“40% of Major Metro Areas Can Expect To See Property Appreciation In 2011” …so reads the headline of Veros Real Estate Solution’s latest forecast. Unfortunately, Reno is not one of those metro areas. Instead Reno-Sparks topped Veros’ list of real estate markets to experience the highest depreciation for 2011. Over the next twelve months the Reno-Sparks real estate market is projected to depreciate 7.2 percent. Here are the top-five strongest and weakest markets:
Projected Five Strongest Markets
- San Diego / Carlsbad / San Marcos, CA +3.5%
- Kennewick / Richland / Pasco, WA +3.4%
- Pittsburgh, PA +2.7%
- Fargo, ND-MN +2.6%
- Washington / Arlington / Alexandria, DC-VA-MD-WV +2.5%
Projected Five Weakest Markets
- Reno / Sparks, NV -7.2%
- Orlando / Kissimmee, FL -6.5%
- Boise City / Nampa, ID -6.4%
- Deltona / Daytona Beach / Ormond Beach, FL -6.3%
- Port St. Lucie / Fort Pierce, FL -6.3%
Source: Veros Real Estate Solutions
Warren
So Reno finally makes it to No. 1 on a list.
Weakest housing market in America!
Carlo
Weakest Housing Market in America!
Most Forgettable Tourist City in America!
Worst Place to retire!
And the Hits….just keep on comin’………..
MikeZ
I’ve bookmarked this for revisit in December, 2011.
I wish the article would explain the data and methodology, instead of simple stating: -7.2%.
smarten
And who exactly is this “Veros” and what is its track record? Well let’s see [ http://www.veros.com/vvforecast.html ], “forecasts are based on an analysis of historic local price trends and their specific relationships to local, regional and national econometric data.” That doesn’t do us any good [does it SVE?] because we’re in uncharted territory; right?
“Charts of four common but significant economic data sets [are] used within the analysis to produce residential valuation forecasts.” And what exactly are those “data sets?” To get the answer, we have to go to a “sample report” [ http://www.veros.com/images/downloads/VeroVALUE-Sample-Report.pdf ]: 1. VeroValue [“the estimated market value of a subject property based on an analysis of available physical and economic data” (isn’t this what Guy supplies us with on a monthly basis?)]; 2. Confidence Score [“a predictive measurement of the accuracy of the estimated market value ranging from a low of 0 to a high of 100” (isn’t this what we bloggers do when we estimate future market trends?)]; 3. Value Range [“the estimated market value range of a subject property based on an analysis of available market data, market trends (see #1 above) and the confidence score” (see #2 above)]; and, 4. Market Value [“the most probable sales price of a property in a competitive and open market” (your typical CMA)].
So we’re supposed to take Veros’ conclusions based upon the foregoing scientific approach as gospel? And just for the record, the pages I read [ http://www.veros.com/forecast2.html ] did NOT predict [sorry Skeptical] that Reno/Sparks is projected to be the weakest U.S. housing market. We’re tied for #3 [with Vero Beach, FL.] behind Chico, CA. and Deltona/Daytona Beach/Ormond Beach, FL.]. And surprisingly, Las Vegas “avoided inclusion.”
GratefulD_420
It’s not a complete description… but here is what they say about the analysis (no data).
“Only VeroFORECAST is robust enough to take into account historical home price trends, interest rates, unemployment, the affordability index, inventory, seasonality influences and numerous other indicators to provide a complete picture that result in forecasts that have been statistically proven to accurately predict future home prices.”
Of course I imagine the poor rating is probably due to the facts (data) that have been pointed out time & time again… when all you can do is point to the generic one-dimensional, stable Median data. Isn’t this the metric that MikeZ plans on measuring against in 2011?
1. Distressed Homes Sales (This is SFR ONLY)
1081 Short Sales Listed on Reno MLS
251 Forclosures Listed on Reno MLS
1,134 current Foreclosure’s in Washoe County
2. Unemployment
12.8% (this is with seasonal holiday emplyment!)
3. High Inventory (SFR)
2,602 Listings (with over 50% distressed)
4. Rising Interest Rates
Yes these are historically low… but if the home values are still dropping @ 5.0%… wait till they hit 6.5%.
I believe 7% depreciation is optimistic.
MikeZ
Thanks, GD_420, where did you find that information?
