Below find First Centennial Title’s Market Condition Report for the month of June. With phrases like: “No significant change…”; “Little change…”; “A slight increase…”; “Holding constant…”; “No significant movement…” used to describe June’s key metrics, I wonder is this telling of a bottom, or the calm before the storm?
Click on the picture below to access the full report (two pages).
Martin
Let’s have a debate, number 387 in the series, about whether a bottom has been reached in the median price.
Who wants to go first?
Rory
Serious eviction standoff happening right now at 2525 W. Lake Ridge Shores. See the RGJ for the latest.
HighlyTrainedRealEstateAnalyst
I’ll go first:
It’s possibly a bottom, but if the market goes down from here it might not be. Or, it might be a false bottom with either an updside or downside potential – unless of course the market does not move during the given period, and that would indicate whether or not the market has stabilized. But, depending upon the precision of one’s estimate there is, in my humble opinion, a 92.4569 percent chance that the market will either go up or down from here, unless of course some unforeseen circumstance arises for which I have failed to account.
Zen
HTREA,
Thanks for clearing that up. I too believe we may have or not but probably will unless we already have reached the bottom. I can also say with some certainty that I will reach the bottom of my beer later, unless I don’t.
Mike McGonagle
There is a time line posted on http://www.REreno.com detailing the loan and default situation at 2525 W Lake Ridge Shores.
MikeZ
June: stable. Just like the 11 prior months.
Sleezy
The deals are STILL getting better!
Great news!
Sleezy
FYI
Unemployment in washoe county increased from 13.3% in may to 13.6% in June..
More stability mikez huh?
Irv
Zen, the philosopher Zeno taught that you could actually never completely reach any destination, probably including the bottom of your beer, because you always have to get halfway there first, right? Then you have to get the next halfway, and on and on, so you can see that you never actually get there, there is always a bit left, and then half of that.
Makes as much sense as most guesswork on here about the bottom of the market.
Sleezy
I thought that was damacratis?
Pogo
We have met the bottom, and he is us…
Zen
Irv,
Uncle Zeno and I finished off many a pint debating that issue. I always told Uncle Zeno that if an object bounced off of something, it had to have hit it. Ultimately, the housing market bottom will hit. We will know because the market will bounce off of it and stay off of it. You can argue all you want about it. The real question is: What are you going to do about it?
fumed
Another thing clogging the pipes of supposed fluid market:
Is their a reason that Reno RE agents are never able to produce a response to an offer that is not verbal? I do not feel like I should ever respond to a verbal counter. Any thoughts?
fumed
(please excuse the above grammar and spelling it is late!)
Sully
Irv, come on! Using Zenos’ paradox to define a bottom is like saying there will never be a bottom.
It’s not hard to see where the primary sales range is and houses are moving in that range. Anything above 400K in the Reno/Sparks area should be considered suspect. These would have to be taken on a one on one basis.
IMO, the high end has yet to come to terms with the general market. With the addition (during the bubble) of so many high end houses, that may take a while. This area should never have had so many million dollar houses built. The median income and the general economy (gaming) doesn’t justify it.
Then there is the competition from the Incline market, where million dollar houses may actually sell. Reno/Sparks is not Lake Tahoe. Silicon Valley millionaires are more apt to purchase a million dollar vacation home in Incline than Reno.
Of course that doesn’t help in defining a bottom either, but it is much better than Zenos’ paradox. 🙂
HighlyTrainedRealEstateAnalyst
Sully,
I would say that Irv’s response, and Zeno’s paradox, make a lot more sense, because it acknowledges the fact that trying to predict what will happen next is nonsense.
The game is rigged, and until we have a stable currency and stable laws under which to operate, there is no way of predicting what will happen next.
As I’ve said in a previous post, there is a way to make every home in Reno worth over one million dollars in less than a month: Simply have the Federal Reserve place 14 million dollars into every person’s checking account. Sound absurd? Then why did they try it with $700?
Sully
HTREDA; I’m not arguing your point, however most people will not wait until your scenario comes true. In the meantime, a general guide for pricing the Reno market is available right now.
Another thing, 14 Million? I’m trying to be realistic, not sarcastic. I have been pushing the state of affairs in this country for quite a while, so I’m not overlooking all the compelling reasons to wait.
However, there are those that will come upon the price they are willing to pay and have the means to pay it. There are those of us that haven’t got the time it will take (life expectancy) to get a stable currency and stable laws.
