The number of houses sold in July fell 32 percent from June’s units sold. Seasonality factors and the end of the First-time Homebuyers Tax Credit contributed to the huge drop in sales.
On the flipside the median sales price jumped nearly 6 percent in July – due to the decrease in the number of entry-level homes being sold now that the effects of the First-time Homebuyers Tax Credit have passed .
Interestingly, July 2010’s median sold price of $180,000 is unchanged from July 2009’s number.
Active listings are up 9.8 percent this month. Pendings are down 2.8 percent.
July’s sales break out as follows:
- Bank-owned properties – 26.3% – up from June’s 23.3%
- Short sales – 34.7% – down from June’s 43.4%
- Equity sales – 37.7% – up from June’s 31.7%
For those readers who prefer the median sold price for houses and condos combined, July’s 475 sold houses and condos exhibited a combined median sold price of $162,900 – up from June’s combined median of $160,000.
| Month Year | # Sold | Sold Price | Sold Price per SqFt | Average DOM | # of Listings | # of Pendings |
| Jul 2010 | 403 | $180,000 | $101.84 | 129 | 2,158 | 1,580 |
| Jun 2010 | 597 | $170,000 | $100.57 | 146 | 1,966 | 1,625 |
| May 2010 | 449 | $175,615 | $102.57 | 138 | 1,789 | 1,804 |
| Apr 2010 | 509 | $179,990 | $103.13 | 129 | ||
| Mar 2010 | 476 | $175,500 | $99.29 | 141 | ||
| Feb 2010 | 338 | $170,000 | $101.68 | 138 | ||
| Jan 2010 | 346 | $167,000 | $98.32 | 134 | ||
| Dec 2009 | 424 | $178,000 | $101.28 | 126 | ||
| Nov 2009 | 461 | $175,000 | $103.61 | 112 | ||
| Oct 2009 | 561 | $180,000 | $103.52 | 123 | ||
| Sep 2009 | 520 | $185,948 | $103.31 | 128 | ||
| Aug 2009 | 482 | $179,900 | $102.64 | 116 | ||
| Jul 2009 | 515 | $180,000 | $103.45 | 126 | ||
| Jun 2009 | 536 | $180,317 | $104.09 | 136 | ||
| May 2009 | 426 | $175,000 | $102.29 | 139 | ||
| Apr 2009 | 429 | $190,000 | $105.71 | 133 | ||
| Mar 2009 | 369 | $200,000 | $105.85 | 133 | ||
| Feb 2009 | 293 | $205,000 | $111.52 | 132 | ||
| Jan 2009 | 233 | $200,000 | $113.04 | 117 | ||
| Dec 2008 | 294 | $218,950 | $121.74 | 145 | ||
| Nov 2008 | 269 | $220,000 | $122.24 | 152 | ||
| Oct 2008 | 354 | $230,000 | $131.43 | 144 | ||
| Sep 2008 | 358 | $239,250 | $136.72 | 145 | ||
| Aug 2008 | 321 | $250,000 | $142.14 | 140 | ||
| Jul 2008 | 397 | $251,000 | $145.48 | 139 | ||
| Jun 2008 | 369 | $262,500 | $148.05 | 142 | ||
| May 2008 | 314 | $260,215 | $152.30 | 134 | ||
| Apr 2008 | 314 | $275,000 | $154.05 | 172 | ||
| Mar 2008 | 238 | $274,000 | $150.93 | 166 | ||
| Feb 2008 | 195 | $289,000 | $156.48 | 149 | ||
| Jan 2008 | 165 | $285,000 | $170.23 | 146 | ||
| Dec2007 | 228 | $283,950 | $167.22 | 143 | ||
| Nov2007 | 204 | $299,750 | $172.24 | 126 | ||
| Oct2007 | 241 | $296,000 | $173.55 | 116 | ||
| Sep2007 | 230 | $299,945 | $179.46 | 114 | ||
| Aug2007 | 311 | $305,000 | $182.49 | 118 | ||
| Jul2007 | 300 | $315,000 | $189.78 | 113 | ||
| Jun2007 | 329 | $320,000 | $196.78 | 104 | ||
| May2007 | 364 | $313,200 | $190.81 | 107 | ||
| Apr2007 | 320 | $309,500 | $193.93 | 121 | ||
| Mar2007 | 324 | $315,000 | $189.61 | 121 | ||
| Feb 2007 | 269 | $315,000 | $191.18 | 126 | ||
| Jan 2007 | 245 | $312,900 | $199.79 | 133 | ||
| Dec2006 | 291 | $309,000 | $193.51 | 114 | ||
| Nov2006 | 281 | $318,000 | $197.32 | 111 | ||
| Oct 2006 | 363 | $312,400 | $201.44 | 105 | ||
| Sep2006 | 344 | $314,950 | $198.08 | 98 | ||
| Aug2006 | 349 | $325,000 | $210.92 | 94 | ||
| Jul2006 | 373 | $335,000 | $210.62 | 93 | ||
| Jun2006 | 424 | $339,000 | $214.54 | 91 | ||
| May2006 | 374 | $339,950 | $219.05 | 99 | ||
| Apr2006 | 368 | $334,600 | $212.08 | 88 | ||
| Mar2006 | 387 | $340,000 | $215.54 | 99 | ||
| Feb 2006 | 283 | $335,000 | $217.29 | 101 | ||
| Jan 2006 | 274 | $365,000 | $216.38 | 98 | ||
| Dec2005 | 333 | $355,000 | $217.31 | 89 | ||
| Nov2005 | 385 | $349,000 | $220.00 | 81 | ||
| Oct2005 | 484 | $359,450 | $223.06 | 77 | ||
| Sep2005 | 531 | $354,500 | $219.26 | 77 | ||
| Aug2005 | 582 | $360,500 | $220.52 | 73 | ||
