thought it would
go right away…..i was wrong.
WorriedGuy
Montreux…You’ll enjoy the $9K per year property tax also…Even if you pick up one of those Renaissance properties for $450K. And again, good luck getting it reassessed down. It simply is not going to happen. The nice inflating of land values to buffer the abatement is a good trick.
billdddrummer
To WorriedGuy,
If you have the house bulldozed, you could get it reassessed.
But then, you’d still need a place to live.
Oops.
Downtownjunkie
What would you guys offer? I thought about 375. From that point it would only start to make sense with the HOA and Prop Tax. After the realtor told me it there were multiple offers I said I am not interested… They called back and said the offers made were really lowball.
Downtownjunkie
I told them I would wait until it drops another 25% 🙂
david
“After the realtor told me it there were multiple offers I said I am not interested…”
And you believe this every time you hear it???? If you want to submit an offer nothing prevents you from doing so. There can be a number of things that makes an offer more attractive than another. Just make sure your offer gets in front of the seller. Make sure you insist that you always get it back signed by the seller whether rejected, countered or accepted.
Catherine
Low end properties are moving a lot. If you bring up areas like Stead and Cold Springs practically everything on the active list is pending/pending short sale. There actually isn’t too much free (not pending) inventory in those areas.
Perry
This is in response to WorriedGuy’s comment about 90’s style homes. In ’92 stricter building codes were implemented in Reno. I think contractors refer to them simply as 92 codes. From what I understand this is when they started accounting for earthquakes. Straps and bolts to the foundation, shear walls etc. I like older houses but I think there was a dark age of building in Reno. I owned a house in SW Reno built in ’76 which should have been torn down. I also owned another tract house that was built in ’65 that should also have been torn down. Both of these houses seemed under engineered.
Gary
Perry, say what you will about the under-engineering of those old houses, but at least they made up for their structural deficiencies by including plenty of asbestos and lead paint 😉
I still wonder how much my brain may have been affected by sanding lead paint without proper hazmat precautions. We just didn’t know any better, but now that we do, I really wouldn’t want to have one of those older homes. The materials can be a real issue when it comes time to sell, and you can spend a ton of money on remediation. These days, a broken mercury thermometer is reason enough to evacuate an entire school, but I’ve held that stuff in the palm of my hand. Yikes!
Martin
Catherine, the low end is where the action is. By definition, one half of all sales are below the median, and the median for houses is now below $180K and for houses and condos it is $166K. 20% of all sales are below $100K. Contrast this with only 8% all sales being over $400K.
In other words, there are more than twice as many houses selling for less than $100K than are selling for $400K.
These facts just really drive the people who are trying to talk up the market nuts.
Damn facts.
Skyler
In Reno-Sparks, there are more than 1,500 properties listed below $200K.
There are about 625 listed below $100K.
There are 330 listed between $400K and $600K.
In other words, there are about 5 times as many properties on the market below $200K than between $400K and $600K.
It is absolutely clear what kind of a market there is in Reno-Sparks today.
Low end, and getting lower.
Got the Memo
It is true that the bottom end is seeing action. The first time 8000 tax credit has a lot of folks buying in at the lower end of the market. The NAR has done a superb job of jockeying this. It has created in the minds of a lot of fence sitters that they better buy now or lose the tax credit when it goes away at the end of November.
Of course, nobody should be surprised when the Congress extends the credit on November 25.
Realtors pay fairly big dues to the NAR, who then pays big fees to its lobbyists. On this issue, for sure, the realtors have got their moneys worth.
skeptical
The general thread here at the blog shows consensus that the market below $200k (for some $300k) has stabilized and is even pretty hot right now.
For those out there, however, who think that even the market above $400k is on the mend, run don’t walk to Mark Hanson’s latest blog at: http://mhanson.com/blog
Nevada blazes every other state in the union with an average LTV of 115%. The next closest state is Arizona at 95%.
For those buyers who can afford it, the place to be in Reno is near and above $400k. The trade up buyer is gone (due to sky high LTV’s/negative equity). Also, investors are bottom fishing (no market to flip at the high end and negative cash flow for prospective landlords at that level).
So, for all those out there ready to pounce on Montreux, and its $9k annual property taxes, maybe you should wait a bit…
Downtownjunkie
Skeptical
I am going to throw it out there: Montreux is going to crash in the next 12 months… Looking at the properties going back to the bank in that area makes me cringe.
I too have seen the sub 300K market heat up. There was a model home sale at Brittney Meadows in Damonte and they both sold within an hour or two. I think the homes were around 1,800SF for about 225ish.
skeptical
Junkie,
I like your chutzpah. It’s possible prices in Montreux will go down considerably over the next year. Those not desperate, however, will likely hold on until the very end, watching the comps around them implode.
I see more of a slow bleed, though, leading to up to 40% reductions from here in Montreux and places like it over the next 2-3 yrs. IV too at risk, but there will always be a higher demand there because of that topaz jewel that they sit astride. There is just no base of high earners in fiscal condition to take on those $1M properties in Reno, exceptions from Guy’s client base notwithstanding….
GratefulD_420
All of you guys evidently don’t know a damn thing about real estate.
I just read the RGJ article from new RE writer, Craig King….and using a logical method based on pure data comes to the conclusion that this mrket has made a complete turn and is ready to take off.
http://www.rgj.com/article/20090921/BIZ/909200330/1071/BIZ
WorriedGuy
Does the author on that article account for shadow inventory accounting trickery?
Sully
For one thing the guy has his facts wrong. –
At the end of August, there is combined, nonpending inventory of only 1,769 units. A closer breakdown of those units shows that 1,439 are single-family homes and 343 are condominiums. By comparison, the inventory of combined single-family and condominium units for sale peaked in the market in August 2006 at about 6,500 units.
According to Market conditon report there are over 3000 sfr for sale. He’s off by 50%. Also, the sales season is over, so don’t hold your breath for multiple offers! 🙂
bob c
the article seems to be predicitng a bottom…
not a u turn
although a bottom (a more normal selling environment) feels like a u turn from the free
fall
Gary
GratefulD_420, it’s interesting that you merely mentioned that Craig King is a new real estate writer for the RGJ, but apparently didn’t think his other job as chief operating officer at Chase International Real Estate was noteworthy enough to mention. Perhaps you underestimate its importance.
I’m not quite sure King is a perfectly neutral referee to be calling the market bottom. Does anyone remember Wayne “2007 is a great time to buy” Capurro?
Sully
Anyone else wondering what Craig looks like in a short skirt and pom poms?
billddrummer
And why didn’t Guy get that job? Is it because he’s actually SELLING real estate, and doesn’t need to spend time making a (low) salary as a journalist?