Our friends at First Centennial Title Company of Nevada have released their Market Condition Report for March.
From the March report:
- OVERVIEW: Both SFR and Condo supply are very constant. This means that as properties are moved off the market by either becoming a sale pending or a failure, those properties are being replaced by new supply. This implies that whatever price trend is currently in effect is likely to continue. Closed SFR demand increased significantly over last month while Condo demand was relatively unchanged. Properties in escrow are on the increase at a slow pace. Median price for both types is declining at a quicker pace. Prices are very weak.
- PERCENT SELLING: Increasing slowly—gained 5 points over last month. This is a reflection of an increase in closings and a decline in the rate of failure.
- WEEKS SUPPLY GIVEN DEMAND (ABSORPTION RATE): Absorption Rate is declining for SFR and steady for Condo. A declining rate signals a tightening market in terms of supply and demand. In order to affect prices, this tightening would need to continue over a prolonged period before prices would react.
- MARKET SPEED INDEX: The market is moving slowly but speed is increasing in small steps from month to month. Expect the pace of the market to increase slowly. This increase will be difficult to discern at the street level in the short run.
- PRICES: SFR and Condo price schedules continue to weaken but the pace of decline has increased. Condo has become more pronounced in the short run. Prices are erratic from month to month and seem to gyrate in a narrow range (see History of Median Sale Price Graph).
Click on the report below to enlarge (two pages)…
Definitions from the report…
Market Speed Index – measures the rate of conversion of listings to closings. The higher this number, the faster the market is converting. The area with the highest speed is the "quickest" area. All other things being equal, areas with the highest Market Speed are the most desirable to buyers.
Weeks Supply Given Demand – the Absorption Rate (the number of weeks required to exhaust current supply given current demand).
This month’s report also offers the following “Advanced Analysis” of Percent Selling a.k.a. Market Efficiency. From the report, “When a property comes to market, ultimately there are only two outcomes: success (closed) or failure (expire, cancel, withdrawn). In the graph to the left, see that in 2005, the market peaked at 80% percent selling (20% failing). This illustrates that without regard to the market, some properties will always fail. Here is the important idea: The market began to lose efficiency in mid-2005. Prices did not begin to react until early to mid-2006. The market, therefore, sent clear signals of decline well before prices began to react to the market change. The reader should also observe that percent selling has peaked out. This implies, at the minimum, that any recovery will either not occur in the near term or be very weak in its effect.”
Steve Herschbach
I like the little median price chart that no matter how median prices keep declining is determined to indicate prices have bottomed and are on the way up.
Walter
Yes, Steve, it’s like the “steady median for the past 12 months” everybody is talking about that declined 8% in that period of time.
If we have another 12 months of this same “steady median”, we will be down another 8%, for a total of a 16% decline for 24 months of this “steady median”.
Carney
Yep, all last year it was…..”See, the median has stabilized. See, the median is hardly dropping at all now. See, we have had month after month of a stabilized median.”
And then, suddenly, emerging from all those several consecutive months of stability, “Oh, it appears the median dropped 8% last year.”
Anonymous Coward
I think Carney’s a little too critical (given month-to-month fluctuations, it’s difficult to discern a sub-percentage drop per month UNTIL you have almost year’s worth of data). But Steve Herschbach is right on the money: it’s ludicrous that the smooth curves drawn over the median-sales price data are drawn with a positive slope for the last couple of months. How the devil does First Centennial generate those curves? (Other than wishful thinking.)
Gadfly
To add to what AC wrote above, much of the 8% decline in 2010 came after September 2010 (October 2010 being an aberration, as it turns out). Between May of 2009 and September of 2010, the data show that the median was relatively stable when compared to the proceeding two years, only to begin to fall significantly again in September 2010. If we want to be objective and fair (not common sentiments found here these days), smarten, who has become RRB enemy #1 despite his years of valuable contributions to this blog, stated many times that he thought it was possible that the relatively stable period would be followed by further decline.
Or put another way, it is — wait for it — orthogonal to use yearly data to support an assertion that there were not some months of relative stability within those years, especially when those months spanned two different calendar years, one of which saw decline in the first third of the year (2009) and the other of which saw decline in the last third of the year (2010). And so, while it does certainly seem that 16 months of relative stability was just a ledge of the abyss, not the bottom, that does not change the facts: the data show 16 months of only relatively minor fluctuations (+/- 5%) in median prices in Reno/Sparks BEFORE the current decline.
Now, on to the chart in question. I vote for wishful thinking being the cause of the happy little upturn at the end, especially for that smiley face we see in the condo market.
MikeZ
smarten, who has become RRB enemy #1 despite his years of valuable contributions to this blog
Wait, what? When did this happen?
Did the personal attacks from you-know-who finally drive him out of the blog?
Curious
Nah, Smarten has moved on to other things in IV. He is spending his time now in a dispute with IVGID. In fact, there was a story about him in the local Tahoe newspaper not too long ago.
sensiblebuyer
“Wait, what? When did this happen?
Did the personal attacks from you-know-who finally drive him out of the blog?”
Who are you referring to- the guy you’re obsessed with who hasn’t posted here for more than a year?
Gadfly
Mike Z,
I think smarten just grew tired of defending his home purchase, and he does seem to be busy with his concerns (genuine, it seems to me) with the IVGID. However, there has been a recurring theme over the past few of months of some posters making snide comments about smarten’s home purchase when falling prices come up, and there was even one thread (a couple of months ago, maybe) in which posters discussed “driving” smarten from the blog.