Of course I imagine the poor rating is probably due to the facts (data) that have been pointed out time & time again… when all you can do is point to the generic one-dimensional, stable Median data.
And $/sq-ft. The report from Veros is forward-looking. Median prices and PPSF look backward.
Isn’t this the metric that MikeZ plans on measuring against in 2011?
Yes, of course. I would never use predictions, even from Veros, even if later proven accurate, to tell where a market has been or where it is now. Why would anyone use predictions to look back when empirical data is available?
GratefulD_420
MikeZ.. the info was from their website.. [http://www.veros.com/vvforecast.html]
“Isn’t this the metric that MikeZ plans on measuring against in 2011?
Yes, of course. I would never use predictions, even from Veros, even if later proven accurate, to tell where a market has been or where it is now. Why would anyone use predictions to look back when empirical data is available?”
Exactly my point… the prediction is about Value’s dropping by 7%… then you going to compare to YOY median sales price & ppsf. Again these are two different things. One is a median price of what is purchased and the other is value. One CANNOT be used to measure the other.
I don’t have time (because I don’t have the MLS tools) to run an analysis… but it certainly would be interesting to look at the following:
The median has been “stable,” for around 16 months. So take a group of homes that sold in that time period (15 to 16 months ago)…and then compare them to current comps (houses sold in last 3 months) or houses currently availible. It would help if the units were very comparable such as track homes in the same development [S.Meadows, Sommerset, Arrowcreek, FieldCreek]. This way we don’t have to get into Smarten’s discussion of my house is so special because of special specialness (sorry, but its too much fun).
It certainly would be interesting to see if the market value is stable during this Median Sold Price stability.
200 Basis Points
It would be great to have a data base of houses in Reno that were bought and then resold in the last 18 months. A Case-Shiller like metric for Reno houses. Then we would know. But we don’t have such a metric. I suppose there might be one or two such houses (maybe more?), but probably not very many houses have been bought and sold within the past 18 months. Only realtors, as far as I know, have access to the MLS data, and I don’t know if this kind of info is even obtainable from the MLS.
smarten
OK Grateful D, I’ll give you some of the data you’ve asked for:
615 Country Club Drive, IV [APN 131-014-01]: Sold May 3, 2010 for $1.3M. Previous sale was on February 24, 2009 for $1.065M.
678 14th Green, IV [APN 131-012-48]: Sold September 17, 2010 for $885K. Previous sale was on March 22, 2010 for $665K.
1011 Apollo Drive, IV [APN 125-441-03]: Sold December 11, 2009 for $1.095M. Currently for sale at $2.499M [MLS #939214] – down from $3.1M [I understand this is not a resale but at $2.499M the home has a long ways to go in price reduction(s) to get down to $1.1M].
Is this what you were looking for?
Merry Christmas to all!
smarten
Actually 200 BP, it’s not as difficult as you might imagine [and you don’t have to have access to the MLS]. But it takes a lot of time.
Go to the Assessor’s Parcel Search page and type in a street name [no number, just the name]. A list will be spit out with every parcel on the street along with the “last transaction date.” Examine the transaction to see if it was a sale. If so, go into the previous sales section to find out the previous sale’s date/amount.
Good luck!
bob_c
Here’s a number 1 for Nevada. According to the US census it grew the fastest
last decade (2000-2010) at 35%. I dont know the exact numbers on Reno.
People like something here (we know gaming is declining and finite), so
the parallels w/ Detroit go out the window……because Detroits population is declining.
No wonder Nevada RE spiked so high. There was demand.
People WANT to live here (per US census) and there is a huge amount of distressed
sales = great bargains for the investor????????????? if RE dips any further?????????????
I’m just using the US census to create a bullish argument and I know the population
declined last year (slightly due to the foreclosure mess) in Nevada, but the US census
is telling us Nevada is a desirable place to live. Been to Detroit??? Wanna live there???
Guy Johnson
bob_c,
Yes, I saw that report too. According to the Wall Street Journal most of the country’s population growth occurred in the South and West. The 10 fastest-growing states had average population gains of 21 percent. The states were:
1. Nevada
2. Arizona
3. Utah
4. Idaho
5. Texas
6. North Carolina
7. Georgia
8. Florida
9. Colorado
10. South Carolina
Michigan was the only state that actually lost population.