| Jul2005 | 608 | $353,000 | $218.99 | 71 | ||
| Jun2005 | 679 | $350,000 | $215.69 | 69 | ||
| May2005 | 644 | $333,250 | $209.95 | 68 | ||
| Apr2005 | 558 | $326,750 | $207.57 | 77 | ||
| Mar2005 | 584 | $325,000 | $200.17 | 81 | ||
| Feb 2005 | 342 | $318,500 | $197.54 | 88 | ||
| Jan 2005 | 341 | $310,000 | $195.19 | 85 | ||
| Dec2004 | 450 | $312,500 | $190.72 | 77 | ||
| Nov2004 | 448 | $309,950 | $191.62 | 63 | ||
| Oct2004 | 512 | $299,250 | $188.72 | 53 | ||
| Sep2004 | 496 | $292,750 | $185.78 | 61 | ||
| Aug2004 | 505 | $285,000 | $182.95 | 56 | ||
| Jul2004 | 544 | $304,300 | $179.28 | 61 | ||
| Jun2004 | 533 | $285,000 | $172.16 | 65 | ||
| May2004 | 476 | $278,750 | $169.64 | 65 | ||
| Apr2004 | 526 | $259,950 | $158.08 | 67 | ||
| Mar2004 | 508 | $245,000 | $142.56 | 71 | ||
| Feb 2004 | 365 | $237,000 | unavailable | 81 | ||
| Jan 2004 | 379 | $229,000 | unavailable | 78 | ||
| Dec2003 | 441 | $240,000 | unavailable | 82 | ||
| Nov2003 | 444 | $220,750 | unavailable | 78 | ||
| Oct2003 | 430 | $219,880 | unavailable | 76 | ||
| Sep2003 | 587 | $223,000 | unavailable | 71 | ||
| Aug2003 | 512 | $220,000 | unavailable | 75 | ||
| Jul2003 | 533 | $210,000 | unavailable | 77 | ||
| Jun2003 | 475 | $207,000 | unavailable | 77 | ||
| May2003 | 450 | $198,950 | unavailable | 85 | ||
| Apr2003 | 478 | $197,750 | unavailable | 82 | ||
| Mar 2003 | 428 | $192,000 | unavailable | 77 | ||
| Feb 2003 | 321 | $186,895 | unavailable | 79 | ||
| Jan 2003 | 316 | $186,000 | unavailable | 96 | ||
| Dec2002 | 379 | $193,500 | unavailable | 93 | ||
| Nov2002 | 423 | $190,000 | unavailable | 82 | ||
| Oct2002 | 483 | $189,900 | unavailable | 83 | ||
| Sep2002 | 410 | $174,000 | unavailable | 85 | ||
| Aug2002 | 459 | $180,000 | unavailable | 74 | ||
| Jul2002 | 469 | $176,000 | unavailable | 83 | ||
| Jun2002 | 445 | $185,000 | unavailable | 80 | ||
| May2002 | 470 | $178,450 | unavailable | 77 | ||
| Apr2002 | 360 | $169,500 | unavailable | 93 | ||
| Mar 2002 | 377 | $169,000 | unavailable | 84 | ||
| Feb 2002 | 323 | $170,900 | unavailable | 89 | ||
| Jan 2002 | 268 | $172,475 | unavailable | 99 | ||
| Dec2001 | 287 | $182,000 | unavailable | 86 | ||
| Nov2001 | 323 | $161,500 | unavailable | 85 | ||
| Oct2001 | 357 | $166,500 | unavailable | 79 | ||
| Sep2001 | 355 | $168,000 | unavailable | 81 | ||
| Aug2001 | 448 | $160,350 | unavailable | 84 | ||
| Jul2001 | 433 | $169,900 | unavailable | 90 | ||
| Jun2001 | 426 | $166,225 | unavailable | 96 | ||
| May2001 | 404 | $162,050 | unavailable | 97 | ||
| Apr2001 | 370 | $158,750 | unavailable | 94 | ||
| Mar 2001 | 385 | $159,900 | unavailable | 97 | ||
| Feb 2001 | 294 | $159,950 | unavailable | 103 | ||
| Jan 2001 | 264 | $165,000 | unavailable | 102 | ||
| Dec2000 | 272 | $156,500 | unavailable | 100 | ||
| Nov2000 | 355 | $154,500 | unavailable | 93 | ||
| Oct 2000 | 348 | $153,000 | unavailable | 98 | ||
| Sep2000 | 356 | $160,000 | unavailable | 104 | ||
| Aug2000 | 412 | $163,375 | unavailable | 94 | ||
| Jul2000 | 368 | $155,000 | unavailable | 110 | ||
| Jun2000 | 466 | $165,845 | unavailable | 104 | ||
| May2000 | 363 | $158,000 | unavailable | 105 | ||
| Apr2000 | 312 | $155,000 | unavailable | 113 | ||
| Mar 2000 | 339 | $162,700 | unavailable | 102 | ||
| Feb 2000 | 244 | $149,620 | unavailable | 110 | ||
| Jan 2000 | 217 | $156,000 | unavailable | 112 | ||
| Dec 1999 | 264 | $155,000 | unavailable | 118 | ||
| Nov 1999 | 293 | $149,900 | unavailable | 98 | ||
| Oct 1999 | 289 | $147,895 | unavailable | 108 | ||
| Sep 1999 | 311 | $157,000 | unavailable | 106 | ||
| Aug 1999 | 360 | $148,500 | unavailable | 112 | ||
| Jul 1999 | 375 | $147,800 | unavailable | 105 | ||
| Jun1999 | 372 | $150,000 | unavailable | 103 | ||
| May 1999 | 307 | $145,500 | unavailable | 106 | ||
| Apr1999 | 324 | $151,700 | unavailable | 111 | ||
| Mar 1999 | 308 | $151,000 | unavailable | 121 | ||
| Feb1999 | 249 | $148,900 | unavailable | 120 | ||