HighlyTrainedRealEstateAnalyst
Sarcasm? How am I being sarcastic? Why is it alright to artificially inflate prices a little at a time if we all know it does no good? Our beloved senator was happy about the minuscule increase in the minimum wage because he claimed it was good for the economy. I’m sure he also voted for the “stimulus” check that was sent out under our last president. Following this ridiculous logic it would be REALLY good to raise it by $5.00 / hour. Or, why not make minimum wage $125.00 an hour? Since the vast majority of GDP in this country is consumer spending, the result should be a massive increase.
My point is that ultimately, a home price is really just a reflection of inflation, and when a bubble occurs that causes home prices to exceed inflation then one of two things will happen: inflation will go up or the home price will go down. There are many variations of this outcome, such as if inflation rises and wages stay flat, but hopefully you get the idea.
bob_c
guys comment ‘the calm before the storm’ is what
i inferred when a local realtor told me ‘nobody
is looking’
Ralston
My brother in law is a realtor here in Reno. He is not saying that “nobody is looking”, but he is saying that he has not had anybody ask to see a house priced over $250K in months and months.
I think he would define the “high end” now as $300K and over.
DownButNotOut
Raise your hand if you believe HTREA is Derrick.
GrandWazoo
Not likely. Thought process, no matter if correct or not, is too coherent. Not enough spelling errors.
My only unanswered question over the last year is what exactly does MikeZ do for a living? Seems like at least a tangentially connected real estate sales participant at some level, hence the constant “buy now” shill.
Who knows on either/both.
smarten
HTREA –
If “trying to predict what will happen next [in the residential real estate market] is nonsense, then why did you “go first” in opining “whether a bottom has been reached in the median price?”
Whatever the answer, how could your answer not have been “sarcastic?”
And no, I don’t believe you’re Derrick. Maybe Derrick’s older/wiser/more learned brother, but not Derrick.
HighlyTrainedRealEstateAnalyst
Smarten and GrandWazoo,
Thank you for the nice compliments (I think calling me wiser then Derrick was a compliment?).
DBNO, I’m not Derrick. I don’t even know who he is. I do not work in the real estate business, and I don’t know any of you.
While my posts are sarcastic, the specific reference to “stimulus” funds and minimum wages rising at very large rates was not sarcasm. I was trying to make a point by extending the absurd policies that have gotten us into this mess to their extreme. Until these policies, which are practiced by both parties, are changed, the problem will not go away.
I’ve been reading this blog for several months and I have enjoyed reading all of your comments – even the ones that I don’t agree with.
DownButNotOut
OK then how about this – as a test HTREA – spell million. 🙂
You’re right Wazoo. Too few spelling errors. But it’s nice to have someone aboard that is more sarcastic than I am.
Steve Herschbach
People keep talking about the bottom and whether we have reached it or not in Reno. More important I think is to define just what you think “bottom” means for Reno.
Many here appear to be thinking of real estate as an investment. So bottom for them likely means trying to catch prices at a low to take advantage of what will then be increasing property values. But is Reno the place to play that game right now?
When I consider the situation here in Reno my idea of a bottom being reached means the huge declines ending and prices becoming more stable. We have obviously had some moderation as of late, although further declines would sure not surprise me. But price appreciation? Hard to believe we will see much of that around here for a very long time. Huge supply, high unemployment. It would seem to me the best we can hope for right now is to muddle along for years. For me a happy outcome would be for property values to eventually get back to roughly tracking inflation.
But in turmoil there is always opportunity. It is obvious lots of cash buyers are snapping up distressed properties now and some of them will no doubt do well.
Me, I will not make any money on my recent Reno purchase. All it will do is cost me money the rest of my life. Nothing like furnishing an empty house to put a dent in your wallet! But my wife is just loving it, and I for one am happy I did not wait. We walked the dogs down to the river last night, and took a spin up to Incline Village the day before. Been a cold, rainy summer in Alaska, and not a day passes that my wife checks the weather up north and is thankful she is here instead.
MikeZ
Wazoo, Do you disagree with my evaluation of the Reno/Sparks housing data: median price and $/sqft are stable and have been for a year now?
My occupation and motivation are irrelevant to the facts and data … for the record, I’m not connected to real estate in any way, but I am a potential home buyer in this area.
I think now is a good time to be a smart, patient, qualified buyer. There are some excellent deals out there, so good that even another 10% drop doesn’t matter.
And to the doom-and-gloomers: This isn’t Detroit and it isn’t the end of the USA or even the State of Nevada. There will be a recovery and housing will ride that recovery wave, when it comes.
