From June to August 2006, 36 homes over a million dollars sold in the Reno Sparks metro area, or approximately 12 per month. Average days on the market were 141 at $309 per square foot. The average sale price? $1,387,152. Interestingly, 53% of homes sold were in the South Suburban area (Arrowcreek, Saddlehorn, Fieldcreek, etc). The rest were scattered evenly trhoughout Reno. None were in Sparks.
Of the 264 homes over a million currently for sale, 12 per month equals a 4.5% absorption rate. So owners in this price range currently have a 1 in 22 chance of selling their home. With a 22 month supply, as a seller you need to price competitively to succeed, especially if your home is not in South Suburban.
Last year during the same time, 68 homes over a million dollars sold, or approximately 23 per month. 31% were in South Suburban, 25% were in Montreux, 10% were in Southwest Reno, 10% in West Southwest (Caughlin Ranch, Juniper Hills), 6% were in Old South Suburban, and the rest spread evenly throughout Reno. They stayed on the market an average 136 days at $324 per square foot. $1,388,438 was the average sale price.
Now within these numbers lie the ultra high end… those homes selling at $2 million and above. From June to August 2006, three sold, out of 46 currently listed for sale, putting absorption at 6.5%, the odds of selling at 1 in 15, leaving us a 15 month supply of homes.
Last year during the same period, four homes over $2 million sold, and 75% of those were in Montreux.
Okay, enough blogging. Time to go eat some ribs. Mmmmmm, ribs…
Reno Ignoramus
“File this under car wreck, as in, you don’t want to really see it, but you cannot look away. I’m talking about the latest batch of housing numbers.”
“Builders like Toll Bros. are saying they’ve never seen anything so bad, in, oh, half a century.”
“I’m sure others have noticed, as I have, the increasingly desperate pleas from the housing-bubble cheerleaders, especially National Association of Realtors Chief Economist David Lereah. A long time bubble denier, who, I think, is more interested in protecting his consituency of six-percenters than in offering realistic housing market commentary, Lereah began asking the Fed to protect his bubble a couple months back.”
“‘Translation: ‘Pleeeze Gawwd, don’t take away their free money! Do that and we’re all sunk.'”
“Many economists and commentators have begun to point out that housing prices are inflated to an unknown degree by seller concessions: rebates on closing costs, swimming pools, new kitchen countertops, luxury trips once a year for life and other goodies. These and other expensive sweetners are now par for the course as desperate sellers try anything to move their houses.”
“There are plenty of reasons this occurs. First and foremost is that the house-selling industry depends on the perception that housing is a no-lose investment in order to continue to hawk its wares. Agents, of course, get paid on selling price, so you can be darn sure they’d rather see under-the-table concessions than straight price drops.”
“The problem is that these real costs don’t appear in the selling price, thus distorting reality and effectively continuing the pleasant myth that Americans have become comfortable embracing: House prices don’t drop. Unfortunately, they do.
Motley Fool
September 1, 2006
gotlots
141 days on the market?
This must be the sanitized made available to the unsuspecting public number furnished by the Board of Realtors.
Average time on market in the $1 million plus range is 4.5 months??
Come on, Diane.
rkybrl
Indeed. The absurdity of the DOM figure is apparent from the post itself. According to Ms. Cohn, 4.5% of the 264 houses in this price range sell every month. Which translates to 22 months of inventory. But we are told the average time it takes to sell a house in this price segment is 4.5 months. Please.
The explanation for the absurdity is well known. There exists a common practice by realtors of taking a listing off the market as it approaches expiration, sitting it out for a day or two, and then bringing it back as a “new” listing. Or, oftentimes, the listing will be allowed to expire. The property is kept out of the MLS for 2-3 days and then “relisted” under a new MLS number. The effect is that a property that has been on the market for 90 or 180 or 270 or 360 days suddenly goes back to “one” day on the market.
