Notice that unit count is even higher than it was at the peak of the buying frenzy.  The difference, of course, is that prices have continued to fall since the end of 2005, although it appears as if we might finally be getting close to the pricing-bottom.  In 2011, the median sales price of existing single family units dropped another 12%, but the last several months of the year showed a marked “flattening” as the rate of descent began to lessen.

New home sales continued to struggle in 2011 with another 19% drop, although the median sales price actually managed to increase 7% from 2010.  If there’s any bit of good news for the area’s new home builders, that was it – they may be selling fewer homes, but at least they have been able to hold the line on pricing.  Still, with barely 400 new units sold in 2011, the market is a far cry from the 3,000 annual units it was absorbing just a few years ago.

Foreclosure activity was trending down in 2011 even before AB284 came along and changed the game entirely.  Once the law took effect on October 1, Notices of Default (which were averaging around 500 per month) effectively stopped and it will take some time to figure out how the banks will deal with delinquent mortgages in Nevada from here on out.  There will most certainly be an increased reliance on short sales to clear inventory off banks’ books, but there could be a lot of people living mortgage free for a very long time if they choose not to go that route.  In the last half of 2011, actual bank repossessions declined 25% compared to the first half of the year and Notices of Trustee Sale (NTS) declined 24%.  There is still a critically high number of “distressed” homes out there, but it’s encouraging to see these numbers moving in the right direction.

Be sure to take a look at the data here on our website, and drop us a line if you have any questions!

Cheers,

Brian Kaiser

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 home or a short sale.  So I don’t see much good news for new home builders in 2012.

As far as the existing home sales go, I think we are going to see a similar level of sales in 2012 as we have in 2011, but I think it’s a safe bet that prices will continue to slide even more than they already have.  The “wild card” in terms of sales volume will be what happens in response to AB284 — now that NODs have basically stopped in Nevada as a result of AB284, the flow of foreclosures through the pipeline will be seriously affected, and no one really has a great understanding of the impact yet.  One thing is for certain: banks will find a way around this.  Meanwhile, you may start to see existing home sales taper off should the inventory of bank owned homes begin to dry up — even if that is only a temporary reduction in inventory.

Existing home prices have been relatively flat during the last few months of 2011, which is a good thing, but the sheer volume of distressed inventory (and shadow inventory) tells me that there’s nowhere but down for home prices until other areas of the economy — namely employment and personal income — begin to rebound.  That remains the biggest challenge for the housing industry. Once the overall economy begins to rebound and people begin to feel more stable in their jobs and begin to earn more money, the housing problem will resolve itself naturally.  This economic recovery cannot and will not be lead by the housing industry.

For more information on the area’s housing market, be sure to check our website each month for the latest data and trends.

Cheers, Brian Kaiser

Washoe County commissioners have put the county’s financial house, the regional economy and jobs at the top of their agenda in 2012 even though the county has no direct role in economic development.

The commission put those issues at the top of its list as the region continues to struggle under the weight of stubborn 12 percent unemployment rates, high foreclosures and the collapse of the housing industry.

More so than in the past, economist Brian Bonnenfant said, county officials tried to get their arms around regional economic trends and what they mean in demands for county services during the commission’s annual retreat Thursday.

“Revenues are not going to be there for the next two to three years. They’re really struggling with solutions on how to right the ship,” Bonnenfant said. “When past trends have blown up, it’s hard to project.”

Bonnenfant, project director with the Center for Regional Studies at the University of Nevada, Reno, presented a mostly dismal picture:

The regional economy has lost 42,000 jobs since December 2006. Only health services and education have grown.

>> The median price of residential properties sold in Washoe County was $135,000 in September, down from about $192,000 in January 2009.

>> Two-thirds of all units sold were short sales or foreclosures.

>> One third of the sales were for cash, meaning investors are snapping up properties and putting them up for rent.

A closer look at numbers

Given the region’s high unemployment and only a very slight drop in Washoe County school enrollment, Bonnefant said he doesn’t believe a big exodus is taking place. The U.S census put the county’s population growth rate from 2009-10 at 1.6 percent, while the state demographer set it at a more anemic 0.2 percent.

Washoe County sales taxes were up 5 percent in the second quarter, largely because of purchases for the Ruby Pipeline in the northern part of the county. Otherwise, he said, it would have been a 2-3 percent increase.

Restaurant and bar sales are the top sales tax generator in Washoe County, edging out automobile sales for several years now. Bonnefant said a joke at the regional studies center was that people not making mortgage payments are spending their money in the bars.

To read the full article go to the Reno Gazette Journal

link to study: click here

The Center for Regional Studies at UNR was asked by the Reno Gazette Journal to help with the development of scenarios for what northern Nevada might look like ten years hence – in the year 2020.

Methodology: To develop scenarios of how the region may evolve over the next decade, we decided to utilize an “outside in” approach – that is to first identify major underlying forces, including international and national forces, over which we have little or no control.