Rory
Nevada is a boom bust state, it’s been that way since it’s inclusion into the union. So for the life of me I don’t understand why people presume Nevada will never recover. It’s a statement on an island because our history doesn’t support the thesis whatsoever. Nevada will struggle to recover more so than many states but the same things that made Nevada a desirable place to move in the early 2000’s, have not disappeared. Nevada has good things to offer many types of people and the fact our real estate is more affordable than any time since the early 90’s, well, that’s a good thing! Now if EDAWN can lure more potential businesses our way, it just might spur a housing DEFICIT, and, price appreciation (GASP!)
Sully
Rory, I agree with you 100%, however I don’t recollect anyone ever saying Nevada will never recover. I will say, the million dollar houses will continue to dwell until the reliance on gaming is resolved.
EDAWN is doing the best it can, but I think it should push business sectors that would fit into this area immediately, instead of trying to rob Silicon Valley. That is a waste of time and resources, as it is now practically mandatory for companies in the Hi Tech arena to have a physical presence in Silicon Valley.
I would love to see the NY Yankees move to Reno, however I wont hold my breath, or give it another thought for that matter.
There aren’t enough casino high paying jobs here to fill the void in high end housing. So,unless this area becomes a doctor magnet, who is going to fill this void?
Rory
I guess I’ve heard the “never recover” rhetoric from outsiders discussing our economic struggles, although there are plenty on this blog who claim a return to 2006 pricing will take 25 years or more. That’s hogwash. With the inflationary pressures facing this country, housing prices will have nowhere to go but up as the dollar is devalued by virtue of Obama’s Printing Press.
And I agree about EDAWN. They need to concentrate on logistics and renewable energy companies as they will find Reno-Tahoe-Sparks to be an ideal place to relocate their respective headquarters.
Irv
I agree with Rory. The federal government is faced with debts it cannot possibly repay, so it can either repudiate them–which is politically unworkable–or it can inflate out of them, by paying them off with funny dollars having little economic value. I believe inflating out of debt is seen by some in power as the best way to deal with the deficit, vast public employee retirement obligations which are stated in dollar terms, and social security payments stated in dollar terms. That way, retirees, pensioners and creditors will get their money, it just won’t be very useful to them once they have it. No promises will have been broken to anyone. And those seniors with significant cash savings sitting in the bank or in money market funds will neatly be left hanging out to dry, but of course, those people aren’t this Administration’s constituency anyway.
HighlyTrainedRealEstateAnalyst
Rory,
You are exactly right. Except, remember it is the Federal Reserve – which is not Federal and has no Reserves – that owns the printing press. The government borrows from them.
Also, if we see inflationary pressures combined with stagnant salaries housing could be in big trouble. Think Weimar Republic where an apple cost nearly a month’s wages but a landlord could not raise the rent because nobody would pay it.
E.Edward
Interesting inflationary hypothesis,
Home appreciation? You would think thats how it would work but it doesn’t….Bingo!- Wiemar republic, Zimbabwe etc etc ….With inflation comes rate increase… Home prices tanked
Don’t get me wrong inflation is coming -necessity items {food&energy assets}
Maybe Wall-tents will go-up!
….just my thoughts
HighlyTrainedRealEstateAnalyst
Good thoughts EE, I hope we are both wrong. Unfortunately I don’t know of a single instance of a country that has debased its currency and not had inflation, devaluation, and widespread poverty.
Ebson
Rory,
Do think that when inflation goes to 15% that mortgage interest rates will still be 4.75%?
I remember 15% inflation and the 18% mortgage money that went with it here in Reno in the late 70s early 80s. Perhaps you can explain how 18% mortgage money is going to juice house values upward. It did not happen then and it won’t happen now.
RRB Historian
I believe that MikeZ has said on this blog that he is an electrical engineer.
GroupDetails
I also remember the 15% inflation of the late 70s and that time was anything but dismal for my retired grandparents. Far from eating dogfood, it was the best financial times of their lives. Those 15% CDs were bringing them a cashflow better than they could have ever anticipated in their later years. Old people tend not to go out and buy a lot of big ticket stuff so the fact that washing machines were going up didn’t matter too much to them. I know quite a few older folks today who would gladly exchange some inflation for 9% CDs.
HighlyTrainedRealEstateAnalyst
GroupDetails,
That is a real nice story, and I’m glad that everything worked out for your grandparents during that specific period of time. But the reality is that inflation, when it is caused by debasing a money supply, is theft. It punishes savers and it is devastating to the vast majority of people who must live on a fixed income.
