Well it’s been a busy week in real estate. Pepperwood is finally in contract, my first time buyers who saved $24K just by asking are closing tomorrow, and my newest clients got a great deal on their dream home over the weekend, narrowly beating out a competing offer by assuring the seller that their two young boys would take wonderful care of the beloved Koi.
Thank goodness Guy was here to hold down the fort during my quasi-absence. He is a huge asset to this blog, and a fabulous advocate for his clients. (Kudos, Guy!)
The flame war that erupted amongst our commenting contributors last week was (ahem) entertaining. Opposing opinions are fine, and snarky is totally appropriate. But, please, keep the personal attacks to a minimum. They really do degrade the conversation. Let’s keep the focus on real estate, okay?
I don’t know if anyone has noticed the recent visitor widget on the lower right, but it’s a fun service from My Blog Log which lets you create a persona and shows everyone who’s been visiting lately. As this blog evolves into a true community around the conversation about local real estate, I encourage everyone to post a picture and participate. Of course you can use whatever crazy picture you want… just keep it G rated.
The 60 Minutes bit was fascinating. Redfin and its brethren are truly the companies to watch, and I can see that this industry is on the verge of a major paradigm shift. I have some ideas on the brokerage of the future, but that’s a whole ‘nother post. For now, I watch with interest.
Today my traditional, full-service broker handed out some interesting graphs at the morning sales meeting which I thought I’d share with you. They show actual, positive trends over a four-month period. We are not making these up. These are the real numbers from our local MLS. The trend lines are not drawn. They are the result of spline interpolation.
The bottom line? Median prices are trending up, reducing average homeowner net loss since July 05 from almost 16% to just over 13%. download pdf. And standing inventory is trending down. download pdf. What does this mean? I think we may now be wallowing at the bottom.
MikeZ
RE: The bottom line? Median prices are trending up, reducing average homeowner net loss since July 05 from almost 16% to just over 13%.
Hmmm.
Either those interpolated graphs are wrong or Guy’s numbers, pulled directly from the MLS are wrong.
Chart apriltrend1.pdf shows April median price significantly up from March.
Guy’s data shows April’s median price *down* from March.
Insider
Inventory headed up, not down http://www.housingtracker.net/old_housingtracker/location/Nevada/Reno/
Move to Reno?
Diane, congratulations on selling Pepperwood!! It is a beautiful house and the new owners are going to enjoy it. It is a bit large and ostentatious for my tastes but that’s just my coupon-clipping nature.
As for your comment that we may be wallowing in the bottom, it is difficult to make that conclusion based on a couple of months of sales data. I agree that all real estate is local but the psychology of the national housing market has to play a role even in Reno.
Perhaps we should look at some spline interpolation graphs of foreclosures in the Reno area, and where they are in the foreclosure process. I have the impression that foreclosures in the Reno area are a bit above their 10 year average. So I would have to say that the bottom will be reached when excess inventory has worked it way out of the system. From what I have read, median prices can mean different things such as the high-end of the market is playing a bigger role in setting the median price as compared to 2 years ago. I also tend to think that when the bottom is reached, there is not going to be a big surge of price appreciation for quite some time because the boom psychology has been disrupted.
Many thanks to you and Guy for your insightful topics in this blog.
Diane Cohn
Mike Z, I’m not 100% sure why the Broker Metrics charts vary somewhat from what Guy and I pull direct from the MLS ourselves, but I suspect that it’s because the data my broker pulled looked at condos, townhomes and stick-built homes only… not manufactured. Guy and I, however, typically include manufactured housing as a part of the whole, which does bring median prices down.
Sean
I dont think we are at the bottom at all. In april there were 277 forclosures, in march there were 341 forclosures, compare that with 41 in april of 2006. This will continue for atleast the next year, maybe 2 as everyone’s ARM’s adjust and cannot make the payments and cannot refi with the stiffer loan standards and oweing more than the house is worth. We are far from the bottom. Here is the article… http://news.rgj.com/apps/pbcs.dll/article?AID=/20070515/NEWS18/70515057&oaso=news.rgj.com/breakingnews
BanteringBear
Diane. I think your bottom calling is several years premature. After all, sales prices and transactions are both down YOY from 2006. I don’t see how this translates into improvement. And, lenders are still tightening their standards. Just yesterday, I read an article which stated that the Alt-A sector is starting to show the same sorts of problems which the subprime did before its implosion. Builder sentiment is at its lowest in more than 15 years, and the consensus is that improvement is not even on the horizon. And, our so-called “feeder markets” over the hills are in dreadful shape. Foreclosures are still gaining momentum, and are far from peaking. The bulk of the loan resets haven’t happened yet this year, so their impact remains to be seen. Having said that, I do like your optimism. While we disagree on the current state of the market, I appreciate your positive nature. Congrats on the Pepperwood sale (assuming it closes escrow).
Mike Van H
http://news.rgj.com/apps/pbcs.dll/article?AID=/20070515/NEWS18/70515057&oaso=news.rgj.com/breakingnews I found this article in RGJ, I dunno maybe it has the foreclosure info you are looking for?
Reno Ignoramus
Diane:
When escrow has closed on Pepperwood, will you be so kind to share with us the selling price, and whatever concessions or incentives the sellers offered?
