Northern Nevada Housing Statistics - June, 2013
The Reno-Tahoe real estate markets continued to show price increases, flat home sales, and low inventory levels which is consistent with the prior several months. Last month, I identified three factors that would, over time, bring a more moderate growth rate in home prices to the markets: new construction, less investor demand, and legislative updates. The Nevada legislature has completed their session and there are two new laws which are now in effect that directly affect the foreclosure/short sale aspects of our housing markets. I am providing a general summary below with links to more details on the laws if you want to read the nitty gritty.
AB-300 - Summary and Likely Impact
I have mentioned and written much about AB 284 over the last two years in this blog. In short, AB 284 substantially increased the documentation requirements for lenders to initiate foreclosure on delinquent property owners. AB 284 also carried harsh penalties for those lenders who were not in compliance with the revised documentation requirements. The impact of AB 284 was two fold: (1) the foreclosure volume dramatically decreased, thus lowering overall housing inventory and (2) some homeowners who knew they could not be foreclosed on due to AB 284's requirements elected to stay in the property (in some cases, not making payments) and not actively pursue a short sale, again lowering housing inventory. While not the only factor, AB 284 was a clear factor in driving the current market conditions.
AB 300 (full text here). Think of AB 300 as a "follow on" or "fix it" measure for moderating the dramatic impacts of AB 284. In short, AB 300 places less demands on lenders to possess the required documentation to initiate the foreclosure process. This new law will allow lenders to process foreclosures in a more consistent and business like manner. The net effect, over time, will be an increase in inventory of distressed properties. These properties could be foreclosed homes or short sales because property owners who are delinquent will not be able to hide behind the shield of AB 284.
While this law is now in effect, the changes in the marketplace will not be fully realized until late 2013 or early 2014. The reason for this delayed effect is due to the statutory time requirements for the banks to process foreclosures. From the Notice of Default filing, which is the first step, to the bank repossessing the property, it generally takes a minimum of 120 - 150 days.
This increase in inventory will eventually work towards cooling off or moderating the price appreciation rates we are seeing in today's market.
SB-321 - Summary and Likely Impact
SB 321 (full text here) is a new law and is referred to as the "Homeowners Bill of Rights". While AB 300 will allow the banks to resume the business of foreclosing on more properties, SB 321 will require the banks to follow specific guidelines regarding how they communicate and interact with property owners who are facing foreclosure. You can read the text of the bill in full but a few of the requirements to give you a sense of SB 321 are:
- Single Point of Contact (person or small team) to home owners do not get "shuffled around" and "worn out" by dealing with the lender's layers of organization.
- No "Dual Tracking". This refers to a property owner getting foreclosed on while in the process of trying to short sale a home. SB 321 will prevent a property from being concurrently processed within the same lender so property owners have the necessary time to work through an alternative to foreclosure (short sale).
The net effect of this new law should be a more productive and fair process to work out foreclosure alternatives between lenders and property owners. The law will also have an additional 'delay effect' for properties that may eventually end up as foreclosed properties due to the increased care lenders must observe in the process. Once this delay effect is absorbed into a renewed pipeline from AB 300, however, it should not have a great deal of influence on the market.
Local Market Conditions Summary
Below is a brief summary of each local market with year over year details:
- Reno - During May, home sales were up 14% from May of last year at 378 homes. You should note that this is the first month in 2013 that is showing a year over year increase in the number of homes sold; this condition is due to lack of inventory. May median sold home price came in at $222,250 - 27% above May, 2012. Reno Months of Inventory for June is at 5.0 months - 10% lower than June, 2012. On the distressed property front for May, 2013, Reno had 103 short sales (27% of the total) and 22 REO sales (6% 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 May totaled 146 (down 19% from one year ago May sales); median home price was $195,000 - up 24% from Spark's median home price of one year ago. Months of Inventory for Sparks rose slightly to 4.6 months, 1% lower than June, 2012. Both Reno and Sparks will continue to see rising prices until inventory builds and allows better balance between supply and demand. Again, distressed sales in Sparks totaled 48% of the total market with 26% as short sales (38 homes) and 10% as foreclosure sales (14 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 59 homes sold during May, 2013 which represents an 11% decrease from May, 2012. Carson City's median home price was $180,000 in May - 33% higher than the median price a year ago. Carson City Months of Inventory is at 5.8 months exactly where it was one year ago. 25% of Carson City sales in May were distressed - 12 short sales (20%) and 3 foreclosure sales (5%). 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 May 2013 totaled 69 - an 11% increase over May, 2012. The Carson Valley median home price at $256,887 is 41% higher than the May, 2012 median price and represents a recent high. Months of Inventory is at 6.0 months and down 21% from the same time one year ago. The Carson Valley area has fewer distressed sales than other areas (except Tahoe); total distressed sales for May were 24% of the total: 14 short sales (20%) and 3 REOs (4%). For a quick view of these trends, visit the Carson Valley real estate trends chart.
- Lake Tahoe - With 16 homes sold in May, the Tahoe market (Douglas County only) was up 45% from the May, 2012 sales volume. Months of Inventory, at 10.4 months, is 41% lower than June, 2012 and will likely edge up as we enter the Summer selling season for Tahoe. 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 1 Short Sales in May. See Tahoe Real Estate by Charts.
- Dayton - Dayton home sales in May, 2013 totaled 32 homes - a 6% decrease over May, 2012. Months of Inventory is at 4.6 months - 24% lower than one year ago. Dayton median home price, at $140,000, is up 18% from one year ago. During May, Dayton saw 15 short sale and 3 REO sales for a total of 56% of the total sales. See Dayton Real Estate Interactive Charts here.
- Fernley - The median home price for Fernley in May, 2013 was $114,900 - a 61% increase over the median Fernley home price in May, 2012. Fernley saw 47 homes sold representing an 18% increase over May, 2012. Months of Inventory is at 3.9 months. 48% of Fernley May sales were distressed: 13 short sales (25%) and 12 foreclosures (23%). Note that in May of 2012, total Fernley distressed sales was 76% of the total.
If you want more details and the color charts used to prepare this blog post, you can view from one of two formats:
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