| Jan 1999 | 210 | $143,000 | unavailable | 115 | ||
| Dec 1998 | 265 | $140,000 | unavailable | 118 | ||
| Nov 1998 | 279 | $153,000 | unavailable | 126 | ||
| Oct1998 | 286 | $142,825 | unavailable | 115 | ||
| Sep 1998 | 279 | $144,500 | unavailable | 102 | ||
| Aug 1998 | 331 | $145,000 | unavailable | 113 | ||
| Jul 1998 | 335 | $150,000 | unavailable | 108 | ||
| Jun 1998 | 351 | $148,500 | unavailable | 103 | ||
| May 1998 | 302 | $145,500 | unavailable | 99 | ||
| Apr 1998 | 235 | $149,000 | unavailable | 111 | ||
| Mar 1998 | 267 | $142,500 | unavailable | 114 | ||
| Feb 1998 | 201 | $139,900 | unavailable | 126 | ||
| Jan 1998 | 165 | $149,490 | unavailable | 131 |
Note: The medians table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – August 2010. Note: This information is deemed reliable, but not guaranteed.
Dallas Listing Agent
The numbers in your market do not look nearly as bad as we have been lead by the media to believe that they are. Now dont get me wrong they can always be better but overall it looks decent. We have just closed two of our listings that both had been on the market for over a year and both were sold way under the appraised value.
smarten
Okay Skeptical –
There you go [it’s July (no more excuses)].
The median sales price is still bumping along between that $170K-$180K range. And even though it is “up” [according to Guy] by 6% over last month, I wouldn’t be jumping to any conclusions that it’s only up from here. As far as I am concerned, we’re still scraping along the same “bottom” we’ve been scraping along for more than a year now [actually, 15 months now].
And also BTW, although unit sales are down from last month, they’re not down as much as I feared they might be [and BTW, they were still higher than July of 2006-2008].
IMO, August’s numbers should be ratification of July’s – but we’ll see.
MikeZ
Another month of stability, both price and PPSF.
Normal, seasonal price declines in the Reno/Sparks area historically start in the August-October time frame, lasting until February.
Sully
Loan Applications Barely Budge as Mortgage Rates Hit New Low
http://www.mortgagenewsdaily.com/08112010_mba_applications_new_low.asp
Looks like the good times are here party has started, but the invitations got lost in the mail. 🙂
E.Edward
OH’C-MON…This is just a bunch of skewed numbers left over from the tax incentives, The drop in sales should be the real trouble-sum focus?
Looky, I can appreciate your all probably sitting on a bunch of real-state rental/investments etc. and the last thing you want to hear is more loss of equity?
But Really what is the best case scenario here?? …Hoping the fed can keep rates a zero long enough to burn up the envintory?….Never gonna Happen!! Foreclosures are up,Unemployment is up,and wages are drop-pin, and thats just part of the pressures.
Theres nothing typical,seasonal or traditional about-it, We are in uncharted waters…. However this much does remain unavoidable…Sooner or later the rate hike is coming, And when it does there goes the last of the inflated prices!
Hey….Go check with your local realtor…The first words out of there mouths is “Take advantage of these low rates before they go up”!
…just my thoughts
HighlyTrainedRealEstateAnalyst
Good thoughts EE, we are definitely in “uncharted waters”. We’ve never seen a recession / depression in this country with so few people that are actually independent.
Personal and national debt are astronomical, record numbers of people are on food stamps and the numbers continue to increase at record rates, we no longer have a manufacturing base, high tech jobs are being outsourced, illegal immigrants continue to drive down wages and use “services” that are bankrupting communities, American corporations are making massive global profits but paying zero tax in the US, we’ve had a complete fiat currency since 1971 that will result in a continuing devaluation of the dollar, inflation for necessities is on the rise, and the list goes on and on and on.
