I often get asked to deliver reports based on median prices rather than average prices. The median is more useful because it is that number exactly in the middle, not skewed like an average would be by the sale of one $17 million house. Unfortunately, my MLS software spits out a lot of data using averages, and not so much using medians. So, dear readers, until we get an amazing new feature set emphasizing the magic of medians, those lowly averages will have to do.
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Reno Ignoramue
Some observations on this Saturday.
Here are the inventory numbers from the MLS in the $0 to $1 million price ran range for “Search all Reno” and “Search all Sparks”:
April 6 …….3,441
May 6 ………4,003
Inventory in this segment of the market shows a net increase of 562 listings in the last month. I guess so much for the Spring Selling Season that was going to take down the inventory numbers.
And, of course, we must add to these 4,003 listings ALL THOSE NEW HOUSES that the buiders keep churning out. And the ever increasing number of FSBOs.
Interest rates on 30 year fixed mortgages hit 6.6% yesterday, the highest in 4 years.
The yield on the 6 month Treasury seems to be going up. And up. And thus will mortgage rates go with it.
And now, even the National Association of Realtors has had to acknowledge what has been plain to everybody else: There will be year over year price declines in almost all markets from 2005 to 2006.
So, what should a buyer do now to protect himself from buying into a falling market? I understand that about 75% of all realtors in Reno don’t have any experience with this. It is, however, a question they need an answer to.
‘Cause, man, it’s not going to be a happy experience for the guy who buys today in May and then looks out across the street in November and sees that his neighbor has just listed the same kind of house for $35,000 less than he paid.
Anybody got any thoughts? Or is the obvious answer to just sit it out for a while and see how low prices are going to go?
OfficeSupport
Value decreases like $35,000 are more real than people want to face. Serious buyers should get down to it and confront this issue perhaps with an agressive lease/option with a moderate exercise time, (5 years), including terms that provide for purchasing the value of the equity subject to equity re-valuation at annual intervals.
Responsible buyers who care about the impact falling equities will have on their family’s finances and purchasing power should vigorously insist on arranging terms that adjust their home purchase price to reflect future market conditions.
Reno Ignoramus
The May issue of Harpers Magazine has a cover story on the housing/debt bubble. The story is entitled “The New Road to Serfdom.”
The article says “a real estate boom that began with the promise of ‘economic freedom’ certainly will end with a growing number of workers locked into a lifetime of debt service that absorbs every single spare penny.”
” a modern equivalent of peonage, a lifetime spent working to pay off debt on an asset of dwindling value.”
Reno Ignoramus
Can we all take a look at something? Just in case some folks out there think the Ignoramus is crying wolf about falling prices.
Back on March 7, Diane posted about a house located at 7681 Autumn Ridge Cr. in Somersett. It was, and still is, MLS # 60004823.
On March 7, Diane explained that this house was originally listed for $639,000. It sat on the market for 117 days. Then they took it off the MLS for a day and “relisted” it for $597,000. Diane commented that it was the first time a house in this neighborhood was listed for under $600K.
Well, guess what? Diane, look again!! After another 62 days on the market,the price has been reduced yet again. Down to $569,000. Hmmm.
Here is my point: Suppose Mr. and Mrs Buyer has bought this house for $639,000, because, after all, there has never been a better time to buy. How BAD would they feel now to know they overpaid by more than $70,000? That they could have bought the house for less than $ 569,000?
Or more to the point: How BAD would Mr. Buyer feel if he paid $639,000 six months ago and looks acrosss the street today and sees his neighbor selling the same house for less than $569,000?
Or even more to the point: How BAD will he feel if he looks across the street six months from today in November and sees his neighbor selling the same house for, ummmm, $499,000?
Any thoughts?
OfficeSupport
In a word, “lawsuit”.