GroupDetails
Not like now……when the “vast majority of people living on a fixed income” are living it up on their 0.1% money market funds and 0.3% on their CDs. They are feeling so damn lucky to not be in a period of high inflation.
Nope, that pablum about inflation stealing the lives of fixed income seniors is textbook nonsense. 80 year old people don’t buy new houses and they don’t buy new cars and they don’t buy 60″ flat screens. Rising prices in big ticket items is not part of their lives anymore. They do like to be able to go our to dinner every now and then. There is not one 80 year old retired person who would not trade inflation for a decent return on their CDs.
Get in the real world.
Wally
Yep, GroupDetails is dead right on. My grandparents are in their 80s and are being devastated not by the boogeyman of inflation, but by the insulting returns on their fixed income investments.
My grandparents would gladly trade having the cost of groceries rise by $20 or $30 every trip to the store in exchange for even 5% on their CDs. I’m not sure that my grandparents even know what a 60″ flatscreen TV is. They sure as hell are not going to go out and buy one.
Festus
I think Highly Trained Analysts are good at textbook theories. Can really throw out them there fancy learnin’ “paradigms”. Maybe haven’t been to very many county fairs though.
HighlyTrainedRealEstateAnalyst
Textbook nonsense? Since the early 1900’s the dollar has lost well over 90% of its value. The textbook theory that has proven to be nonsense is Keynesian economics. But, this is a real estate blog, so I will continue to try to keep my comments pertinent to real estate and not my grandparents.
Sleezy
Lol you know nothing about Keynesian economics… So hussshhhh up
Sully
The textbook theory that has proven to be nonsense is Keynesian economics.
At least you got that part right. 🙂
HighlyTrainedRealEstateAnalyst
Sleezy,
One of the reasons that this blog has very few new contributors is because some (not all) of the “regulars” have a tendency to resort to insults instead of facts. You know nothing about me, and yet you claim that I know nothing about Keynesian economics.
Why not argue the facts instead of baseless claims?
MikeZ
Highly Trained, “Sleezy” is Derrick, our troll.
Here’s a sample of his forecasting ability:
DERRICK said,
in April 15th, 2007: Anyone who is expecting or waiting for home prices in reno to reach the 2002 levels are in for a reality check.
[ From http://tinyurl.com/2d9j26v ]
HighlyTrainedRealEstateAnalyst
Thanks for the info Mike Z.
I say we all – myself included – work on keeping our posts respectful, and geared toward real estate.
Brandon
AS further evidence of Reno’s improving economy, the office vacancy rate has risen to 21.9%. The highest vacancy rate ever.
Yes, surely evidence of the bottom of the economic downturn is all around us.
Ellie
I readily acknowledge that I don’t know crap about Keynesian economics, but the comments made here that older people would gladly trade some inflation for decent CD returns is a no brainer.
They don’t care how much of the dollar has lost since 1900, they want to earn more than $50 a year on their $10,000 CD.
This time of one of the lowest rates of inflation ever recorded is killing them financially. And for the record, I am 70 years old.
Don’t mean to insult anybody. Some of us out here are living in the real world, not the college classroom.
HighlyTrainedRealEstateAnalyst
There you go again assuming that I have some sort of advanced degree in economics or finance, or that I don’t live in the “real world” (Maybe this is just Derrick again posting under a different name?). I’m just a person with a basic understanding of money – both constitutionally defined money and the private, fiat system under which we currently live. Also, I realize that the calculations for the CPI (Consumer Price Index) have been changed extensively over the past 50 years so that real inflation is masked. There’s a reason for this manipulation: All government entitlement increases are tied to the CPI.
At some point all of this money that has been created will be put into circulation, and then the real inflation begins. Remember, the majority of it is currently being held by the largest banks. Words mean things, and inflation, when properly understood, should be a major concern not only in real estate, but in every area of life. To claim there is no inflation because the CPI is low and some prices are not currently rising is to miss the point.
Since the people that respond to my posts (even if they are the same person) seem to be more interested in my book learning, my “fancy textbook theories”, and how many county fairs I have attended, I think it’s time for me to stop wasting my time posting to this blog. I hope that our society has not degraded to the point where somebody who has a basic understanding of this country’s economic foundation is actually accused of being an out of touch academic. I thought that anybody reading my initial posts would realize that the name under which I posted was sarcasm. I guess I was wrong, in order to realize that one would have to be “book learned” and have read books such as “Hitch Hiker’s Guide to the Galaxy”, “Brave New World”, “1984”, etc.
War is Peace
Freedom is Slavery
Ignorance is Strength