Maybe this is just a cycle, and maybe another boom will come along to provide the appearance of prosperity, but when somebody tells me that this downturn is just a cycle and that the economy will rebound soon, I always ask how that will happen. I rarely get a response.
smarten
No Derrick [aka “E.E.”] has not made good points. Why don’t you tell us Derrick why you made your Spanish Springs condo purchase at the end of last year given your views of the economy/real estate market? Kind of a dumb thing to do, don’t you think?
Okay, so we’ve all been waiting for the spin we’d hear from skeptical and others once the first time homebuyers’ tax credit expired. So now we’re hearing that the numbers are unreliable because they’re “skewed;” median sales price doesn’t matter anymore; and, it’s unit sales which are the important barometer. Unbelievable!
If unit sales are the litmus test for the residential real estate market, where were Derrick and the rest when the number of sales reached their highest level in June since July of 2005? Nowhere because they had other reasons to support their views as to why the numbers were “skewed.”
If you’re a potential home buyers out there and you think the country is going down the tubes for all the reasons Derrick and his group pontificate, then it really doesn’t matter what you do; the country is still going down the tubes. But if you believe we’ll recover for all the reasons we’ve recovered in the past, then the simple fact of the matter is we’ve reached a plateau or bottom [actually, it was reached 14-15 months ago] and mortgage interest rates are at their all time lows EVER [at least in any of our lifetimes]. When interest rates rise and are lost forever, trust me: you’re going to be kicking yourself in the rear for not having taken advantage of the opportunities in front of you.
E.Edward
Jumping back-in here,
1: Who is Derrick? You keep referring to me one in the same?… Please explain?
2: I own nothing in spanish-springs… Never Have.
3: I am not affiliated with any other name or alias on this blog to date! and certainly not from this ip#……CLEAR?
4: We do agree on one thing, Interest rates are going to rase…..However how are rising rates somehow going to magically help stabilize or boost home prices and why would a buyer kick them-selfs for waiting…..Please explain?
5: Its a forgone conclusion higher rates bring lower prices…..
inclinejj
Bank-owned properties – 26.3% – up from June’s 23.3%
Short sales – 34.7% – down from June’s 43.4%
61% distressed sales means a recovery is a long long way away!!!
E.Edward
woops, in a hurry {rase-rise}
HighlyTrainedRealEstateAnalyst
Smarten,
I don’t know who E. Edwards is, but I felt that he made good points.
Do you believe “we’ll recover for all the reasons we’ve recovered in the past?”
If so, since I’ve shared some of the reasons why I believe the outlook is not good, could you share some of the reasons regarding why we will recover so that I can have cause for an optimistic outlook?
Sully
smarten; do you really think Derrick could compose that long of a comment without insulting two or three people? For that matter, even thinking of that much to say in one comment. 🙂
Joe
Smarten, are you telling me that you believe all effects of the tax credit are gone from July’s numbers? Did you forget about the extension for all those pendings (offers made in time for the first deadline) that guy has been following? I just want to know if you truly believe July’s numbers are in no way scewed by the government tax credit extension, and why. Maybe I’m wrong and the extension was not granted, but I swear I remember that ole Harry pushed it through.
smarten
Joe –
There was an extension of the tax credit; an extension of the date to close escrow. However, there were no extension of the April 30 contract drop dead date. I believe there’s no way to determine the number of “pendings” which involve first time homebuyers who in fact contracted prior to April 30 [correct me if I’m wrong Guy]. But I don’t believe the number to be significant. You can in fact see this observation being played out in the median sales price which jumped so much in just a month. As Guy has observed, less and less lower priced SFRs are closing. Why? Because there are less and less first time homebuyers. In fact, I think an argument can be made that the SFR median sales price for the last six or more months has been skewed downwards specifically because of the tax credit. Stated differently, were it not for the credit, less lower priced SFRs would have sold which would have translated into an higher median sales price.
If July’s numbers are “skewed” Joe, then when exactly do you contend they will no longer be? Will there EVER be such a time? Rather than accepting the numbers for what they are and have been, there always seems to be some new argument as to why the data is “skewed.” I thought we’d be over all of this come July’s numbers but I guess it will never be over it until the permabears get the numbers that support their position. When that happens [and it eventually will] and a non-believer asserts those numbers are “skewed,” what exactly will be your response Joe?
Joe
Actually smarten, it looks like over 200 of Julys sales (out of around 400) were signed before May 1, meaning they got the credit. Am I wrong? I just compared Guy’s 60 days later with his 90 days later posts. Insignificant?
smarten
I think you’re wrong Joe. I don’t think there’s any way to determine from Guy’s data re: pendings/sales how many of July’s sales were as a result of contracts entered into prior to May 1, nor how many were to first time homebuyers [if I’m mistaken Guy, please clarify].
Furthermore, let’s assume for purposes of argument you are correct that July’s numbers are “skewed” by extension of the first time homebuyers’ tax credit. Explain the significant one month jump in the median sales price directly as a result of that credit.
Guy Johnson
Joe and Smarten, you are both correct.
