Northern Nevada Housing Statistics - August, 2013
Welcome to the August Market Update companion to the Greater Reno-Tahoe Real Estate Report. As we've discussed in prior month's blog posts, the dramatic rises in prices we've been experiencing over the last 18 months could not last forever. We are now beginning to see signs from the numbers as well as 'in the field' experiences to support the beginning of more moderate price appreciation on the horizon. Before getting into the market summary for each local market, I want to mention a few factors that are drivers behind the changing market conditions.
Last week, I spent a few hours at a regularly scheduled real estate investment group meeting in Reno, Reno Real Estate Investors Club. The typical attendance at these monthly meetings is around 50 people who are or have an interest in real estate investing. The general consensus among speakers and guest contributors was the "peak buying time" is now well behind us and the slowing rate of price appreciation combined with the higher prices will make it more difficult for "flippers" or "buy/hold/rent" investors to make the profits that were enjoyed over the last two years. Hence, there is lessening demand from real estate investors compared to one and two years ago. This will take some demand out of the sub $200,000 market and make it a bit easier for first time home buyers and others who have had a very difficult time competing with investor buyers. Demand from this segment of Buyers will continue, however, at a lower volume as we move forward.
Rising Interest Rates/Loan Costs
While still historically low, interest rates have recently increased. Since most home buyers tie the home purchase to an affordable monthly payment and the same payment now buys less house, the markets have had some downward price pressure because of this. With the economy slowly improving and housing becoming more firmly footed in a recovery, there will be pressure on the Fed to implement policy that will gradually move rates higher. This phenomenon will occur over time "in step" with broad price recovery in housing across the country. In addition to rising rates, effective June 1 2013, the FHA increased the initial cost to obtain an FHA loan and, more importantly, removed the ability to remove MI (Mortgage Insurance) from the loan - for the life of the loan (see more details here). With so many recent loans being done as FHA loans, these increases in mortgage costs, reduce the FHA buyer's 'buying power' which, again, has downward pressure on pricing.
State Legislation (SB-321)
In the June blog post, I summarized the newly enacted AB-300 and SB-321. There has been quite a bit of discussion within the real estate community about the anticipated impacts of SB-321, the "Homeowner Bill of Rights". One of the anticipated changes is a dramatic increase (more than I had anticipated two moths ago) in the timelines for lenders to complete a foreclosure - while we don't have any experience with this yet, there is discussion about a 3x factor or more to the current statutory minimum timelines of approximately 120 - 150 days. The first sign of this bill's impact is the dramatic decrease in Notices of Default filings as reported by Ticor Title as the banks have a "deer in the headlight" effect putting the systems and procedures together to ensure compliance. Notice the drop off of Notice of Default filings when the original AB-284 went into effect and the most recent drop off (right when AB-300 should have had an increase in Notice of Default filings) for the most recent month. Stay tuned for more on this one but it does seem like it is going to have flattening and elongation effects on the market to more than counter the changes made in AB-300.
Local Market Conditions Summary
Below is a brief summary of each local market with year over year details:
- Reno - During July, home sales were up 16% from July of last year at 409 homes - this is the highest single month of sales volume since the summer of 2005, which coincidentally was at the peak of the bubble. July median sold home price came in at $219,000 - 25% above July, 2012 but the lowest year over year % gain than any prior month in 2013. Reno Months of Inventory for August is at 5.2 months - 7% lower than August, 2012. On the distressed property front for July, 2013, Reno had 82 short sales (20% of the total) and 28 REO sales (7% of the total). For a visual review of these trends, visit our interactive charts - use the "Reno" menu at the top of the page for different chart options; these charts are interactive - click the Help menu from the charts site to see how.
- Sparks - Sparks homes sold in July totaled 165 (up 11% from one year ago July sales); median home price was $210,000 - up 31% from Spark's median home price of one year ago and a new recent high in this recovery cycle. Months of Inventory for Sparks is at 4.4 months, 10% lower than August, 2012. Again, distressed sales in Sparks totaled 28% of the total market with 22% as short sales (36 homes) and 6% as foreclosure sales (10 homes). To see how the mix of short sales and foreclosures has reversed over time based on AB-284 impact, check out this chart.
- Carson City - There were 58 homes sold during July, 2013 which represents a 21% increase from July, 2012. Carson City's median home price was $191,250 in July - 28% higher than the median price a year ago and another new high for Carson City prices during this recovery. Months of Inventory is at 5.8 months and holding steady over the last three months. 28% of Carson City sales in July were distressed - 11 short sales (19%) and 5 foreclosure sales (9%). See Carson City Housing Trends on our interactive chart. The Carson market is not as tight as Reno/Sparks but clearly following the same regional trend.
- Carson Valley - Homes sold in July 2013 totaled 75 - a 6% decrease over July, 2012. The Carson Valley median home price at $260,000 is 33% higher than the July, 2012 median price and represents a recent high. Months of Inventory is at 6.0 months and down 25% from the same time one year ago. The Carson Valley area has fewer distressed sales than other areas (except Tahoe); total distressed sales for July were 25% of the total: 13 short sales (17%) and 6 REOs (8%). For a quick view of these trends, visit the Carson Valley real estate trends chart.
- Lake Tahoe - With 14 homes sold in July, the Tahoe market (Douglas County only) was up 8% from the July, 2012 sales volume. Months of Inventory, at 11.2 months, is 30% lower than August, 2012. Lake Tahoe median price for July was $539,000. Due to the small sampling size of homes sold and the wide range of home prices at Lake Tahoe, the median price shows wide fluctuation on a monthly basis. Tahoe saw 1 REO sale and no Short Sales in July. See Tahoe Real Estate by Charts.
- Dayton - Dayton home sales in July, 2013 totaled 38 homes - a 31% increase over July, 2012. Months of Inventory is at 4.1 months - 31% lower than one year ago. Dayton median home price, at $136,950, is up 21% from one year ago. During July, Dayton saw 8 short sale and 9 REO sales for a total of 45% of the total sales. See Dayton Real Estate Interactive Charts here.
- Fernley - The median home price for Fernley in July, 2013 was $133,000 - a 36% increase over the median Fernley home price in July, 2012. Fernley saw 47 homes sold representing a 8% decrease over July, 2012. Months of Inventory is at 3.7 months. Distressed Sales: 36% of Fernley July sales were distressed: 14 short sales (30%) and 3 foreclosures (6%). Note that in July of 2012, total Fernley distressed sales was 76% of the total - quite a dramatic market shift which is due in large part to Nevada's AB-284 law.
If you want more details and the color charts used to prepare this blog post, you can view from one of two formats:
Between the lines of all of this market activity, it is important for active Buyers and Sellers to note that the homes that are priced to yield value to the buyers are those being sold quickly. Just because the markets are recovering does not mean that all houses are selling at any price! If you are considering selling a home, we would be happy to help you understand your local market and the right price to help you get the home sold for its maximum in a short timeframe.
I hope you find this information useful. If we can help you or anyone you know who needs professional guidance buying or selling a home, please give a call or drop an email!
Broker - CalNeva Realty