Our friends at First Centennial Title have released their Market Condition Report for the Reno, Nevada area for the month of March. (Click on the report below to enlarge.)
Nothing but green. Green tinted cells signal tight markets — from a Ratio of Supply to Demand standpoint — in the specified areas. All other things being equal, the smaller the Ratio of Supply to Demand, the tighter the area market.
Reno’s Ratio of Supply to Demand value of 1.6 is the lowest number I’ve seen for the Reno Real Estate market since I’ve been tracking this report. Similarly, Sparks’ Ratio of Supply to Demand value of 0.9 is the lowest number I’ve seen for the Sparks Real Estate market.
Also noteworthy is the difference between the median “in escrow” price and the median closed sales price report for the areas. The March report shows that Reno properties exhibit a median “in escrow” price of $285,000 and a median closed sales price of $282,000. This difference of only $3,000 indicates that properties are selling at only a 1 percent discount. For Sparks, the report shows no difference between the median in escrow price and the median closed sales price.
related post: FCT’s Market Condition Report – January 2015
FCT’s Market Condition Report – March 2015 | bestreno241
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Geoffrey Parlane
Some pretty low ratio numbers. I believe these numbers are probably actually realistically too high as the "supply" number still has "pending's" in it. I guess the pending's number has to go somewhere, but still hard to wrap my head around that one. Quick question, the median list price in Reno is $555,000, but the median escrow/close price is $282-285,000. Logic would say this means that the available inventory are majority higher price homes, or is there something I'm missing?
Guy Johnson
Thank you for your comment, Geoffery. And you’re not missing anything.
In my latest market report post there is a table showing how March sales breakout by price band…
Looking at the units sold column it’s easy to see at what price the bulk of the sales occur. …and at which price points we have few sales.
Guy Johnson
I posted a reply to your question in the comments on the blog. My reply contains a table showing sales broken out by price band. Thank you for your comment.
Carrie Lamb
Very depressing for us regular folks. We have nothing but higher rents and even higher home prices. I can’t help but wonder if this is a bit of a bubbly market. Wages haven’t budged. Two years ago homes in my South Reno neighborhood sold for the mid to high 200’s. Now they are going in the mid 400’s. Rentals in my neighborhood are going for $500 more a month than we rent for (which we secured 2 years ago). Where is the wage increase to justify this or keep it going? It seems a rich person market – homes that are affordably priced are gone within hours, and everyone else ends up overpaying. How long can this hold out? The nature of the current market and it’s strong favoring for sellers right now caused us to completely shelve our home search, probably for several years. We endured to the Vegas bubble, and we’re not touching the current market with a ten foot pole.
reno robert
Carrie,
If you’re living in a neighborhood where the houses are selling for the mid-$400’s, it looks like that puts your neighborhood somewhere in the top 7-9% of Reno by sales price, according to Guy’s chart. (That’s doesn’t sound like a “regular folk’s” neighborhood).
Yes, prices have gone up, but they were abnormally depressed a few years ago, and if you were around at the time, there was so much fear and hesitation amongst buyers, that the ones that dove in and took the risk are being rewarded now.
The median cost of housing and the cost-of-living in the area (including low property taxes and no State income tax) are still much lower than where many people are coming into the area from — which I believe has actually driven a lot of the price increases, along with the Tesla news which may or may not live up to the hype. But again, the increase has been from what was an unusually low base just a few years ago.
Sure, future gains might be slower and we could even see price decreases if interest rates go up. But on the other hand, real wage growth may materialize from Tesla’s coming into the area, and besides, that’s just the nature of real estate — prices go up and down, and there also are a lot of hidden costs, but you need to live somewhere.
Good luck.
BanteringBear
It’s another bubble, Carrie, or an extension of the same bubble, however you want to look at it. It’s global. The Fed’s easy money policy, historically loose lending, and an artificial inventory shortage in conjunction with widespread speculation- the mania part- is what’s driving these prices. The same folks who were saying we were not in a bubble in the past, are saying the same thing again- “this is not a bubble, this time it’s different, etc.” It’s a bubble, Carrie, and it’s going to POP just like the last one. All the naysayers will disappear when it does, just like last time. Just do the best you can in the meantime, and avoid buying a house unless you want to experience negative equity like all those losers last time.
Carrie Lamb
Yes, you have some excellent points. When we moved here we found a nice neighborhood zoned for a good school that we could afford rent in, and now are saddened that we can’t afford to buy in this area we’ve lived in for awhile now. But all over Reno and Sparks it is the same: affordability is tight, inventory is even lower. People who have significant equity don’t sell because they won’t find another home to move to. Others are still underwater. My husband has a great job, makes $80k/yr, we have perfect credit, hardly any debt (even our cars are paid off!) and we can’t afford a 4 bdrm home ANYWHERE here. (We have 5 kids- a 3 bdrm will not work! ) We even sold a home in Vegas at a good profit last year. We rent for $1600/month. That’s a mortgage payment on a $260-290k house. To find a decent family home in that price range (and not be in a bidding war to get it) is not possible in the current market. A family such as ours used to be considered middle class and could afford to live at that standard. It’s interesting to watch this shift in society. Lennar’s new “next gen” line of homes epitomizes these shifting economics.I won’t claim to know why this is the case, but the fact is is that home ownership is becoming more out of reach for regular folks.
Sully
Everything runs in cycles, some longer than others, but cycles never the less. The NASDAQ recently hit an all time high, it’s been 15 years since the dot.com bust. Real estate in Silicon Valley has already passed the high set in the last bubble. Currently all but 11% of tech IPO’s are unprofitable compared to 13% during dot.com era.
Superpowers have changed regularly since Alexander the Great, in almost every case because the empire expanded too far too fast!
The current cycle we’re in is fabricated, pure and simple. There is nothing real about it. The Feds 2% inflation rate based on CPI (stuff you buy once in a blue moon or never), BLS unemployment rate, etc. are figures made up in Fantasyland, simply to make politicians look good and fool (or attempt to fool) the general public.
Additionally, many people are saying the Fed is creating bubbles because they can’t do anything else. I guess that remains to be seen.
The few articles saying a recession is coming, generally use 2016/17 as the target date, however I’m thinking as early as Oct this year.
Whenever asset prices collapse (blood in the streets) the smart money jumps on it and the cycle starts all over again – déjà vu. So, sit back and fasten your seat belt, the coming ride is very likely to be much more aggressive than you think is possible.
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