Joe, nice work applying the percentages I posted in the “90 days later” post. The raw numbers (which I had not posted) are as follows:
Of the 2,220 pending sales on May 1st (the morning following the expiration of the “contract date” required to be eligible for the First-time Home Buyer’s Tax Credit)…
• 465 closed in May
• 408 closed in June
• 200 closed in July
Of these sales, there really is no way to tell how many of the purchasers took advantage of the First-time Home Buyer’s Tax Credit.
However, for the sake of discussion, let’s assume that a “first-time” home buyer purchases at a price point that is less than or equal to the median sales price. Using the most recent median sales price of $180,000, of the closings above, the number that closed at or below the median are as follows:
• 277 in May
• 289 in June
• 110 in July
So, regarding the residual effect of the First-time Home Buyer Tax Credit on July’s sales, it’s open to interpretation, but the current numbers are as follows:
• There were 405 sales in July
• 200 of those sales were pending on May 1, 2010
• July’s median sales price was $180,000 (Note: because there were several sales at exactly $180,000, the actual number of July sales at or below $180,000 was 205 units)
• From the exercise above we see that 110 of those sales pending on May 1, 2010 sold in July for less than or equal to the median of $180,000.
Sully
Realty Trac posted this info today:
Top 10 States for REOs
January to June 2010 REOs
Calif 92,318
Florida 54,940
Arizona 39,017
Michigan 38,910
Texas 31,216
Illinois 27,137
Georgia 26,392
Ohio 20,516
Nevada 17,747
Tenness 12,809
However, when taken by percent of populaton Nev and Ariz. rank 1 and 2. Taken another way Nev. foreclosures are 2.8 higher than Calif.
Guy Johnson
Sully,
I assuming you meant “2.8 times higher”.
And I read in the RGJ this morning that Nevada’s foreclosure filing rate of 1 in 81 housing units led the U.S. for the 43rd month in a row and is twice as high as 2nd-place Arizona’s.
Free Falling
Guy – Thanks for adding active listings and pendings to this regular report. Very helpful. At 5 months supply, we are still in “balanced” territory. I agree with others on this thread that we’ll see median price bump a little more as the last of the tax credit buyers work through the system in the next 60 – 90 days. This doesn’t mean that values (as measured by Case Schiller for example) will rise, just median. I also agree that the tax credit has pushed median price down since it brought more first timers into the market. So, on a Case Schiller house for house basis, there seems to be fairly compelling evidence that the value of any given home in Reno has been fundamentally flat for 14 months.
Sully – Thanks for posting the mortgage apps charts. Very interesting to see the fall off in mortgage apps nationwide as of May 1st. We all knew that was coming. It is interesting that the recent rate drop hasn’t caused any increase in activity. It would seem to be a safe bet that we will see closings running along at a lower number for the balance of the year with all the first timers effectively removed from the market. And yes permabears, with no meaningful job creation, we shouldn’t expect any serious price movement any time soon.
The one thing I am reading into the market is that more and more buyers are accepting current pricing as the new reality. The increase in “equity” sales to a whopping 39% is actually a good trend.
It seems to me that the whole country is sitting in a dazed stupor right now. Things aren’t getting better, they aren’t getting worse. They are bad enough already. For the lucky few in good stable jobs, there couldn’t be a better time to move up in the market if they have any equity left in their current home or cash on the sidelines to pay off the mortgage on a move up deal. If prices haven’t dropped during the past 14 months of doldrums, I see no compelling reason to believe they will drop now even with the end of the tax credit. It seems that there are enough investors circling around the market willing to buy with 4.5% money and rent out the property waiting for better times.
Has anyone noticed that the builders are slowing building again? Here in the Northwest we have Homecrafters (Mayberry), Lennar (Laurel Ridge), Del Webb (Sierra Canyon Somersett), Toll Brothers (Somersett), Lakemont (Canyon Pines) and Grand Summit all framing away. Hardly boom times, but clearly a sign that things aren’t getting worse (or maybe the builders’ crystal balls have all gone cloudy).
I think last fall I posted $190 k as median price come year end 2010. (It didn’t make it into the official list). Well my $5.00 is still on $190 k.
Guy Johnson
Thank you for your comments, Free Falling.
DownButNotOut
E. Edwards is Derrick, AKA sleezy. Long established. Whether he makes good points or is just the usual blowhard, he’s still Derrick.
MikeZ
There was an extension of the tax credit; an extension of the date to close escrow. However, there were no extension of the April 30 contract drop dead date.
See?! SEE?!
I TOLD you all someone would try to use the extension – which only extended the closure date, not the signing date! – as the next excuse for why prices remain stable.
MikeZ
So, on a Case Schiller house for house basis, there seems to be fairly compelling evidence that the value of any given home in Reno has been fundamentally flat for 14 months.
More than compelling, IMO, down right FACTUAL.
Two plus two is four, for all values of two. The median price has indeed been flat (stable), as has PPSF, for 14 mos.
It’s simply astounding to me that this is not a point of universal agreement.
skeptical
Mitch Argon showing 151 price reductions in Reno in last 5 days. No need to jump through hoops of fire to hurry and get the bid in to beat the rush….
As for the stats for July. Median is stable. Let’s see what happens in August.
