Sales in March 2008 were off 38% from the year prior. The under $300K range is moving along with a decrease to 13 months’ of inventory, and of particular interest was the big jump in pendings from 288 to 370. The $300K-500K range came down to 16 months, and showed improved activity as well. The $500K-1 million category really languished this month with fewer sales and an increase in supply from 30-43 months. It was also interesting to see 42 pendings in this category last month but only 14 closings out of that bunch. Tough to get financing, I presume? Another interesting tidbit: of the 250 sales last month, 230 of them were under $500K. The higher end is remarkably stagnant so far this spring, which leads me to believe that prices will have to adjust. Overall pendings are up 20%. Full report.
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Reno Ignoramus
230 out of 250 sales were under $500,000. “The higher end is remarkably stagnant so far this spring”. Yes, I suppose you can say that when a price segment amounts to only 8% of total sales, things are “stagnant” there.
How many of those sales were under $300,000?
Could it be, God forbid, that people are only buying houses, they can, you know, actually afford??
Could it be that the absence of the Voodoo money is starting to show up in the sales numbers? Damn, you take away 105% financing, require a down payment, require verifiable income, and look what happens.
Three and a half YEARS of inventory in the over $500K market segment.
Lord is there a rude awakening yet to come for those still delusional sellers with their $500K and $600K and $700K and beyond asking prices. Before the Voodoo money, Reno never was a high end market. All we are seeing here is a return to normalcy.
BanteringBear
Diane:
One of my favorite things about your posts, as silly as it may seem, is looking at the pictures. I like to find what it is that prompted you to take the picture. Oftentimes it is a mountain vista, a blossoming plant, or a nicely finished property. So, keep snapping away!
smarten
With 35 months of inventory in the $1M-$2M category [up from infinity]; and an average 314 DOM; I find it unbelievable that the properties that did sell closed at 99% of asking price. Stated differently, the message of these numbers is that if your property is delusionarily priced above fmv, you should sit tight and wait for nearly a year – you’ll eventually get your price.
Since there weren’t that many sales in this category, I’d be interested Diane in how closing prices compared to original listing prices when these properties first [as opposed to last] went on the MLS. I’m certain it’s not 99% of listing prices.
john
Smarten – I have been watching the Montreux market closely for the past year or so and that is exactly what is happing. Homes that were taken off the market for a month or so are now back on at steep discounts. The same thing is happening in Galena and St. James.
Case in point in Montreux is 4680 Alpes, originally on the market for 1.795mil 18 months ago, dropped to 1.695 12 months ago, and re-listed after a few months off the market last week, though not really off the market, at 1,595mil. It’s interesting to note that this home was purchased in 2003 for 1.2 mil. I wonder if prices in Montreux will soon return to 2003 levels? Any thoughts on this anyone?
Homes that actually seem to be selling in Galena St. James area are in the 1 mil range for 5000 sq feet of nice fairly new construction. Case in point is 180 Nottingham Court which is pending.
I also see the sq. foot price dropping in Montreux for homes just coming on the market for the first time and apparently owned by owners who are serious about selling, such as 5550 Lausanne at 6332 sq feet for 1.715mil. This is the lowest per sq foot price I have seen since I began watching the Montreux market.
Also of note is 5925 Cartier which appears to be a “pre-foreclosure sale” whatever that is. This is one of the Renaissance formerly and likely still over priced tract homes that used to sell in the 1.200mil range in 2006.
It appears that while spring is here and the snow is thawing, the ice is also cracking in the Montreux resale market.
Sully
I noticed, over on the Chase site, several realtors complaining about buyers making low ball offers that insulted the sellers.
One thing you learn in Supply/Demand 101 is an item is only worth what someone is willing to pay for it.
If you want a nosebleed price, then you have to wait for the demand to increase or else a buyer that wants a nosebleed.
As the current sales figures are showing, buyers are only willing to pay for something they can afford. (Jeez, what an idea!)
I think the market, 400K and up, needs more than a just price adjustment. Perhaps some seller education on the part of the listing agents!
Diane Cohn
RI: 164 were under $300K. 66 were $300K-$500K. The emerging opportunity is for the move up buyer. As high-end prices start to cave, that buyer who prices their under $500K home to sell and negotiates a killer deal on their next house could really come out ahead, if they’ve got the down payment and credit of course.
BB: Hey thanks for noticing. My photos aren’t that good, but I’ve got a lot of them, and it’s fun to change them up with the occasional quirky one thrown in.
Smarten: the average list price for the six that sold was $1,304,650, and the average sold price was $1,297,205. Basically these are the lower end homes in that price range obviously value priced to move.