The DOM figure is the most blatantly deceptive figure produced by realtors. The accurate, and honest method of calculating DOM is to keep track by property address, not the most recent listing. Realtors have the ability to search total DOM by property address, not listing. That information is available to them. But that is not the figure that is provided to the public. It is a sham.
gotlots
It was a dark and stormy night. Seated around the kitchen table are Seller and Realtor discussing the listing of Seller’s McMansion in Somersett:
Seller: How much do you think we should list for?
Realtor: $1,099,000
Seller: Gee, that’s a little lower than I had hoped.
Realtor: Listen, it isn’t 2004 anymore. The days are gone when you can look at what your neighbor sold for and add 10%.
Seller: How long do you think it will take to sell?
Realtor: Here’s the reality. There are 264 houses on the MLS in the over $1 million price range. About 12 a month are selling. That is 22 months of inventory. That means that if NO other houses come on the market in this price range, at the rate of current sales, it would take 22 months to sell all the existing inventory.
Seller: Ugh.
Realtor: Yes, ugh. But its better to know the truth and be realistic.
Seller: Ugh. Well, ok.
Realtor: But according to oficial MLS statistics, the average amount of time it takes to sell a house in this price range is 4.5 months.
Seller: Huh?
Realtor: (silence)
Seller: I am confused. First you tell me that if not even one more house comes on the market, at the rate of current sales, it will take almost two years to sell all this inventory. But now you tell me that on average it only takes 4.5 months to sell in this market segment. How can that be?
Realtor: Listen. Our job as realtors is to create illusion. On your behalf, of course. The illusion to potential buyers that the market is going strong. The illusion that houses are selling fairly quickly. The illusion that there is substantial demand for houses, and buyers better buy now. If we tell buyers that dozens and dozens and dozens of houses in this price range have been on the market for many many months, even well over a year, buyers will not buy into the illusion. So we here at the Board of Realtors have devised a system to make it look like houses are being purchased a lot sooner than they really are. Sure, it’s a bit of flimflam, but we do it for you.
Seller: oh, gee. Thanks. I feel much better now.
Reno Ignoramus
Some Labor Day weekend news about Carson City:
“There aern’t many people looking to buy homes during this typically slow season in late summer/early fall, but those who do are spending about 6 percent less than a month before, according to city assessor records. Residential sales are also being brought down by higher interest rates and sellers overestimating what their property is worth, said Bob Fredlund, an agent in Carson City.”
“Sellers are shocked because of the decrease in the value of their property over a year ago when all real property was inflated, Fredlund said. Many sellers are making reductions in asking prices. He believes this trend will continue until Carson City gets a population influx.’The reality is we’ve got fewer buyers now’ he said. ‘Everybody purchased in the last year.'”
Nevada Appeal
September 2, 2006
Yes, Bob, everybody did purchase in the last year, because the realtorindustry told them to buy now or get forever priced out. Prices will continue to drop until Carson City gets a population influx? You mean, like over the next 10 years or so?
But if Reno is special because it is so close to Lake Tahoe, wouldn’t Carson City be even more special since it is even closer to Lake Tahoe?
I though that northern Nevada real property never went down in value. I thought you couldn’t lose by buying northern Nevada real estate. If I was a seller in Carson City, I would be shocked too.
Reno Ignoramus
Some Labor Day weekend news from Lake Tahoe:
“Dee Hackleman is one seller who took her house off the market recently because she and her husband didn’t get what they were asking for.”
“‘The market is flat right now. It’s glutted’, she said.”
“The median price for South Shore homes from July to August dipped by $40,000 to $435,000.”
“Concessions are being made in this extremely competitive market. One listing from Coldwell Banker indicates the ‘seller will carry a second to a qualified buyer with no payments for three years.'”
Nevada Appeal
September 2, 2006
Median price down by $40,000 in one month? Sellers willing to carry a second with no payments for 3 years?
But surely Lake Tahoe is special because it is so close to Lake Tahoe. Er, uh, wait. This IS Lake Tahoe.
Chris
Rkybrl – Thanks for your comments on DOM, and how those numbers are often manipulated/skewed. Very insightful.
