My outlook for the residential market in Washoe County in 2012 is pretty bleak. Sorry to be the bearer of bad tidings, but I just do not see much in the data that gives me hope that 2012 will be significantly different than 2011.
In 2010, new home sales sunk to their lowest level in decades — barely 500 new homes found buyers last year and it was a disaster for most area home builders. In 2011, the pace has been even worse and we’re on track to close less than 400 new units. The problem with new homes is that they are competing in the marketplace for the same tiny pool of qualified buyers, and most of the buyers in today’s market are purely looking for the best deal. New homes are unable to match the bargain basement prices of existing homes — over 60% of which are being sold in distress. Also, investors comprise a rather large proportion of today’s buyers, so for them it makes more sense from a cash flow standpoint to focus on picking up a bank owned...
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