Lightbulb moment for me when a few months ago someone here mentioned how the tax credits may actually have been keeping the median prices down, as it attracted lower end buyers looking for cheaper homes.
If I were in the market for a home in Reno right now, I’d buy at or below median, with a well researched offer for the seller, and forget about real estate for a while.
smarten
Thanks skeptical.
I agree with you – let’s see what happens in August [although I suspect it’s going to be more of the same]. But I disagree with your advice that if one is in the market for a Reno home right now, he/she should buy at or below the median sales price.
As you now admit, the median has been pretty stable for the last 14-15 months [and may have in fact been artifically depressed due to the first time homebuyers’ tax credit]. Many on this blog have commented that the lower priced segment of the market has been robost for some period of time [multiple offers, lower DOM, etc.]. If the home a potential buyer is going to be his/her principle residence, my advice would be to spend more and not less. Here’s why:
1. As I’ve commented before, if we’re all going down the tubes what difference does a lesser versus great purchase make?
2. The higher end of the Reno SFR market is finally beginning to capitulate pricewise. This means that your odds of success presenting “a well researched offer” should be enhanced [if not, no harm no foul].
3. You should have a lot more attractive choices available to you because the number of sales above $250K-$300K are markedly less than the number below.
4. Mortgage interest rates are at historical lows [also, property taxes have come down quite a bit as well]. This means that if you compare your projected monthly debt service costs to what they were as a little as a year ago, you can spend more today on a purchase and your monthly costs will be the same.
5. I think most of us would like to upgrade our living environments. If one purchases at/about the median sales price, that likely will not occur [all you’ll do is pay less for the same old, same old]. By spending what you may have been prepared to spend for a principle residence several years ago, in this market you should be able to buy a whole heck of a lot more house [maybe even finding something that until now was not even a possibility].
6. If you think prices/lower property taxes/lower mortgage interest rates are going to remain where they are for an extended period of time, I think you’re mistaken. I’m not saying there are going to be massive increases in the short term future. But if you’re banking upon things remaining the same [or worse] for 3, 5 or 10 years, in my view that would be a mistake.
7. If I’m wrong, I can’t see the downside risk being anywhere near what it was as little as 2-3 years ago. And if I’m really wrong, as I said, what difference is it really going to make?
Just my two cents so to all you permabears out there, feel free to have at me!
Sully
smarten; if you really believe what you are saying – why haven’t you gotten your real estate license? With interest rates at lowest levels (ever?) now is a great time to buy. You could be making all kinds of money selling million dollar houses in Tahoe.
Nevermind the fact that the largest tax hike in history is coming Jan/2011 or that Bernanke has all but admitted the stimulus isn’t working and will now use MBS principal payments to buy treasuries (or using Visa to pay the Mastercard bill).
None of this should matter and I cannot see why a young healthy person should be sitting around looking out the window, when a truckload of money is waiting to be made, just seems like a waste of talent.
CommercialLender
Ooooowh, Smarten, lost me on that one. Guy, how about starting a new thread with his post? We can banter back and forth on a new thread…
smarten
Sully, will mortgage/secured real property income tax deductions be eliminated in January of 2011 when the largest tax hike in history takes hold?
What about depreciation on rental property?
Although the capital gains tax is scheduled to increase, will it continue to be taxed at a favored rate compared to the rate on ordinary earned income?
What about deferred tax treatment for 1031 exchanges – is this tax benefit being eliminated?
It’s not the end of the world Sully.
Furthermore if Republicans take over Congress, the tax hikes you speak of may never come into being.
In the meantime I’ve seen many bull and bear residential real estate markets in the last 35 years and I can tell you that right now is the best buying opportunity I’ve ever seen [and I’m not the only one who feels this way]. Therefore if you’ve got a backbone; you’re purchasing for the long term; it’s your principle residence [rather than an investment property]; you can afford a purchase in excess of $180K; you can qualify for a conforming loan amount mortgage; you have steady sources of income; and you believe in this country; you might want to consider actually doing something rather than sitting on the sidelines.
Not interested in selling real estate Sully; too much work [ask Guy] chasing too few qualified buyers. Besides according to our friend Don Kanare [insideincline.com], over 50% of all Incline Village Coldwell Banker [the largest local real estate firm] agents have averaged less than one transaction/year over the last five years. If I were looking for a career, not exactly the kind of profession I’d be pursuing. But thanks for the recommendation.
Irv
Any take-over of Congress by the Repubs will be of the House only and will be short-lived. Watch for “Comprehensive Immigration Reform” which in actuality, means a three step program: Legalization, accelerated Naturalization, then Registration. And which party do you think will be registering those millions of new voters? My friends, this is the epical event in the life of our country–the change-over in the majority control, to a permanent ruling party. We are on our way to becoming the next Argentina.
It won’t matter what you have invested in, the fruits of investment and labor will be largely taxed away and redistributed to others, viewed as more in need.
HighlyTrainedRealEstateAnalyst
Smarten,
I understand what you are trying to say and your logic makes perfect sense if the purchase is for a primary residence in a location in which the buyer has no intention of ever leaving (at least not for a long time because prices will be flat for some time).