As for price reductions, two actually sold for more than their asking prices, apparently because they were new construction homes with upgrades added during escrow. Here’s the difference between original price, last asking price and sold price for the other four:
$1.500m to $1.479m, sold $1.375m
$1.395m to $1.325m, sold $1.210m
$1.299m to $1.250m, sold $1.155m
$1.450m to $1.399m, sold $1.150m
So yes, some big differences from original asking to actual selling price. The sellers that sell obviously negotiate.
John: Guy’s been in that house on Lausanne. He says it has a really funky layout and would require some serious remodeling to remedy. Even so, on the golf course, it’s a great value and already has an offer. I would say keep watching the high-end for now… all the signs seem to be pointing toward some serious price reductions ahead. Even in Montreux.
smarten
Thanks Diane –
I don’t understand.
I took the 4 properties you detailed. I compared their combined original listing to sales prices and got a 86.6% sales/listing ratio. I took each property separately and got 79.31%, 88.91%, 86.74% and 86.6% sales/listing ratios.
If my numbers are accurate, they present a very, very different picture than properties in this category selling for 99% of listing price.
So where am I wrong?
DERRICK
Geee so when are those 2 story 2,400 sq.ft stucco shit box homes going to be selling for 150k? lmao.. still waiting guys..
DERRICK
Geee so when are those spanish/wingfield 2 story 2,400 sq.ft stucco shit box homes going to be selling for 150k? lmao.. still waiting guys..
DERRICK
3 straight months of higher sales, with a 4th almost certain.. Welcome to the bottom guys like it or not.
Perry
What year prices represent the bottom, 04… 03…? 7293 Heatherwood Drive is listed at $229,000 which is $10,500 less than they paid in 02/04. 4bd 2.5 bth at 1780sq’ I know this is one of those stucco houses that everyone likes to complain about but this seems like a pretty good price to me. It’s about $70k less than the builder is currently asking for the same model.
Reno Ignoramus
Thank you, Diane, for that info.
66% of the houses that sold last month sold for less than $300,000 (166 out of 250).
26% sold between $300K and $500K (66 out of 250).
8% sold for more than $500,000 (20 out of 250).
0.02% sold for more than $1 million (6 out of 250).
Yes, sales are increasing. And, as I have said numerous times here, the only way prices fall is through sales.
And can we puh-lease stop talking about Reno as a “high end” market? A whopping 0.02% of the sales last month were over $ 1 million. This just shows how acacdemically interesting it may be to talk about the $ 1 million and over market in Reno. And how irrelevant.
I’d love to know how many houses sold last month below $200,000. Diane?
Gail
6 houses out of 250 sold for more than $1 million. Hmmm. Maybe the people who want to talk about the $ 1 million and over market ought to go to Chase Nation and start up a conversation with Ms. Chase herself. Then they can talk like the High Rollers they conceive themselves to be with somebody who might actually be interested. And where the conversation might be marginally relevant.
I’d much prefer to have a conversation around the kind of question that Perry asks. I don’t complain about stucco houses. It seems a bit arrogant actually. So, is $229,000 (less say 5%) a fair price for 7293 Heatherwood Dr.?
Let’s face it. The future of the Reno market is in the under $400,000 category. Maybe even in the under $300,000 as pointed out above.
MikeZ
I noticed, over on the Chase site, several realtors complaining about buyers making low ball offers that insulted the sellers.
If a seller has a minimum, all they have to do is inform their agent that they will not entertain any offers below that price, and, voila!, no more insults.
SkrapGuy
Did everybody see the story in the RGJ about the Dickson Realty foreclosure bus tour in Reno-Sparks? Seems it sold out for the first tour. Also seems the tour is only going to foreclosed houses priced $300K or less. Apparently the foreclosure bus folks are not interested in that 0.02% of the market above $1 million.
Here’s something to consider. There are currently 277 listings above $1 million in Reno-Sparks. Yes, that’s a lot of delusional sellers. Using the 6 sales over $ 1 million last month, that is 46 months of inventory. In other words, if not one other listing came on the market in that price range, President McCain/Clinton/Obama will be in the fourth year of his/her Presidency before all these houses are sold. Sometime in 2012.
DERRICK
perry, I’m convinced that 02’/early 03′ prices are pretty much going to be the bottom.. but if you look hard enough you will find some in the late 2001 range.. (which are a steal IMO)
I am taking into consideration that with a 2003 price, the sellers are also paying ALL closing cost and even some allowance (say 5k) for any upgrade of your choice..
