The Reno/Sparks Association of REALTORS® has published the Market Reports for June 2011. These .pdf reports may be accessed here:
- Reno/Sparks Standard Report June 2011
- Reno/Sparks Detailed Report June 2011
- Fernley Standard Market Report June 2011
Conclusion from Reno/Sparks June Market Report…
- June comes in as the fourth highest June sales month in history. It is outperformed only by June 2004 and June 2005, the boom years, and June 2010 which was influenced by tax credits. The market continues to perform at strong levels. This can be attributed to the current affordability levels and continued low mortgage interest rates.
- Year-to-date 2011 unit sales (2723) numbers at are a pace with 2010 unit sales (2726).
- In June, the “Bank-owned” sales category held the dominant share of the market with 41% of the closings.
- June’s median price of $152,400 was up 1.6% over May. Remember that June 2010 was the first deadline to close in order to qualify for the 2010 tax credits. That deadline was extended to September 2010. There was some artificial stabilizing in the median price during the tax credit influenced period. After the final deadline of September, we have seen a continued settling in the median price.
- A recovery of the housing market may mean a return of home values keeping pace with inflation. The medium home sales price will continue to be influenced by the volume of sales at the lower end of the market.
- Some National economists and talking heads report a “glut of inventory” in some markets which is predicted to drive prices down. The Reno absorption levels show an overall balanced market. In the under $300,000 price range there is inventory of 5.8 to 6.8 month’s supply and in excess of 8 month’s supply of inventory in the over $300,000 price range.
- Distressed new listings (short sales and bank-owned) remained about the same at 60% of the mix in June. The continuation of new distressed listings coming on the market is evidence that we are working through the inventory of distressed properties.
- The unemployment picture is improving, but still remains the key to closing the valve on the supply of new distressed listings entering the market and instilling buyer confidence. May 2011 unemployment figures for Washoe County were at 11.8%, down from May 2010 at 14.1%, a 16% drop in the year-over-year unemployment numbers for Washoe County.
- Mortgage rates remain at historic lows, up a little from the all-time lows of earlier in 2010 but still very favorable. Experts are predicting that rates will move up before year end. For those with stable jobs and who expect to stay in their home long-term, it’s an excellent time to buy.
Justin
“The unemployment picture s improving…”
Uh, no. No its not. Unemployment was up last month both on the statewide level and in Washoe County.
Back up to 13% in Washoe County.
E,Edward
Ya know I hear this stuff every year right about now and the day come I hear a realtor say its a bad time to buy is the day I start buying in droves!
Truth of the matter……..Why buy today what can be bought tomorrow for less?
Comeback Kid
Unemployment is improving. There’s more of it!
Walter
The last 6 threads on this blog have had a grand total of 6 comments, some of which were even about real estate. 6 comments over the last two weeks.
The thread before that had 32 comments, almost none of which were about real estate, but rather whether higher education creates jobs.
Is the RRB on life support?
skeptical
Three stages of grief: denial, anger, acceptance.
Plenty of denial even as late as last year, as Smarten chirped out his last wisps of smugness, boasting of his wonderful chalet in Lake Tahoe.
Anger? Plenty. The big bear seemed to spew much and get even more back in return.
Acceptance. That’s when hope is lost. The deed is done. The loss has occurred. Just accept life and move on. Gone are the snipes by Smarten, and even the cheerleading of MikeZ and the other acolytes.
No longer any reason to say anything.
So, we may have hit the final stage of grief in the greatest of housing depressions. Call me crazy, but I think that’s a good sign.
Grand Wazoo
Couldn’t have said it better, Skeptical. Reno in particular, and Northern Nevada in general, have hit some sort of realization that the good old days are not coming back, Fitzgerald’s climbing wall or not.
Good luck to you all.
Dirtbagger
The financial pundits say that once a market segment becomes unloved and ignored, it is usually a good sign.
rrb_reader
You would think that the “Recent local crime mug shots” in the RGJ online isn’t helping prospective buyers decide to move to Reno. It’s actually kind of scary
MikeZ
“Cheerleading!”
You see things through your own special lens, don’t you, skeptical?
Interesting personal attack on smarten, by the way. I really didn’t think you’d stoop to go there.
Comebackkid
Walter,
I found I don’t need to constantly comment to enjoy reading the blog. There’s just not a lot new that hasn’t been said already. I hope that doesn’t mean the blog should be on life support. Besides, the middle of summer is typically the slowest news period, although this summer we have the debt crisis to focus on.