The next step is to identify state and local forces that are influencing our future. In some cases, decisions made at the state and/or local level may be able to influence some of these forces.

The final step is to bring together business and community leaders to discuss these forces and some of the choices which might cause different outcomes for our region and to flesh out what these futures may hold for our citizens, businesses, institutions and communities.

The UNR team has identified the following key trends, constraints and paradigm shifts occurring at the international, national, regional, state and local levels.

So how has the area’s housing market been doing this year?  Pretty horribly, thanks for asking.  Overall sales of new and existing homes for the first half of 2011 were down 3% from the the first half of 2010, and the overall median sales price declined another 11%.  You’d think we would all be used to seeing these kinds of drops, but it still stings.  New single family home sales dropped 30%, but the median sales price actually posted a 10% increase compared to last year…Washoe County is on pace to close barely 400 new home sales in 2011, which is by far the worse sales rate seen in decades.

Home foreclosures are up in 2011, but the leading indicators — Notices of Default and Notices of Trustee Sale — have both been trending DOWN this year.  One way to interpret this data is that banks are finally catching up on the backlog of distressed homes in the pipeline and finally foreclosing on them, while the pool of “new defaulters” has been lessening (as evidenced by the declining NODs and NTSs).  This would be a good thing for the area’s housing market.  Alternatively, the reductions in NODs and NTSs *could* just be a result of overwhelmed banks not having the capacity to process the crush of new defaults…meaning they are coming, but are not yet reflected in the stats for 2011.  Let’s hope it’s not that…

Dig into our website and download your favorite reports, and be sure to drop us a line if you have any questions interpreting the data!

The Center For Regional Studies has finished re-uploading all of the corrected home sales and foreclosure data to its website, and comparisons with previous year’s data aren’t flattering.  New single family home sales, in particular, suffered through a horrible year in Washoe County with a sales rate of just 1/4 of its “normal” pace.  The median sales price of new single family homes slipped another 11% in 2010 to just $221,450 — a 48% decline from the market’s peak.  Existing single family home sales managed to increase 2.8% in 2010 while the median sales price dropped another 7% to $171,900, largely a result of short sales and bank owned homes flooding the market.  With the “distressed” market losing steam, though, it will be interesting to see how the numbers shape up in early 2011.

Interestingly, existing condo sales were a bright spot in 2010 with nearly1,300 unit sales during the year — a 38% increase from 2009 and a 154% increase from 2008.  With a median sales price of just $75,000, existing condos were a relatively hot commodity in the Reno-Sparks area in 2009 and 2010 in spite of the fact that condos generally have NOT historically been huge sellers in this market.  When the median sales price of condos was over $200k, sales were dramatically lower so these units are clearly moving based on rock-bottom pricing.  And as any of the developers who got caught holding the bag with new condos can tell you, there’s just not much of a market in the Reno-Sparks area for expensive, new condos when the average transaction prices of existing units is continually sinking lower.

For more information on the area’s housing market, be sure to check out all of the home sale and foreclosure data here on the Center’s website!

Download a PDF copy of the report from our website, and make sure you’re subscribed to our RSS feed so you’re notified as we update the data on our site!

Looking at the new home sales for September, the actual number of units sold (18) is really low, down 64% from last year and down 5% from August – but the median sales price of those few units was up quite a bit from last year (and last month).  There isn’t much activity in the new home market right now, but the average transaction price is so much higher than it is for existing homes that it makes me think that people buying new homes are clearly willing to pay a premium for a home that they don’t have to negotiate with the banks for, which is the case with over 60% of the existing homes on the market.

For the third quarter as a whole, new home sales were down 72% from 2q, and down 59% from a year ago with only 59 new home sales…at that pace, the area would only absorb 236 homes in a year compared to 3-4,000 in the market’s “normal” years.  There’s virtually no demand for new housing right now, not that it should be a surprise to anyone.

EXISTING single family home sales, though, have really faltered in the 3^rd quarter after posting such solid gains over the past couple of years.  Existing SF home sales were down 14% in the 3^rd quarter compared to 2q10, and down 11% compared to 3q09…that’s a fairly pronounced slowdown in the market.  Overall, though, sales of existing SF homes is still up 10.5% in 2010 from last year, but we’re definitely seeing the market cool off this fall.  The median sales price of all existing SF homes sold in 2010 was $172,500, which is 7% lower than it was during the first three quarters of 2009.  Prices are still dropping, but not as rapidly as they once were.

For new condos, the sales pace is even slower…just 51 new condos have been sold in 2010, which is 41% lower than in 2009.  The median sales price of those units is flat, which is somewhat promising, but there isn’t much activity in this part of the market.  Existing condo sales are way up though – up 61% in 2010 through September – but with a median sales price of only $75,000, this is clearly a bargain hunter’s market.  980 existing condo units sold in the first three quarters of 2010.

With fall upon us, the summer buying season behind us, and the economy still struggling to regain some lost ground, I don’t expect the 4q10 numbers to show much improvement in this market.

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