Lets face it though.. buying has been increasing nicely the last 3 months (4 months is VERY likely as well)
jan-185
feb-220
march-250
april- 285??
At that current pace, # of sales are increasing roughly 15%
DERRICK
*15 % month over month*
smarten
Derrick –
Please remember Diane’s figures include manufactured housing. What I’m waiting for are Guy’s figures for March which haven’t been increasing month-over-month. In fact, February will probably end up being the low [at 125], although from what I’ve heard from other sources, March may end up being only slightly better.
Nevertheless, what exactly is “the bottom?” Guy’s research on this subject suggests there’s a good nine month lead time after sales volume reaches bottom before prices follow suit [which would put us out at about January of next year]. Why?
As RI correctly points out, there must be sales before there can be sales prices. And there must be more sales at lower prices before the median sales price starts dropping. So IMO, it’s good that the number of sales are most likely increasing [although they could very easily remain relatively flat for some number of months]. If Diane’s figures are correct [that the majority of sales are now at the lower end of the price spectrum], then the median sales price cannot do anything other than start dropping.
So if you’re looking for prices to hit bottom, you’ve still got a ways to go. But I do think the writing’s on the wall.
DERRICK
manufactured housing is consider A HOUSE!. so my numbers STILL make sense.
IMHO when prices hit bottom, like you say. There is a very good chance a majority of the “good” deals will have already been taken off or bought.
15% month over month sales up tick, with decreasing inventory.
It’s still possible to find some 2001 pricing but not that easy. In 9-12 months do you really think its going to be any easier? I don’t in fact “m willing to bet it will be next to impossible.
The bottom is right now.
BanteringBear
My bullsh!t meter just broke through the stop.
DERRICK said,
in April 6th, 2008 at 12:18 am
“I’m convinced that 02?/early 03? prices are pretty much going to be the bottom.. but if you look hard enough you will find some in the late 2001 range..”
Derrick said,
in April 17th, 2007 at 11:08 am :
“Many firms firms and corporations are relocating to reno because of its favorable tax climate low lease rates and desirable location. Im not saying prices in reno wont go down further because evidence suggest we have a small amount of downside risk from here. but 2002 prices? …Hence my point 2002 prices arent coming back you hopefulls.”
Will you just keep changing your forecasts as we go along, huh Derrick? Perhaps you should realize that, unlike yourself, others are quite intuitive with very good memories. You have zero credibility in my book.
move to reno?
Last year about this time I thought we would hit bottom at the end of ’08, but am not so sure right now. The reason is that a recession is under way and nobody seems to know how long or how deep it will be. Usually, a drop in housing activity is a result of a recession but this time it appears that the recession has been brought on by the crash of the housing bubble. This difference could have important consequences in how long the housing price/sales slide continues.
smarten
Sorry for the stupid question BB, but how does one easily find [on this site] what another [in this case Derrick] has blogged on let’s say April 17, 2007 at 11:08 A.M? Do you maintain all comments on your computer for future reference? Or is there an easy way to retrieve such comments through some search function on this blogsite?
Thanks for the help.
Reno Ignoramus
Hey Smarten, the only way I know how to do it is to go to the archives which Diane now has all the way back to when she started the blog. You can review every single post that has ever been put up on the RRB. Actually, it’s a pretty interesting thing to do. You can go back and see what was being posted a year ago, or two years ago. You can see that there are some long time posters here who have been absolutely dead on with their predictions going back 2 years, and other who have been, well, out to lunch.
Perry
Apparently Heatherwood was a typo. If you look now it says price raised and it’s at $299k. Kool-Aid reigns supreme!
MikeZ
Last year about this time I thought we would hit bottom at the end of ‘08, but am not so sure right now.
Almost everyone here understands that real estate sales are seasonal. That’s why YoY is more reliable than MoM.
YoY, sales are down 38%. THIRTY-EIGHT PERCENT.
That doesn’t look like a bottom to me.
Perry
I thought this might be of interest to some. I was going through some files and came across this article I printed out. After I read this I was pretty convinced that things were going to head south soon.
http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html
Diane Cohn
RI, 55 homes below $200K sold last month.
Diane Cohn
Smarten, the difference is the two that sold for more than asking price… Sorry, should have put their details up. Due to custom upgrades, each sold for a few hundred thousand over asking price, and those two brought the average up to 99%.
bondstevenbond
Everybody write it down, in April 08 Derrick is calling the bottom.
Again, I will advocate that “nothing is worth more than it can produce”.