Gadfly
I think the main “problem” is that there is not much on which comment is warranted, at least not about real estate. Last year we had arguments about whether the market was stable, stagnant, or falling. Because the data objectively showed relative stasis for 18 months, we were able to have “fun” debating whether that stasis meant the market was stable, whether stable equated to healthy, and whether the market would continue in stasis or fall. We now know that the 18 months of static prices was just a small ridge on the larger cliff, not a bottom, so what is interesting to discuss? That MikeZ was more wrong than I was, and I was more wrong than Skeptical (who himself indicated he thought it might be time to consider buying – that is before the bottom fell out again), and that Skeptical was more wrong than BB (or BBesque posters), etc.? I admit that the market I thought was stagnant and perhaps in for a period of settling down to the eventual bottom was actually just preparing for another big fall. I am not surprised the market lost more value – I never thought we had reached “the bottom” – but I was surprised by how much value was lost and how quickly it happened. So, since we have all discussed how wrong we were (or in a few cases, how right), what is left to say about it?
“Oh look! We can all see that the market is STILL falling,” is not a comment likely to engender debate. After all, all the real “cheerleaders” left the blog in 2008 when the carnage began to be obvious to everyone. Those who remained (after the real estate shills left) disagreed on how long and hard the market would fall, but I cannot think of a current poster who was one of those clinging to the bubble in 2007.
And that includes smarten. Contrary to current RRB folklore, smarten was one of the most vocal in decrying the bubble and the real estate spin-jive of the bubble back when the conventional “wisdom” was that real estate never went down. Perhaps smarten bought his house too soon and then perhaps was too zealous in defending his decision. However, if he can afford his mortgage, loves his home, and finds that it is worth what he is paying, then that is his choice. Personally, I would like to know what smarten thinks about the current market, but I think he is busy fighting the Incline Village mafia.
Sully
Since BB has left the blog, I’ve probably become the biggest pessimist here. I bought in Apr/09 at the (then) bottom of the market. Granted we have seen the market drop further, even zillows shows me with a 12K lost.
However, since I was renting for 1300/mo and paying my own utilities I’m still at break even. So for two years I’ve owned and am basically even. One thing smarten did say (several times) is that you can’t see the bottom until you’ve gone past it.
The first paragraph in the market condition report says:
“June comes in as the fourth highest June sales month in history. It is outperformed only by June 2004 and June 2005, the boom years, and June 2010 which was influenced by tax credits. The market continues to perform at strong levels. This can be attributed to the current affordability levels and continued low mortgage interest rates.”
So other than waiting for a bank to offer to pay you to buy a house, what’s left? In the under 300K market how much more will they drop? How much worst can things get in Reno?
Sure houses can drop another 20K or unemployment rise another 3%. Considering how long this has gone on so far – Reno is still here, the biggest little city sign is still lit, the sun still rises in the East and sets in the West.
This is NOT to say we have hit bottom and blood is running in the streets, but then how do we know for sure?
My negative feelings still exist for the over 400K market in some respects, however in the current active sales range – there isn’t much to wait for other than an invitation.
Comeback Kid
Sully,
The country is going through a uniquely different period. Confidence in our government is a an all-time unprecedented low. Our debt is out of control. The demographics are changing big time. And emerging countries are ready to pounce on us. Pensions and Health care are bankrupting us. Couple that with the possibility of an upcoming disaster such as an earthquake, weather related calamity or the near certainty that we will be attacked again by those that would like to see us suffer, and you have all the makings for Real Estate to go down further. And that might be the least of our worries.
Negative? Pessimistic? Maybe. But as a person that’s lived a little, a student of history and a follower of daily world events, I’d say things could get worse – way worse – before they get better.
Sully
CK, no argument with that, as things could very well get ugly. Still think the under 300K market will hold up better than it’s expected to, not so much confidence in the over 400K market. In fact, I think that end will see a large drop.
Zen
“Still think the under 300K market will hold up better than it’s expected to, not so much confidence in the over 400K market. In fact, I think that end will see a large drop.”
Sully, I don’t quite understand the logic. If the over 400K market is to see a large drop, shouldn’t it then follow that the price of less expensive housing will drop too? As the price of the more expensive housing approaches that of the less expensive housing, market forces would push the less expensive housing price down further.
Sully
Zen, that’s why I said better than it’s expected to. If things get ugly, the high end would continue its correction. The lower end has come down across the board quite a bit already, whereas the high end is sporadic.
It’s quite apparent we are headed back to ‘great recession’ mode (as if we never left it?), wealth preservation would trump risk in that people that still need somewhere to live and didn’t want to rent would lean toward the best bang for the buck as opposed to the biggest buck for the bang! Sales would tend to dry up in high end and gain more in the low end.
This market is unique for having so many high end houses in an area that has so few high end buyers.
Zen
Sully, I see that you said “better than expected too”, but I don’t agree. Maybe you aren’t the biggest pessimist here after all. First, high end housing has been falling dramatically the last couple of years. I watch this market fairly close, and a lot of over 400k properties sell. I’m not sure why sometimes, but they do. I will grant you that there are still a lot of owners of high end real estate with their heads in the clouds that can’t sell their house, but I see some of that in the under 300k market too. Back to the other point, if housing that today is worth 400k and higher sees a “large drop” as you stated, then I think it will affect the housing that is currently bellow 300k negatively. All pricing will shift down. For example, if a 450k house today is worth say 375k a couple of years from now, do you think someone is still going to pay 300k for another home that was worth 300k two years prior? I don’t think so. That 300k home will have to have lost some value, and other housing below the 300k will also have lost some value too, because now you can pick up what was previously a 300k home for less money, and so on and so on.