The only concern with purchasing right now for many people is the job market in Reno. If one was to lose a good paying job in a specialized field it might be necessary to leave Reno in order to find employment, and getting rid of a house in this market would be a challenge.
Unfortunately, what Irv describes is exactly what is happening, and like any other third world country we are seeing taxes go up, infrastructure crumble, and massive debasement of our currency. All hallmark traits of any third world banana republic.
What’s really sad is the fact that there really is no difference between the two parties at this point anyways – The illegal immigration continues, the deficits continue, the wars continue, the loss of freedoms continue, etc, etc, etc.
GratefulD_420
uuhggg.
Smarten and Mike Z can’t get it. Median is flat however the values are still falling.
There is a HUGE downside risk to purchasing right now and small upside risk to not purchasing.
Huge dowside risk…
Reno has very high unemployment and very few high paying jobs. They have not found a way to bring in the CA businesses that we talk about so much. This will not change anytime soon. Period.
61% of sales are distressed sales… means that EVERY 61 of 100 sales GREATLY reduces comp values (whether zillow or other methods counts them or not!). Period. You could also assume that the other 39% of sales are competing with the large amount of distressed …. so do you think these are improving VALUE?
Inventory is starting to take off again… which was the leading indicator before steep price drop in 2005. Look at Reno Home Inventory graph…
http://www.housingtracker.net/asking-prices/reno-nevada/ . Also look at the 75% listing drop off??
The largest risk to another steep fall… STOCK MARKET. Currently a significant portion of the market is being held up by investors… if the stock market drop off.. the majority will be gone.
No I don’t pertend to know if the market will crash (yes I have everything moved to downside)… but I can say… if it crashes… are RE market will also fall off another cliff that others don’t think exist becuase we are at the FLAT BOTTOM.
MikeZ
Median is flat however the values are still falling
I disagree; that would tend to show up in a declining PPSF.
HighlyTrainedRealEstateAnalyst
GD420,
Good points. In addition, we have another large wave of option ARM resets coming real soon. Here’s a graph:
http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html
GratefulD_420
Mike –
Agree Mike… from a 5,000 ft view you would expect it to show up in the PPSF. Unfortunately it doesn’t and there is good reason. Let’s say its a two-dimensional picture of a five dimensional valuation.
PPSF merly counts sales price and size of house. It does not count for quality, location or land.
I think we are all in agreement that the lower end including the lower quality, no land..3,000 sqft homes went first… and the higher end homes were holding on longer. This is the explaination for the median and the ppsf that we are seeing. Again..this is not new… it just seems there are several who would like to overlook this fact.. time and time again at their convienence.
GratefulD_420
Thanks HighlyTrained RE for the graph. I’ve been meaning to go look for this revised version.
Sully
Completed the price band for July.
100k – 250k = May 62.6% June 65.6% July 61% of total sales.
350K and under = May 84.44% June 85.69% July 83.01% of total sales.
Not much has changed, except fewer sales this month than last. The prime range of the market is unchanged. There were 12 sales listed at over $1 mil that were really a distressed sale and was a combined price of all 12 units – don’t know why the county listed them at 1.3 mil apiece.
Sully
$50,000 and under 3
$100,000 – $50,001 44
$150,000 – $100,001 115
$200,000 – $150,001 93
$250,000 – $200,001 72
$300,000 – $250,001 28
$350,000 – $300,001 26
$400,000 – $350,001 20
$450,000 – $400,001 18
$500,000 – $450,001 6
$550,000 – $500,001 6
$600,000 – $550,001 3
$650,000 – $600,001 3
$700,000 – $650,001 2
$750,000 – $700,001 0
$800,000 – $750,001 4
$850,000 – $800,001 4
$900,000 – $850,001 1
$950,000 – $900,001 0
$1,000,000 – $950,001 3
$1,000,001 and above 8
MikeZ
smarten; if you really believe what you are saying – why haven’t you gotten your real estate license? With interest rates at lowest levels (ever?) now is a great time to buy. You could be making all kinds of money selling million dollar houses in Tahoe.
Sully, you’re presenting a false dichotomy: either 1) invest all your money and time in real estate or 2) you don’t believe that real estate is stable.
Nevermind the fact that the largest tax hike in history is coming Jan/2011 or that Bernanke has all but admitted the stimulus isn’t working and will now use MBS principal payments to buy treasuries (or using Visa to pay the Mastercard bill).
This whole “largest tax hike” hyperbole is just silly political rhetoric. The last “largest tax hike in history” was Clinton’s 1993 Omnibus Budget Reconciliation Act and was met with similar dire predictions that it would kill the already weak U.S. economy.
Well, it didn’t kill the economy … and it actually produced a revenue surplus.
MikeZ
[GD_420]PPSF merely counts sales price and size of house. It does not count for quality, location or land.
That’s true, however, the lower-quality homes will also continue to sell, albeit at lower $/sq-ft, and that would still tend to exert downward pressure on median $/sq-ft.
The price and quality strata are all interconnected. When a home falls in value from $400K to $300K, the value of what was a $300K home also falls.
Do you agree?
The same crossover effect that we see in the price bands happens in the quality bands.
HighlyTrainedRealEstateAnalyst
Mike Z,
Do you really believe that Clinton’s tax polices created a surplus? If you take a look at the debt history for this country you will see that when Clinton left office the debt was much higher than when he entered.
