…so reads a headline that is presently making the rounds through the nation’s media outlets.
If you haven’t heard the story, you will. Just google it and see how many papers have picked it up. It’ll probably be mentioned on this evening news.
In a nutshell, the crux of the story is this: During the typically peak home buying months (March through August) Americans purchase fewer new homes in 2011 than in any other six-month period since record-keeping began a half-century ago.
Though the story applies to country as a whole, I wanted to lend some local perspective to just how hammered new sales have been this year. I compiled the table below from the numbers that our friends at Ticor Title sends our way each month. I went as far back as the peak years of the housing bubble – namely 2005 and 2006.
New home sales recorded in Washoe County by year
| Month | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Mar | 52 | 74 | 81 | 201 | 327 | 437 | 372 |
| Apr | 35 | 76 | 70 | 178 | 320 | 439 | 349 |
| May | 51 | 56 | 61 | 210 | 318 | 466 | 363 |
| Jun | 59 | 94 | 102 | 167 | 304 | 468 | 452 |
| Jul | 61 | 43 | 78 | 158 | 257 | 349 | 418 |
| Aug | 41 | 46 | 78 | 163 | 305 | 465 | 471 |
| total | 299 | 389 | 470 | 1,077 | 1,831 | 2,624 | 2,425 |
Looking at only new home sales in Washoe County, one can see that new home sales recorded during the home-buying months March through August peaked in 2006 with 2,624 recorded sales. Compare that to this year’s number of 299 recorded sales. That’s an 88.6 percent decrease from the peak.
Looking at it another way, more new homes were sold in any given month of 2006 than were sold during the entire six-month home-buying season of 2011.
Norton
So it’s an 88.6% decline. Surely this means there has never been a better time to buy.
Also out today is the report from the US Census Bureau that shows Nevada had the worst decline in household income in 2010. Down 11.9%. That’s an 11.9% decline. In one year.
Yep, that V shaped blastoff of housing prices is about to start any day now.
Zen
One could read a lot of things into this, and come up with many of different conclusions, but one thing is for sure, it is still not a good time to be in the construction industry.
Guy, your data table includes the peak of the crazy busy years up to now, but I wonder what the numbers looked like prior to all the crazy, when we had a “normal” housing market. Do you have any data for that?
lurker
The obvious misnomer in this story is that it focuses only on “new homes”. Considering the massive oversupply created by the bubble, who could expect any different for at least the next 5 years?
Is it bad news that “new homes” are not selling in Reno, or nationwide? I don’t think so. We need a long period to digest all the REOs out there to restore health to this market before anybody builds any new places.
Total sales are near bubble highs, so somebody’s buying. And I suspect the better agents, like Guy, are making quite a good living in this “worst homebuying season in 50 years.”
Cornell
The difference is that for agents like Guy today they have to sell five $150K houses to make the same commission as one $750K house in 2005. It ain’t the gravy train it was during the bubble frenzy.
I suggest that it really has little to do with new vs. used. It has to do with price. There are no new houses selling at the median price of used houses. Yes sales volume is up. But one half of those 760 resales last month sold for $150K, or less.
Guy Johnson
Zen, good question; unfortunately I do not have historical new home sale data readily available. I would have to see if the title company might have that data available.
lurker, you make a good point, total units sold are approaching bubble highs. I took a quick look at the number of sales reflected on our MLS between March and August, for the past ten years and found…
2011 – 3,044 units sold
2010 – 2,907
2009 – 2,760
2008 – 1,953
2007 – 1,943
2006 – 2,275
2005 – 3,655
2004 – 3,133
2003 – 2,891
2002 – 2,599
Guy Johnson
Cornell, you also make a very valid point. However, just for the record, I did not begin my career as a residential real estate salesperson until after the market peaked in 2006. I missed the so-called “gravy train”. 🙂
The timing was not planned on my part, but in many ways I consider myself fortunate to have “learned the ropes” while in a declining market.
Tom Joad
How many hundreds and hundreds and hundreds of houses are there on the MLS for less than $100K? Hell, there are about 125 houses (not condos) between $90K and $100K. The last time sales volume hit 760 at the height of the bubble there were NO houses for sale below $100K.
Today there are hundreds and hundreds.
Reno always has been, and always will be, a working class town.
Welcome back, Reno houses, to your working class roots.
Marvin
It’s pretty interesting to scan through those listings for $100K and under. You’d think that the realtor would at least try to get the cell phone camera in focus. But then when the take home commission is $1200, I guess the realtor is not going to get too invested in moving the property.
Not sure how many realtors today are “making quite a good living” selling these places.
inclinejj
Guy, does a foreclosure count? Like when the bank takes back the house or when it is sold on the courthouse steps?
Guy Johnson
Inclinejj,
Foreclosure sales (i.e. on the courthouse steps) are not included in the figures above.
EdBear
Hi Guy,
Still wished we could have progressed farther on that property we talked about. Thanks again.
MikeZ
So it’s an 88.6% decline. Surely this means there has never been a better time to buy.
With low volume pushing prices down, it could be a great time to buy.
Also out today is the report from the US Census Bureau that shows Nevada had the worst decline in household income in 2010. Down 11.9%. That’s an 11.9% decline. In one year.
That’s bad news, but it’s also old new – the time period is 2009-2010. NV median housing prices also dropped over the same period. The important question is did median home prices drop by a comparable amount, and if they did, then home prices already reflect the downward correction in income.
MikeZ
From the article:
Combined, foreclosures and short sales are selling at an average 20 percent discount. And they’re lowering neighboring home values.
Devan MacConnell, 28, an administrator at a nonprofit in southeast Virginia, had been renting for years before buying a short sale this month — a one-bedroom condo in Virginia Beach overlooking the ocean. She picked it up for $215,000, about $35,000 less than neighboring apartments.
“It was a steal,” she said.
Exactly!
Anonymous Coward
lurker makes excellent points.