This is why the low-end homes are selling, ie, the buy vs. rent decision is somewhat rational. The higher-end homes may still have a long, long way to go. Remove price appreciation expectations and, like an emperor with no clothes, they look just plain ridiculous. Those few who don’t think so probably can’t get a conforming loan, so never mind them.
Spring thaw or just Indian summer? Derrick, here are my questions for you: How can prices stablize when buyers can’t borrow? How can banks lend when their balance sheets are deteriorating? How can balance sheets not deteriorate when foreclosures rise? How can foreclosures not rise when loans reset higher? How can the market really improve until the reset wave finally recedes in Sept 2009 and the foreclosure wave finally recedes 18 months later? (Dec 2010)
Like Pharoah’s dream in the story of Joseph, “Seven years of famine follows seven years of plenty” sounds about right to me. Just as up-markets can bubble, down markets can stay irrational longer than speculators can stay solvent. Take Toyko, real estate in the 1980’s or Midwest farmland in the 1970’s as (albeit extreme) examples of market psychology–They fell 70% and they stayed down for 20 years!
That is why, Derrick, my optimistic friend, I’ll be content to continue to rent and leave it to you to be brave enough to call the bottom.
Reno Ignoramus
Thanks again, Diane.
So almost 25% of the houses that sold last month sold for $200K or less. That’s 2.5 times the number of houses that sold for $500K or more, and 9 times the number of houses that sold for $1 million.
Now that the Voodoo money is gone, we are more and more clearly seeing a return to normalcy. There was a lot more action in the under $200K catgeory than in the over $500K category. I guess none of Shari Chase’s oil sheiks or Forbes 500 CEOs bought in Reno last month.
Bit by bit, piece by piece, the absurdity of the bubble is being wrung out of the Reno market.
GrandWazoo
Anyone have any examples of exactly what kind of house you can buy in Reno for less than $200K?
RenoIgnoramus
Well GrandWazoo, you could go look on the MLS. There are hundreds of them. Just between $175K and $200K there are 209 houses in Reno-Sparks. Houses, not condos. There is an amazing logjam of houses priced between $199,000 and $200,000. Something like 50 houses $1,000 apart in asking price. It looks like there is serious resistance to pricing over $199,999.
So much of this blog’s conversation gets taken up with $500 a sq. ft. downtown condos and $1.75 million houses in Montreux. It’s quite interesting to see the ever growing number of listings falling below $300K, and now even below $200K. Alas, I guess Reno-Sparks really isn’t Danville North.
GreenNV
GrandWazoo, just scroll to the right to “Search MLS” and enter $175,000 – $200,000. Sure there is a lot of crap available in this price range, but is anyone expecting Montreux? There are a lot of very livable homes in decent neighborhoods available, even under $150,000. I can guarantee you will find an awful lot of listings “pending”. Try that in Somersett, Arrowcreek, Montreux, South Meadows, or the Palladio et al.
It is ugly, but the bottom tier of the market is working itself out. The mid and upper tiers haven’t gotten the memo yet.
DERRICK
OVER 209 HOUSES!! wow What a selection, I’m willing to bet 50% of those are dumps.
with the 200k and under segment accounting for LESS than 25% of al sales, that’s not a huge number!
DERRICK
It would be interesting to know at what rate the 200k and under segment have been selling for??
Diane?
DERRICK
*selling at*
MIke Van H
Dumps? Some of them are yes. Hello nothing new. There have always been dumps for sale at the low end of the price scale. However, there are a lot of decent listings mixed in with those dumps. I noticed the North Valleys seems to have the highest concentration of homes for sale in this price range. In fact amazingly, I spotted a couple that are in 2003-built Centex subdivisions of which when I went house hunting back in 2003, they were in the $175,000 to $185,000 range. Interesting that those same homes (even spotted a 4 bedroom model) are now in nearly the same exact price $200K-under range they were back in 2003. Sure, they are Centex (blech), sure, the eaves on the houses are only 6 inches deep, and sure it’s in the North Valleys, but it’s the first time I have seen homes in a recently-built subdivision go for what they originally went for.
MikeZ
I spotted a couple that are in 2003-built Centex subdivisions of which when I went house hunting back in 2003, they were in the $175,000 to $185,000 range. Interesting that those same homes (even spotted a 4 bedroom model) are now in nearly the same exact price $200K-under range they were back in 2003.
WHAT?! 2003 prices? Impossible. You must be mistaken.
Almost one year ago to the date, The Oracle of Sparks told us that would never happen.
DERRICK
Last I checked the median home Price wasn’t 2003 prices.
in regards to the 200k and under market.