Sully
Zen, my comments were directed more toward Comebacks suggestion of impending doom. In a normal times you would be right, these are not normal times. Many houses in the high end also have high end maintenance such as $250/mo HOA fees, much higher property taxes, etc.
Homes in the median range (100 – 250) are selling for below builders cost to build. These could be bought now to live in and converted later (assuming there is a later) into rentals. High end housing doesn’t have the same flexibility.
If the whole system collapses, it really wont matter much anyway. However, if the steeple get their collective acts together by next election and vote in people that will work to pull us out of this mess instead of the people that are in there now gaming the system for their own benefit – then now would be the time to buy. Of course there is still the option to rent, no problem with that.
I took the chance two years ago based on this market falling for three more years. So I think we could fall for at least another year from here. However, my calculations in price have not held up as they have all done better than I expected them to until just recently (Apr).
Also, a 10% drop on a 200K house is a lot less then the same haircut on a $1 million house. At any rate this could go on for another ten years and I for one did not want to rent for that long. 🙂
Sandman
” a lot of over $400K properties sell.”
Well, not really. Only about 6% of all sales are for $400K and over. Last month it was 32 out of 517.
Zen
Sandman, I have to ask, where did you get your data? Also, by last month, do you mean July?
Twilight
The fact of the matter is that houses selling for $400K and over are a negligible segment of what sells now. $400K is two and a half times the median sales price. It’s like talking about cars that sell for $60,000 and drawing conclusions about the overall state of the auto market from these sales. There will always be a few folks who can pay $60,000 for a car, but it doesn’t mean much to the overall state of the auto market.
Sandman
Zen, I got my data from Guy’s thread right here on the RRB posted on July 10, which was for the June sales.
I don’t think the July sales data has been announced yet.
Also, for reference, for May, 27 out of 492 sales were for more than $400K, or 5.5%. And for April, 26 out of 422 sales were for more than $400K, or, 6%.
This 6% figure has been been quite steady for many months in a row.
Grand Wazoo
Did the ex-UNR basketball coach’s house ever sell? Mike?
MikeZ
Sully, I don’t quite understand the logic. If the over 400K market is to see a large drop, shouldn’t it then follow that the price of less expensive housing will drop too? As the price of the more expensive housing approaches that of the less expensive housing, market forces would push the less expensive housing price down further.
Yes, exactly.
Except for very rare cases, downward and upward movement that starts in one price band ripples into every other price band, above and below. The ripple effect can take some time (months, not years) and it can become compressed, but it will happen.
Zen
Mike, thanks for the vote of confidence, I thought maybe I was all alone here.
Sandman, I looked at this report and got slightly different numbers. Take another look at the data, I think you will see that the actual numbers are a little different. From the “Reno/Sparks Detailed Report June 2011”, under a table called “Active and Sold Homes by Price, current month”, I get the following figures:
111+32+17+146+39+11+58+16+3+117+11+2=563 (total houses for sale in June above 400k) I believe these are a snapshot taken at the end of the month. And: 17+11+3+2=33 (total houses sold in June above 400k). Maybe I am reading the data wrong, but I don’t think so. Let me know if we are looking at two different things, or if somehow I am misinterpreting the numbers. On the surface, this makes your argument a little more persuasive, but I was only making a general observation. I haven’t been watching housing above 800k. I have been watching housing in the 400k to 800k range, which is where at least 28 of the 33 sales took place. I realize the percentage selling in this range is still small, but not as bleak as all housing over 400k combined. It has pretty much always been the case that upper end housing sits on the market longer on average than the lower end housing, so I suspect, without checking decades worth of data, that this is not that irregular to have a much lower selling percentage in the upper priced housing than the lower priced housing. Anyway, at the end of the day, I was just trying to make a point, which MikeZ reiterated for me. Maybe we are both wrong, but I don’t think so.
Sully
Zen and MikeZ you are both missing my point. I have been saying the same thing for years. However the fact of the matter is the under 300K market is already compressed and holding whereas the over 400K market is extremely sporadic in its compression.
I didn’t say the lower range would go up or even hold steady, just that it would do better than expected. Which can only be seen in hindsight. I’m looking at the number of listings versus number of sales and the over 400K range is on life support in comparison to the under 300K range.
My theory was that the high end buyer, in event things really got ugly, would opt to preserve cash and (if housing was needed) buy down below his normal affordability range with the intention of selling or turning the purchase into a rental at a later date.
In a normal market downturn, one without govt intervention and massive FED printing of munny, the normal reaction of the market is to fall across all price ranges. This market is not reacting in a normal fashion because the high end is pretty much doing what it wants to do and the low end seems to be already too low.