The current inventory levels are crashing. The housing market now has less than a months supply of active inventory in some of the faster selling areas around Reno and Sparks, Nevada (see table below). Keep in mind that a neutral real estate market is typically described as having five to six months supply of available inventory. More than that, the market is described as a Buyers market; less than that, the market becomes a Sellers market.
So what do you call the market when less than a months supply of inventory exists? How about Stead, or perhaps Donner Springs, or maybe the South Meadows.
I’ve been writing about the dwindling supply of available listings over the past few months, but it appears the market has tightened even more. It is difficult to even see a new house that enters the market; much less make an offer and have it accepted.
This weekend I was showing properties to clients. At one house, there was literally a line of agents waiting their turn to enter and show the property. Yesterday a new listing hit the market. Before my clients and I could even set an appointment to see the house, another buyer made a full-price, all cash offer, sight-unseen. The status was quickly changed to pending.
Below I’ve reported on the number of houses presently available for sale in a few of the best-selling areas around Reno and Sparks. If you would like me to report on an area that I have not included in the table below let me know and I’ll pull the numbers.
| MLS Area | February Units Sold | Active Units* | Days Supply of Inventory |
|---|---|---|---|
| (MLS 134) Reno – Stead | 43 | 21 | 14.2 days |
| (MLS 143) Reno – South Meadows | 39 | 28 | 20.8 days |
| (MLS 141) Reno – Donner Springs | 11 | 8 | 21.1 days |
| (MLS 181) Sparks – East | 27 | 20 | 21.5 days |
| (MLS 120) Reno – Old Northwest | 23 | 24 | 30.3 days |
| (MLS 185) Spanish Springs – East | 6 | 8 | 38.7 days |
| (MLS 121) Reno – NW Suburban | 26 | 36 | 40.2 days |
| (MLS 183) Spanish Springs – South | 31 | 46 | 43.0 days |
| (MLS 100) All Reno Sparks | 460 | 812 | 51.2 days |
*Active Units means non-pending, Active Site/Stick Built properties with a current status of New, Active, Extended, Back On Market, Price Raised, or Price Reduced. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – March 2012. Note: This information is deemed reliable, but not guaranteed.
E.Edward
Just how long can a bank hold-on to inventory? ……..Interesting article
Bank Mythology 2011 – How Long Can A Bank Hold An REO?
Robin
I don’t know about this seller’s market thing. The house down the street from me on Idlewild Drive has been on the market since last August listed at $230K and has had only one offer, that fell through when the buyer could not qualify. That’s certainly a fair price given its location and condition. Or at least I thought. The listing just went price reduced a couple of days ago. Now if the house was unrealistically overpriced I could see it not getting any offers. But this house is well within recent comps. So where is the seller’s market?
I think there may be a seller’s market in some price points, but it is clearly below the $230K price point.
BanteringBear
The demand for the lower end homes is not so much from prospective homeowners as it is from “investors.” And, they’re not all local. These people don’t buy the more expensive homes because they cannot provide positive cash flow. Get ready for paltry, paltry sales numbers.
Sooner
There was a story in LVRJ a while back that said that about 70% of sales in LV now are to investors and that almost 60- 70% of all these investors are not from LV. Most are from southern Cal. The article went on to say that a similar situation exists in Phoenix. Now LV and Phoenix are much more on the radar than Reno, but it would be interesting to have that kind of info about Reno.
I have noticed that despite “all markets are local”, there appears to be similar trends happening in many different real estate markets, especially in places where there was a huge bubble. And Reno certainly qualifies in that regard.
patrick
reno, lv and phoenix will be owned as rental property by rich californians
neighborhoods/whole zip codes won’t be kept up
other cities could ship in their section 8 residents as these rental areas become more and more affordable
tyler durden
Patrick, You are somewhat correct. Fixed income yields so little and inflation threats have forced investors to seek crashed real estate as an investment and it is their interest to keep their properties up to snuff. After scrolling throught the pendings; it is apparent to me that all price levels are participating. Short slaes may take longer to close (and thus be relected in the median) and using estimation Reno has already experienced at least a 10% SFR rebound. Median 150-165K and rising. Miami, Phoenix and Vegas have reported similar gains. This is really good news.