Carlo
If you are going to count the folks who buy at a foreclosure sale and then turn the property around quickly, as has been documented here many times, then you are going to find examples of houses selling for substantially more within 18 months. There are dozens of examples of this which Mike has documented in his many threads.
I’m not sure that Grateful was talking about distressed sales.
bob_c
Palladio sale 12-14-2010 (10 days ago) $265,000 for 881 sf. apn 011-529-02.
Check other comps at the Palladio.
I’m guessing there is some hidden risk at the montage (lawsuits…..homeowners
association liabilities or something off my radar) for those to offered at $125/sf .
If I were a real estate investor….i would dig in and find what is really going on at
the montage…..because from a distance it looks like a lelleva speculation possibilty.
bob_c
If I knew the ins and outs of being a landlord (I hear its a pretty tough profession)
I’d be shopping this market. No wonder one person bought 5 montage units—if
there is no hidden liability I totally understood what they did. I, personally, dont
know if I could handle having tenants and servicing their requests. But for ROR,
this market seems ripe. Buy when everyone HAS to sell, (Foreclosure/short sale).
smarten
Carlo, a sale is a sale as long as it is arm’s length. None of the sales I referred to was purchased at foreclosure.
Besides, if 75% of sales are distress [by your definition] then really, what’s left over to compare? And why even ask the question?
Sully
Guy, I’m not so sure Michigan was the only state that loss population. This link shows the new count for congressional seats:
http://voices.washingtonpost.com/thefix/mapping-the-future/red-states-gain-as-new-congres.html
10 states are losing 1 or 2 seats; Michigan is unchanged. NV is gaining one.
Susan
It appears that the property on Country Club Drive was purchased on 2/29/09 at a foreclosure sale.
It appears that the property at 678 14th Green was purchased on 3/22/10 at a foreclosure sale.
GratefulD_420
To 200 Basis Points… you are correct their will not be many houses purchased and resold in the last 18 months to gather any REAL data. What I want to do, is look at houses sold 16 months ago and compare them to todays (last 3 months) standard RE comps. In addition it would also be nice to add comps that are active for sale (to be fair these should be on the market for 60+ days).
Ohh Smarten… cherry picking again? Is it always so important to make a point that you close your eyes while doing so? Is the game worth winning if it’s the wrong game to play?
Here is what I was asking for specifically (nothing close to what you convienently supplied as the answer):
“It would help if the units were very comparable such as track homes in the same development [S.Meadows, Sommerset, Arrowcreek, FieldCreek]. This way we don’t have to get into Smarten’s discussion of my house is so special because of special specialness (sorry, but its too much fun).”
In addition, the conversation was about Reno not IV [where ppsf on a “comp” can run between $770/sf & $174/sf]. The idea was to look at the most prevalent existing track style homes and look at comparable neighborhood track homes…. because these are simple ppsf conversation…. we all know that a house in the same track at e.g. sommerset, can only be in the same price range as it’s same track/style no matter how much the owner dropped into it. I am not saying it should be so specific as the developments that I suggested…. but something along those lines…. so we get a fair comparison.
As Smarten says… it’s very easy to get the data… however to get any data set large enough to be quantitative… your need a tool (I think the ever secure MLS can do it)?
With regards to population it would be more interesting to know the exudus numbers since 2008. Construction (building the 3,500 sf stucco McMansion on .16 acres of never-ending worthless desert land) was booming from 2000 thru 2007… and crashed hard in 2008. The year 2009 was a disaster… nobody built ANYTHING. I think the unemployment is only as low as it is becuase many contruction folks up and left their 1,000 years of mortgage servitude and unemployment. To BobC.. of course everyone wanted to live here… carpet companies were booking $200/hr! Tile guys made $40/hr. Why do those guys want to live here now? I know why I live in and love to live in Reno, NV… so don’t get me wrong. However the things that I love… such as the 5 to 6 months of snow. The highest base elevation with the best northern slope chutes 30 mins away. The beautiful summers at Tahoe, the wakeboarding at Frenchman’s, the fishing at Stampede, the 4th of July at Donner (or at the lake) are all amazing…. but unfortunately I find that most people DONT do these things. If you are retiring you don’t want snow from Nov to April. If you are a homebody you don’t do ANY of these things.
Happy Holidays!
GratefulD_420
To Carlo… thanks for picking our Smarten for Cherry picking his data.