Chris
Reno Ignoramus
“Washington Mutual, a leading issuer of option ARMs, revealed that it had improperly calculated some customer debt/income ratios for 2004 and most of 2005. As a result, borrowers qualified for loans at lower interest rates than was justified by their personal financial situations. According to the company, the unpaid balance of borrowers who mistakenly qualified totaled $ 30 billion.”
“The problem is that the housing decline has just started and the above revelations are most likely only the tip of the iceberg. With home prices likely to move lower,a lot of homeowners are going to be in real danger of defaulting with widespread foreclosures a distinct possibility.”
Comstcok Partners, Inc
August 31, 2006
This is ONE lender. ONE. $30 billion in loans to “unqualified buyers.”
Anybody care to come here and explain how this is all going to turn out well?
Reno Ignoramus
“The Housing boom–no matter what the experts, real estate agents or builders tell us–is going bust. I learned years ago never to ask a barber if you need a haircut or a banker of you need a certificate of deposit. And never ask a real estate agent if he thinks property prices will come down. Of course housing experts (who are these experts?) are predicting a 3% to 7% increase in property values this year. But these well-paid idiots completely ignore the fact that there wasn’t a sane reason for the astronomical rise in housing costs during the past five years.”
“Common sense valuations suggest as of January the prices of most homes and condos were 40% to 50% too high. Even if we experience a strong growth in the wage base, a surge in GDP and inflation at 5%, the average home value may fall 25% to 30% in the next three years. Last year, 45% of new home buyers…bought their homes without a down payment and 35% of all new mortgages were interest only.”
Star News Online (North Carolina)
September 3, 2006
This is from that well-known bubble area, North Carolina.
All over the country, folks, the bubble is starting to implode, and people are figuring it out. And the national and local media, finally, is starting to tell it like it is.
Todd Tarson
I am aware and saddened by the manipulation of listing information (the days on market figure specifically). However, I will say the effort was not brought to you by the Board of Realtors.
If anything, and I can’t speak for the Northern Nevada area, the leadership is looking into this practice and has begun a crackdown.
The MLS in Phoenix was talking about a $1,000 fine for such practices. Where I live in Arizona we are currently organizing a new regional MLS and this subject came up often and the result will be that the DOM will run with the address of the listing after intitial experation for 6 months before the meter is reset to zero.
Meaning my lising does not sell so another agent picks up the listing. The DOM will reflect 181 days when the new agent begin’s their listing period.
This is something I plan on monitoring as we get this up and running. I think the problem has been the leadership in the past for not being up to speed on some rather simple issues that face the industry. It’s being talked about now and there will be solutions.
As I always say, the data in the MLS is only as good as the person that inputs the data. There’s plenty of work that needs to be done to address the variety of problems that the industry is facing. Hopefully you will be able to count on your leaders…
gotlots
There ought to be an asterisk * that immediately follows any DOM number contained in any report that is based on MLS statistics. Then at the bottom of the report, there ought to be the following mandatory disclosure:
* This number is a manipulated number. It is not accurate, and ought not to be relied upon for any purpose. It is the result of deceptive conduct engaged in by realtors. In actuality, the true and correct number may well be two to three times this number, and in certain instances may be three and one-half times this number.
Diane Cohn
Yes, the MLS software from which I pull data has some loopholes… one of them being the potential for skewing days on the market for any given property.
Believe me, it’s not some calculated conspiracy designed to dupe the public, it’s just bad software design that some agents take advantage of to try and serve their seller’s best interests.
Out of curiosity, I went back and looked at the over million dollar sales in July and ran a time-consuming property history on each address to see if, indeed, they had been listed multiple times. Only one out of nine had… a listing in Montreux with three separate entries. The rest were just single listings that eventually sold. After calculating the average days on the market by hand, it came out longer at 244 days.
So, yes, data can be manipulated when people withdraw listings, change agents or simply decide to start over. Until our software tracks activity by unique address, I suppose I should stop citing days on the market statistics because what good is skewed data?