It will be informative to see how much of a loss the sellers took on this property in order to get it sold.
MikeZ
Q: Do I think a local market recovery is in progress?
A: No. There’s still far too much inflation left in the Reno RE bubble.
IMO: If MOM median prices are showing improvement, it’s a statistical mirage from the low end market falling disproportionately further during the MOM period than the high-end segment, not because the market is getting better.
And I especially distrust charts created by Broker Metrics from cherry-picked data processed through a “spline interpolation” process that contradict the actual sales data from the MLS.
Derrick
Did I hear prices trending up? Did I hear Inventory being worked off? UH OH some people have some explaining to do lol. No Seriously looks like some pretty hard evidence diane thanks! Like most I didnt expect the Reno Market to go down forever, and thats not to say we dont have a small correction even from these numbers. Overall however it does appear as if a bottom has been reached if not very close.
BanteringBear
This whole “prices trending up” nonsense is just that. Looking at the interpolation chart, it shows that these trends are seasonal, occuring yearly at this time. It looks like the roller coaster ride to hell, really. Prices are DOWN YOY, compared to April 06. Funny how this is roundly ignored. And, as I have stated before, even if the median remains unchanged, it continues to buy more house for the money due to the price per square foot falling. This illustrates a continued deterioration in prices, and the market in general. If anything, there is more cause for alarm than celebration at this time.
Reno Ignoramus
Perhaps a case in point is appropriate. Look at MLS # 60026271. 1900 Russell Pointe Ct. in Somersett.
This house last sold in late 2005 for $1,050,000.00. Currently on the market for $839,000. (Word on the street is that the seller is being urged by the realtor to drop to $775,000.)
Let’s say this house gets an offer at 96% of $839,000, or, $805,440. That is a loss of about $245,000. Or a decline in value of about 25%.
When this house eventually sells for around $800,000 or so, that price will be more than twice the median price in Reno-Sparks.The sale will tilt the median upward.
However, for the seller who loses around $250,000 and sees the value drop 25% from what she paid, you think there will be celebration that the market is turning around?
DERRICK
in what way is finding out how much the sellers of pepperwood lost on the sale going to be informative reno ignoramous? Were talking about a house close to 1.5 million hardly a barometer of the maret as a whole. Explain to me how exactly that would be found as informative? Are you looking to buy on pepperwood drive? lol something tells me no. Congrats on selling the pepperwood estate diane. and despite what many so called RE Pro’s like to think. the news you presented in the article was POSITIVE news not negative.. Cheers
MikeZ
RE: Overall however it does appear as if a bottom has been reached if not very close.
Hey, Derrick, with the departure of David Lereah, there’s an opening at the NAR for Chief Spokesparrot.
You’ve got most of the standard responses down already (“Prices appear to be trending up!” “Inventory is being worked off!” “We’ve hit bottom!”) …if you practice saying “It’s a great time to buy or sell!” with a straight face I bet you could land the job!
SkrapGuy
Let me explain it to you Derrick, since you seem to have difficulty grasping things. The point of RI’s post, I believe, is that the entire segment of the market above the median, which is now everything above $297,000, can well be losing value, while the median rises.
It does not just apply to #1 million houses. Suppose Joe Sixpack bought a house in 2004 for $400,000. He sells it today for $320,000. This sale is above the median, and will contribute to a “rising” median. The reality, however, is that the sale reflects a 20% drop in value and an $80,000 loss to JSP.
Get it, Derrick?
BanteringBear
Derrick posted:
“in what way is finding out how much the sellers of pepperwood lost on the sale going to be informative reno ignoramous? Were talking about a house close to 1.5 million hardly a barometer of the maret as a whole. Explain to me how exactly that would be found as informative?”
I believe you are a living example of why we don’t use lead based paint anymore. I suspect your crib posts were chewed beyond words. Nevertheless, I’ll try to explain it to you.
The properties RI refers to are terrific examples of the current PRICE TRENDS. Why? Because they are same sales examples, and thus, are apples to apples comparison since they are identical (the same) properties. Hardly a barometer you say? Ha! An ebbing tide lowers all boats.
DERRICK
Thanks I appreciate the personal attacks once again. The 1-2 mill segment of the market Is not A good barometer of the market as whole was my only point, no need to get nasty. I think thats a perfectly valid point. Although these sales may increase the median slightly most of that increase is artificial considering what % of people can even afford to buy in the price range. These are people that im sure you cant even identify with. These are also people that pay with cash and not loans. Last I checked 95% of home purchases were made with little downpayment and the bulk of them loans. Im willing to bet this was a cash deal.
MikeZ
RE: Is the Reno market turning up?
Doesn’t look like it…
http://tinyurl.com/24yv3j
“The foreclosure rate in Washoe County remained dramatically higher from a year ago, according to a report released this week.”
“In Washoe County, 277 homes entered some stage of foreclosure in April, according to RealtyTrac. That’s up from just 41 in April 2006, according to the report.”
“Washoe’s rate is better than the average in Nevada, which boasted the highest foreclosure rate in the nation for the fourth consecutive month. Las Vegas had the fifth-highest rate of all metropolitan areas in the country.”
“Washoe’s western neighbors in California, Stockton, Vallejo-Fairfield, Modesto, Sacramento and Merced, joined Vegas in the Top 10 highest rates.”