I do want to include distressed sales… becuase they are a major part of the market. Successful re-sellers will be minimized since the they should have turned the home quicker than our time line [14 months – last three months = 11 months], so I wouldn’t worry about that skewing the data. Comparing similiar track homes according to standard RE “comps,” sold within the last 3 months will give us the best measure of Value versus the ever “stable,” Median Sales Price and ppsf. Additonally, looking at comp homes on the MLS sitting for 60+ days should give us a good idea of the true value (since if they are not selling at that price the true market value is the same OR lower).
smarten
Wrong on both counts [“it appears?”] “Susan.”
Country Club was a REO when it was sold on 2/24/09 [there were only 28 and not 29 days in the month] from U.S. Bank to Brady. The trustee’s deed was recorded 3 plus months earlier [on 11/7/08] as Document #03703835. Brady resold the property to Calder on 5/3/10 [Document #3877539]. 14th Green was a short sale from Griffin to Caracciolot on 3/22/10. It was resold to Berge on 9/17/10. Apollo was a traditional sale.
inclinejj
14th Green sold to Carrio at the sale I was standing there when the sale went down at the courthouse. The owner filed suit against the bank and buyer at the courthouse also.
http://icris.washoecounty.us/recorder/eagleweb/downloads/3868982.pdf?id=DOC366S17131.A0&parent=DOC366S17131
inclinejj
http://icris.washoecounty.us/recorder/eagleweb/downloads/3862421.pdf?id=DOC366S13534.A0&parent=DOC366S13534
JR
I’ve been a long time lurker of this blog, and just wanted to throw my 2 cents in on this topic. I was looking to purchase a home in the Double Diamond / Damonte Ranch area last summer (Summer 2009). Having a few relatives in the real estate industry, i was advised that a great deal was finding a 2,000 sf home for roughly $100 / SF (2,000 SF home for 200k). After looking for months, it was nearly impossible to find homes in the area that were selling for that price (Minus the occasional foreclosure that needed LOTs of work).
If you take a look today, you can find many homes listed for not only $100 / SF in the Double Diamond area, but i am even seeing the occasional listing show up for as low as $90 / SF in that area. Looks like we are back to the Mid 90’s prices.
Happy Holidays!
Old Tahoe
Looks like Smarten got busted again. This guy will distort any data to prove he was “Smart”en when he bought his IV palace.
Danville
Thanks Susan and Inclinejj. 14th Green was Trustees’s Deed on 3/22/10, and not a short sale as Smarten says.
Country Club was also a foreclosure.
MikeZ
The median has been “stable,” for around 16 months. So take a group of homes that sold in that time period (15 to 16 months ago)…and then compare them to current comps (houses sold in last 3 months) or houses currently available. It would help if the units were very comparable such as track homes in the same development [S.Meadows, Sommerset, Arrowcreek, FieldCreek].
The exercise your propose is no different than observing price per square foot. Comps have comparable living areas. Any change in the value comps would also show as a change in the price per square foot of the sales.
Do you agree?
It certainly would be interesting to see if the market value is stable during this Median Sold Price stability.
It certainly would be helpful if you would look back and see that no one is using just median price to determine home price value or market stability.
Carole
Price per sq. ft. has dropped about 8% in the past 18 months.
June, 2009…..$104.09
November, 2010…..$96.29
So with a “stable” median over the past 18 months, does this mean that a buyer today can get about an 8% bigger house for the same amount of money?
An extra 8% on a 2,000 sq. ft. house is not insubstantial.
Does this mean that a 2000 sq.ft. house is 8% cheaper than it was 18 months ago? Despite a “stable” median?
MikeZ
Actually 200 BP, it’s not as difficult as you might imagine [and you don’t have to have access to the MLS]. But it takes a lot of time.
Now *I* will make *my* prediction: GD_420 will not invest his own time and energy into gathering the data that he claims would shed light on the true state of the real estate market in Reno/Sparks, but he will continue to explain why it’s so important (just not important enough for *him* to spend any time doing it).
MikeZ
Carole, post under your other identity and I will respond.
Trolling by alias is not welcome.
Martin
Now MikeZ decides who is allowed to comment on the blog?
