Northern Nevada Real Estate Update - May, 2013
Since hitting a bottom in early 2012, the local real estate markets have recorded median price appreciation, on average, of 53% - a "hard" bounce off the bottom! Of course, in 2003,2004,2005, we learned that hyper inflated rates of appreciation do not sustain. Our local markets will begin to moderate and we should see sustainable appreciation as a number of factors begin to play out in the local markets. These primary factors are:
- Investor Activity Drop Off - As prices increase, it becomes more challenging for local real estate investors to realize target rates of return on rental properties. It also makes it more difficult to pick up bargains due to the increased activity. The longer the prices rise at this rate, the fewer investors there will be due to a decreasing return on investment scenario. Of course, this will not go away entirely, but the "herd" of bottom feeders will move along to other regions or other investment vehicles.
- AB-300 Impact - AB-300 (Assembly Bill 300) has already passed the Nevada Assembly with a unanimous approval. The bill is now being reviewed by the Senate and should be voted on soon. The net effect of AB-300 will be to allow banks to commence the foreclosure process by filing a notice of default without the unrealistic and highly stringent requirements set forth in AB-284 nearly two years ago. This bill, upon passage, will also go into immediate effect. As a result, the flow of bank owned inventory should resume to much higher levels than we have seen in the last two years. Remember, it does take at least 120 days after filing a notice of default before the property can be foreclosed so even with imminent passage, there will be a delay before we see inventory levels dramatically increase.
- New Construction - New home starts have been the lowest seen in decades due to the depressed prices. With inventory low and prices rising, new home builders are aggressively ramping up construction and slowly adding more inventory and adding more options into the market for home buyers. This new 'wave' of inventory will reduce competition at levels we are seeing in today's market and help to moderate the market over time.
As these developments unfold, I am hopeful we will experience a reduction in the rate of price increases and begin to restore a healthy (and sustainable) real estate market.
Below is a brief summary of each local market with year over year details:
- Reno - During April, home sales were down 5% from April of last year at 333 homes. This decrease is largely due to a lack of inventory as evidenced by increasing prices and the fierce competition playing out among home buyers. April median sold home price came in at $215,000 - 40% above April, 2012. Reno Months of Inventory for May is at 4.7 months - 14% lower than May, 2012. On the distressed property front for April, 2013, Reno had 96 short sales (29% of the total) and 22 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 April totaled 138 (down 18% from one year ago April sales); median home price was $189,500 - up 27% from Spark's median home price of one year ago. Months of Inventory for Sparks is down to 4.0 months, 19% lower than May, 2012 which is consistent with the market experiences mentioned earlier in this blog post. Both Reno and Sparks will continue to see rising prices until inventory builds and allows better balance between supply and demand. Currently, there are multiple qualified buyers for every reasonably priced listing under the $300,000 price range. Again, distressed sales in Sparks totaled 48% of the total market with 41% as short sales (56 homes) and 7% 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 40 homes sold during April, 2013 which represents a 25% decrease from April, 2012. Carson City's median home price was $171,500 in April - 23% higher than the median price a year ago. Carson City Months of Inventory is at 6.0 months showing a decline of 4% from one year ago. 26% of Carson City sales in April were distressed - 7 short sales (18%) and 3 foreclosure sales (8%). See Carson City Housing Trends on our interactive chart. While Carson City has lagged Reno/Sparks in rebounding, this market is experiencing the same phenomenon.
- Carson Valley - Homes sold in April 2013 totaled 58 - a 17% decrease over April, 2012. The Carson Valley median home price at $254,200 is 29% higher than the April, 2012 median price and represents a recent high. Months of Inventory is at 5.7 months and down 28% from the same time one year ago. The Carson Valley area has fewer distressed sales than other areas (except Tahoe); total distressed sales for April were 24% of the total: 12 short sales (21%) and 3 REOs (3%). For a quick view of these trends, visit the Carson Valley real estate trends chart.
- Lake Tahoe - With 14 homes sold in April, the Tahoe market (Douglas County only) was up 100% from the April, 2012 sales volume. Months of Inventory, at 9.1 months, is 47% lower than May, 2012 and is continuing downward. 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 April. See Tahoe Real Estate by Charts.
- Dayton - Dayton home sales in April, 2013 totaled 31 homes - an 11% decrease over April, 2012. Months of Inventory is at 4.4 months - 24% lower than one year ago. Dayton median home price, at $125,000, is up 25% from one year ago. During April, Dayton saw 10 short sale and 8 REO sales for a total of 58% of the total sales. See Dayton Real Estate Interactive Charts here.
- Fernley - The median home price for Fernley in April, 2013 was $114,900 - a 61% increase over the median Fernley home price in April, 2012. Fernley saw 47 homes sold representing an 18% increase over April, 2012. Months of Inventory is at 3.9 months. 33% of Fernley April sales were distressed: 14 short sales (29%) and 2 foreclosures (4%). Note that in April of 2012, total Fernley distressed sales was 76% of the total (38 total properties).
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