I ran a search and realized 50% or more of these homes are complete dumps, and major fixer uppers, and of course TINY
200k and under : 1,028 sqft (average), 20-30 years old ( average)
The 200-175k range didn’t fare much better :1,400 sqft, 20-30 years old as well,
Like I said, A majority of the homes selling for 200k and less are either falling apart or about to. MOST of these homes need some serious work. Ie; roofs,driveways,drywall,electrical,plumbing, etc…
DERRICK
Last I checked the median home Price wasn’t 2003 prices.
in regards to the 200k and under market.
I ran a search and realized 50% or more of these homes are complete dumps, and major fixer uppers, and of course TINY
200k and under : 1,028 sqft (average), 20-30 years old ( average)
The 200-175k range didn’t fare much better :1,450 sqft, 20-30 years old as well,
Like I said, A majority of the homes selling for 200k and less are either falling apart or about to. MOST of these homes need some serious work. Ie; roofs,driveways,drywall,electrical,plumbing, etc…
John Newell
I agree with DERRICK about the under $200K houses, at least to a point. Many are lower end and/or distressed properties. However, if you watch the under $200k segment of the MLS regularly, you will see some relatively nice homes pop up. Furthermore, many of the houses in the under $200k segment that don’t fall in to the “complete dump” category but may be older or need some work would still make nice starter homes for working people who have heretofore been priced out of the market. We should not forget that many of the under $200k houses listed on the MLS today would have been listed for $300k+ just a couple short years ago, and would have been called bargains at that. So perhaps what we are seeing is that the lower end of the market is returning to a more reasonable pricing structure that may be indicative of how the mid-range and high end markets will trend during the ongoing correction.
John Newell
Case in point about finding some relatively good houses in the $200k and under range, let’s take a look at MLS# 80005284, 7610 Soft Winds Dr, Stead, 1902 square feet, built 1992. Newly listed at $200k, it sold for $330k in September 2005. Yes, I know Stead is not the most desirable of locations, and I know the house is more than 15 years old, but if a family were in the market for a nice sized starter home, I think this would be a solid candidate, whereas two and a half years ago such a family likely would have been priced out of the market for such a home.
DERRICK
I only ran numbers for the Reno area John. If we were to start talking about fernley,stead, dayton etc.. I’m sure they are much more desirable in terms of age, quality, and even land.
Like you said, some of these homes are great for the entry level buyer. Isn’t it normal for the low end housing segment to be 1 of the faster moving segments in most real estate markets anyways?
It would be interesting to track how fast the 200k and under market is expanding, while keeping an eye on the contraction in the 300-500k market.
MIke Van H
BTW I am so glad I didn’t decide to live way out there. Gas prices are getting a little nuts!
GreenNV
A quick look at the Assessor’s March sales data so far (they lag a bit) for Washoe SFRs. 92 sales below $300,000 of which 18 were new construction and 2 were REOs (REOs could be greater – I’m not confident that the Assessor always picks up the bank as an intermediate owner). Average sales price was $243,826.
Below $200,000, there were 15 sales with an average of $166,169. 1 house was new in 2003, 2 in 2001, and the rest older.
A lot of what is currently listed below $200,000 and are decent are proposed short sales, which may or may not pan out. I think a lot will. Saw one listing with new cabinets, Brazilian cherry floors and new paver patio. You may have competition, oh Oracle!
Reno Ignoramus
I only started this conversation about houses selling for $300K and under to make one point. At the end of 2004, I had a very prominent realtor tell me that there was “nothing but crap” in Reno for under $300K, and “it would be that way forever.” This person said that even in Stead $300K houses were gone forever. Had to go to Fernley to find a decent place under $300K said this person.
Now I see 1 out of 4 houses selling for less than $200K.
Now I see a house in Stead that sold for $330K in ’05 that is going to sell for more than a 40% haircut from ’05.
40%.
At what point can we honestly describe this a meltdown?
Sam
Hang on to your trousers boys, we got a long
ways to hit bottom especially if jobs are
slashed more and more as the economy goes
even further south–which it will no doubt!
And Im an optimist by nature.
The dollar is worthless now and is the world
peso and I see commodities hanging on with
perhaps a climb in gold and silver soon.
Citibank has lost billions in worthless
loans and more banks to come.
We kind of live in our own little world here
in Reno with world markets on a rollar coaster
anybody who thinks we are hitting bottom is
defintely on something illegal. Do ya think
that if Hillary or Obama gets elected that
things will get any better with tax increases.
GOODLUCK!!!!!!!!!!!!!!!!