GratefulD_420
To MikeZ…
‘Comon. You cannot seriously rationalize these are the same thing.
ppsf is not the same as a comp. it does not include the “#1” factor in RE… location. It does not include the 2’nd most important factor: quality. It does not account for land.
Nice MikeZ… you have gone from pandering…. to rationalization away from the true talking point (becuase it will not support your arguments)…. to straight up belittling.
Nice stuff.
You are correct though… I’ve given it a few goes…. but again without an MLS tool I have found no way to compile enough data in a timely fashion. I could easily pull out the few I have done that support my point of falling Value (versus stable median)… however, that is not my objective. In order to make a more comprehensive analysis and to learn the TRUTH we need a larger data set.
The only reason I keep bringing it up though…is because you and Smarten continue to pass misinformation about the health of the market based upon a few key parameters which are just not functioning meterics in this current dynamic “once in a lifetime,” market.
Sully
One of the things that make this particular market a bit difficult to define is the large number of bubble babies that were built here. How do you put a historical value on a house built with $3 2×4’s when older houses were built with $1 2×4’s. Inflation adjusting helps some, but doesn’t really explain some pricing or the reasons for so many builders deciding on McMansions instead of normal sized housing. This area has far too many 3500/ft+ housing units than would normally be considered for a pop. of 330K and most of them were built during the bubble years.
Following trend lines will show the bubble has been worked out, in nominal dollars. Using inflation adjusted dollars, going back to 1980, shows we are now below the long time average.
Neither of which tells you actual state of the market, but a general idea of what it’s doing. A friend of mine (commercial realtor) sold his vacation home in Tahoe Keys for 350K (pre bubble) thinking the price was getting a bit frothy for a vacation home! I thought he was right, little did either of apparently know.
However, one thing that hasn’t changed is the fact real estate will bring whatever the market will bear. In this economy, the market isn’t bearing much. 🙂
inclinejj
http://calculatedriskimages.blogspot.com/2010/12/unofficial-problem-bank-list-dec-24.html
919 Banks on the problem list and the housing homers think the market will improve!!!
Walter
“My fellow Nevadans. Our economy is robust, our work force is teeming, our job growth is healthy, and the unemployment rate is low. I am proud to announce the state of our state is strong.”
Jim Gibbons, Governor of Nevada
January 22, 2007
MikeZ
GD_420: The only reason I keep bringing it up though…is because you and Smarten continue to pass misinformation about the health of the market based upon a few key parameters which are just not functioning meterics in this current dynamic “once in a lifetime,” market.
And what misinformation would that be?
MikeZ says:
July 5, 2010 at 7:23 PM
…
Is the Reno/Sparks RE market healthy right now? I would say: No.
But “health” is terribly subjective. To me, a healthy real estate market is appreciating and growing and this market isn’t.
…
Rory
“My fellow Nevadans. Our economy is robust, our work force is teeming, our job growth is healthy, and the unemployment rate is low. I am proud to announce the state of our state is strong.”
Jim Gibbons, Governor of Nevada
January 22, 2007
…And what did you expect him to say? People don’t and rarely handle bad news well. Had he said it’s time to button down the hatches and save money, the opposition party would have been claiming he was eating babies and killing puppies!
RNC
Jimbo was , absolutely, the worst Governor in Nevada’s history. Five more days and he’s gone. Good riddance.
Tom
I see where the former Shell Oil president has just projected $5 per gallon gas prices in our not-too-distant future. If so, jet fuel will also increase. If those things happen, along with the rising trend in food costs we presently are witnessing continuing to occur (but which the federal government neatly excludes from its C.O.L./Inflation statistics), there won’t be as much discretionary spending money left in the monthly budgets of a large percentage of American families as there is currently–which isn’t much. One of the things those households will likely be inclined to cut back upon will be discretionary regional travel. In my opinion, the short-term future doesn’t sound too encouraging for those planning to renovate and reopen local hotel properties–or even for operators of existing properties now open. That segment of commerce is a significant component of your local area employment, presently at least although not in the long term, and it is dependent upon an ongoing stream of visitors who largely arrive by car, bus or airline. Fewer visitors will cause further staffing cutbacks at some of those lodging facilities, which in turn adds to higher unemployment rates, further impacting residential property values. I wish it were a rosier scenario but it doesn’t seem so to me.
I still like the idea of living in your area, it is beautiful–but the future economics of the region are giving me some second thoughts.