He was able to ride the false bubble called the internet boom that created a surplus for a time, but the nation’s debt did not go down while he was president. There was never a real surplus, not even a Social Security surplus, because all of the money went into the general fund and was offset by IOU’s.
Also, the “dire predictions” are coming true right before our eyes and are the result of many years of very bad policy – illegal immigration, fiat currency, outsourcing of technical jobs, destroying the US manufacturing base with programs such as NAFTA, etc. . Many of the decisions that are made by politicians are not fully felt for years to come. As an example, consider rent control in large cities and government run health care. The Disasterous affects of these types of policies take years to be fully felt.
MikeZ
[HTREA] Good points. In addition, we have another large wave of option ARM resets coming real soon.
Rate resets, per se, are neither good, nor bad.
With rates where they are right now, some mortgages will surely be adjusting downward, resulting in lower mortgage payments.
I haven’t seen any charts yet that split the rate recasts into increase and decreases. If you come across one, please link to it.
MikeZ
[HTREA]Do you really believe that Clinton’s tax polices created a surplus?
The 1993 tax hike was a significant factor in the large increase seen in federal tax revenue. Combined with spending cuts, we had a $300B surplus in 2000.
Did the tax hike by itself create the surplus? No. But it also did not kill the economy.
There’s no question we have a serious debt problem right now, and debt was higher in 2001 than in 1993.
But you pay down debt by running a surplus and we were on the right track a decade ago, and the tax hike helped put us on the that track.
jacky
“I disagree; that would tend to show up in a declining PPSF.”
not necessarily… With the bottom end of the market experiencing so many sales lately, the inventory of the low end is considerably LOWER as well..
Less sales in the low end combined with relatively stable sales in the higher ends would create an INCREASE in the PPSF AND median..
that DOES NOT mean values have stopped coming down MIKEZ ..
Sully
MikeZ; I can only assume you were still in school in 1993 and had no first hand knowledge of that era.
The Clinton defense is superficially plausible, but it fails under closer scrutiny. Economic growth was solid but hardly spectacular in the years immediately following the 1993 tax increase. The real economic boom occurred in the latter half of the decade, after the 1997 tax cut. Lowtaxes are still a key to a strong economy.
Here’s the whole article:
http://www.heritage.org/research/reports/2008/03/tax-cuts-not-the-clinton-tax-hike-produced-the-1990s-boom
HighlyTrainedRealEstateAnalyst
Mike Z,
If this is true:
“But you pay down debt by running a surplus and we were on the right track a decade ago, and the tax hike helped put us on the that track.”
Then why not raise income tax rates back to the Carter era when the top tax rates were in the 70% range? Maybe even 100% would be good? What about the impact of the change in behavior that is the result of these tax increases?
The reality is that, taxes aside, it is now mathematically impossible to ever pay off the federal debt that is currently over 13 trillion. Reason? We have more debt than money in circulation. All money creation is based on debt.
The following article provides a good explanation:
http://theeconomiccollapseblog.com/archives/it-is-now-mathematically-impossible-to-pay-off-the-u-s-national-debt
MikeZ
[jacky] With the bottom end of the market experiencing so many sales lately, the inventory of the low end is considerably LOWER as well..
Less sales in the low end combined with relatively stable sales in the higher ends would create an INCREASE in the PPSF AND median..
that DOES NOT mean values have stopped coming down MIKEZ
Sure, that’s possible, but a statistical phenomenon such as that would have to be relatively short-lived, and we’ve seen 14 mos. of stability now.
I think it’s time to stop clutching at statistical straws to explain the data.
Could Reno/Sparks home values/prices fall more? Oh, absolutely.
But can’t we at least agree that they’ve been stable for the last 14 mos?
MikeZ
[Sully]MikeZ; I can only assume you were still in school in 1993 and had no first hand knowledge of that era.
Giggle.
MikeZ
[HTREA]”Then why not raise income tax rates back to the Carter era when the top tax rates were in the 70% range? Maybe even 100% would be good?”
Oh, come on!
That argument is flawed, same as: “If taking 2 aspirin is good, then taking the whole bottle must be even better.”
The proposed selective expiration of the Bush tax cuts, which is what’s being called a tax hike here, would increase the 2 top marginal tax rates, from 33% to 36% and 35% to 39.6%.
We’re not talking 100% or 90% or 70%. And these are the marginal rates. On the top 2%, a group that has an average of 22% disposable income.
The reality is that, taxes aside, it is now mathematically impossible to ever pay off the federal debt that is currently over 13 trillion. Reason? We have more debt than money in circulation.
It seems to me that only makes it impossible to pay all the debt off TODAY.
If I have $100K in debt and only $50K in cash, am I hopelessly indebted forever? I don’t think so.
GratefulD_420
“I think it’s time to stop clutching at statistical straws to explain the data. Could Reno/Sparks home values/prices fall more? Oh, absolutely. But can’t we at least agree that they’ve been stable for the last 14 mos?. – Mike Z
We can agree that the Median Sales price has been stable. I cannot agree that values of Reno/Sparks homes have not been falling significantly during this period.