Click on higher priced areas (*example south subarban or west southwest) and see how many homes are pending. Hoards of investors buying properties well below replacement cost as investment and inflation hedge.
gomez
and to think people said I was STUPID when I purchased the ONLY house in the downtown core under 100k (65k) last year. btw I’ve already made back $4k just from rental income.
BanteringBear
“reno, lv and phoenix will be owned as rental property by rich californians
neighborhoods/whole zip codes won’t be kept up
other cities could ship in their section 8 residents as these rental areas become more and more affordable”
This sounds a lot like “buy now or be priced out forever.” I’m not buying it.
Cousin ITT
Gotta cry bulldookie, gomez. I watched the permit history and work in progress on State Street. Roofing permit $7800 as I recall. I forget the permit values of the other 2. You had to gut the place and a lot of sweat equity went in. I figure you have $95-100K in the place. As I recall, you were asking $725 in rent, and it has been rented, what, 2 months now ($1450)? A pretty far cry from $4000.
People may have called you crazy because they couldn’t get the numbers to work. I sure couldn’t, and none of the “professionals” in the neighborhood bit on it, either. But I wish you the best on your investment, D.
Raymond
Pretty much one thing is for sure. Whenever anybody comes on a blog chattering about what a frickin genius they are, they aern’t. It doesn’t mattter whether it is a real estate blog (“hey, dude, Iv’e got a cap rate of 10% on that sweet little rental I picked up for a song last year” ) or an investment blog (“hey , dude, I am up 16.75% ytd on my portfolio”) or a commodities blog (“hey, dude, I am 85% on my futures contracts”). If they gotta brag, they are full of crap. They are usually wannabes with less than 5 years experience who are stupid enough to think that they can beat the markets forever.
gomez
Cousin ITT-
I am into the place 86k. We renovated the kitchen and bathroom along with a new roof, electrical, and landscaping. The plumbing and sewer lines were in fair shape so I decided to leave them be. It’s rented @ $750/month ($615 net) with tenants who have paid ahead.
it’s currently running at an 8.5% cap rate with a slightly below market rent. However, with the location and mixed use zoning I felt the investment was well worth it and I still do! I wonder how many homes there are for sale in the downtown core with major upgrades as this house has below 100k? The answer is NONE.
gomez
I should clarify that there is currently ZERO inventory available SFR in the downtown core at ANY price point.
tyler durden
no responses to my observation that pending sales indicate 10-20% rise in median ?
Reno Madness
Well, after a weekend of “looking” at places — and I would call checking out places that are technically under contract, about to go under contract, or otherwise have too many buyers and their real estate agents hovering about just that: “looking”!, — I agree there is no inventory to be had, and the market for the few units available is too crowded with bidders, at least in the middle price range where we had been looking.
It really seems like this law stopping legitimate foreclosures has wrecked havoc on the system, and isn’t good for anything or anyone, other than the folks already in houses and not paying their mortgages. I wouldn’t want to be a real estate agent at the moment, there’s nothing to sell! Maybe is good for builders, I don’t know, it seems like there’s a certainly lot of develop-able land in the area. Wow, I just had a thought — if the builders actually start building again, the banks will never get out of their positions, even if they are eventually able to foreclose!, by that time it will be too late, who wants some of this old stuff when new construction can be had. I mean I looked at some pretty bad construction.
Since we have options, we are (almost very officially as I write this) out of the Reno real estate market at this time, though I feel bad for anyone with a personal or family situation that has no choice but to stay in the area for basic housing, simply because the practical choices are pretty slim at the moment.
I’ve seen before what happens when there is no inventory and buyers are forced to make ultra-quick decisions — in fact I think this in part created a lot of the run-up and current ills we have been contending with. I was hoping to capitalize on Reno as an affordable, if not A+ desirable, place to live, but that didn’t really work out.
Uncle Tom
Reno Madness,
Mind sharing with us what you consider “middle price range?”
Thanks.
Guy Johnson
Reno Madness,
Thank you for your comment. I agree the current lack of inventory will (or should) incentivize builders to begin construction again. See today’s post, Waiting list to purchase a home?!
Gomez
Reno madness
I wish you luck wherever it is you decide to buy. If you’re coming from California I really don’t know what your choices are besides buying in California. good luck with that.
Will monthly home sales (units) drop 70 percent? | RRB Home
[…] Given the current market conditions, i.e. multiple offers; sales for more than list price (see Inventory now measured in days, not months), a gradual rising of the market’s median is not […]