More of the same was pretty much how I would describe February. Except that the median price, after dropping to a low of $281K, jumped back up to $295K. And pendings upticked slightly yet again. So, is it time to party?
The reality is, we still have a lot of inventory to work through. And as I tour buyers throughout the area, I am seeing more and more bank sales and foreclosures, especially in the boomtown areas of South Meadows, Spanish Springs and occasionally Somersett. Even exclusive areas like Old South Suburban aren’t immune.
As subprime lenders drop like flies, I can’t help feeling that this downturn isn’t done yet. Despite NAR’s rosy spring stabilization message, I can’t ignore estimates that 23% of subprime loans originated in the Reno-Sparks area since 2005 are predicted to go bad… this has to affect our pricing.
When a 2500 square foot, nearly new home on Jack Hammer sells for $370K because the bank has to take over, cut its losses and dump the property, that affects the entire neighborhood. And if happens to enough properties across the region, prices will most certainly come down. read
GreenNV
I checked out a cute little FSBO open house I found on Craig’s List this weekend. OK house if you go for the South Meadows sort of thing. The cider was mulling on the stove, the fresh cookies were baking, tastefully staged decor. A quick title search turned up the “owner” as HSBC! The fox is in the henhouse now, I guess.
My gut feeling is that there ARE some serious buyers out there, but the market is lacking “serious” sellers. New listings in 89523 (Slumersett) for homes originally purchased in the mid 2005 peak period keep getting listed at 25-27% over original purchase price (some a lot higher). They may have experienced a bit of run up before the peak depending on when they locked in, maybe 5% or so. Bottom line guess is that the properties will sell eventually for about 20% under current asking, less if they become a “stale fish.”
Hey Diane, 40 Old Reno Road has relisted at $3,995,000 or so every day for the past 6 months or so. Can a civilian file some sort of complaint with the MLS governing board on this sort of gross abuse of the system? Do some agents really think this sort of tactic works, especially in this rarified stratasphere of the market?
Mike
Reno Ignoramus
The owner is HSBC, huh?
That would be the same HSBC that announced 3 days ago it is taking an $11,000,000,000,000 hit for Vodoo loans going bad. Yes, that is 11 BILLION dollars.
We are in the first inning of the Voodoo mortgage lenders meltdown. Voodoo mortgage companies are going out of business daily.
How long will it take before people begin to connect the dots?
Anybody care to offer their thoughts on what happens to the market when the nothing down, I/O, neg am liar loans to the walking dead go away?
30-40% of the buyers from 2002-2005 were flippers and speculators. Safe to say the flippers have left the market now. 70% of all people already own a house; they are already in the game. Soon the Voodoo Specials will be gone.
Who will be left to buy? Who will buy the $250K house so the owner/seller of that house can buy the $450K house so the owner/seller of that house can buy the $650K house so the owner/seller of that house can buy the $850K house so the owner/seller of that house can buy the $1 million house?
Chris
I am currently renting a house in 89523 (at a monthly rent that would not even come close to paying a mortgage). We are looking/considering buying late spring or early summer. I will be one of those true buyers, no existing home to sell, have cash from my house sale back in Chicago and will be ready to go. 1. I am glad I found this blog, this will be a really interesting time. 2. MLS# 70004211 (just up the street from us) goes on the market at a whopping $750k, the home next to it (albeit a little smaller) just sold a month or so ago in the low $500s, what in the world are these people thinking!!!
I think those 10 things in the post above are definitely NOT being communicated to the sellers, these sellers have this house priced at $250/sq ft. I can definitely see the 20% drop in this price taking place, however, how long does it take the seller to realize that?
Lindie
MLS # 70004211. 2890 Sunline. Record owners live in Truckee.
Sold for $557,972 on 7/29/05.
Well, at least the current totally nailed the top of the market.
In the past 20 months, the Reno market has gone nowhere but down. But these sellers ask for an increase of $190,000 over what they paid.
These sellers and their agent must be of the belief that it is still 2004, and that prices are still increasing 20% annually, and that the world is still full of Greater Fools.
So what do you think, Chris, do the prices of houses in Reno always go up? Do you think that if you don’t pay $750,000 now you will be priced out forever? Isn’t it true that you can’t go wrong buying a house in Reno because everybody wants to live here, because Reno is special, and because they aren’t making any more land?
Please let us know what you decide, ok?
RenoLover
Chris – I think people are still in la la land overthere. We are ex Reno folks hoping to come back if we can find jobs there, and we read this blog regularly. Diane & Co. do a great job of telling the real deal. Honestly, I don’t know what people there are thinking, and I am amazed at what the realtors are not telling them. I have some realtor friends and they seem to think the realtors are usually more practical but the sellers just don’t want to hear it. Read the book Freakonomics – has a great chapter about realtor commissions and how price is less of a factor to their bottom line than it is to sellers (obviously). We watched the Reno market sky rocket up with false demand, crazy loans, and no underlying market fundementals (i.e industry) to support the prices. I don’t think the market will hit the bottom until spring ’08, but that’s one person’s opinion.
Jennifer
-Joe
We are not going to see any type of solidification in the used home market until the builders have exhausted their inventory of new homes.
I suspect we will have a ‘failed rally’ this spring, a slow summer and even slower fall.
A wild card is the stock market, you can plot the latest rise of the market against the real estate market and see where the funds for real estate have gone. Conversely, as the market moves towards an inevitable correction, more funds will be allocated to the ‘safe’ haven of real estate thereby offsetting the failed rally and actually fueling the stabilization of our market.
Of course this is my opinion and I’m probably wrong.
Chris
I’m tempted to go put an offer on that house for $525k (I know I won’t hear anything back from them, not even a counter offer). Currently, we will continually watch to see what’s going on, and for the time being I think the only people I may consider buying from are the builders and those other houses owned by banks, since those will be the only realistic sellers in the market for the time being.
We really enjoy Reno for the past 9 months we’ve been here, and with a month-to-month lease on the current house, I don’t see any reason to be the next fool to jump in at the wrong time.
GreenNV
You still might be overshooting the market with that offer! Look at 3045 Blackthorn – sold for $477,357 on 9/1/05, and is now on the market at $463,000. Same neighborhood, close to the same purchase date, right at the peak of the market. I think anyone who bought at the peak should probably expect that their house has depreciated at least 20%.
Also some interesting “real estate-ese” in the flyer. This may be the last house on Sunline adjacent to undeveloped land today, but Ventana Point was approved by Reno Planning last week, and will extend Sunline for a 70 unit development. http://www.cityofreno.com/gov/boards/pdfs/board_pdfs/PlanningCommission-03-06-07-Links.pdf I read most of the staff report, and it seems there are at least 5 other projects approved for the “open” or “undeveloped” land in the area.
In development mad Reno, you need to see abuts Forest Service land, public open space, or deeded open space. And still don’t trust it.