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Looking at the cumulative numbers for the first seven months of the year relative to last year, the news was a little more encouraging: Sales of existing single family homes for the first seven months of the year were up 18% from last year, and sales of existing condos were up 75%.  There ARE sales occurring, although prices have yet to bottom out in this market and the inventory of distressed (bank owned or short sale homes) is still at record levels for the area.  The median sales price of existing single family homes was down 6% through July, and down 21% for condo sales through July relative to last year.

Unemployment is still a huge drain on the economy — with Washoe County’s unemployment rate hovering around 14% (which is one of the highest rates in the nation), it’s not realistic to hope for a miraculous surge in the area’s housing market.  Once we finally start to see some employment stability in the region, the housing market will finally have a chance to claw its way back onto more solid ground.

For more information on housing market in Washoe County, visit our website and make sure you subscribe to our RSS news feed!

Each quarter we are seeing more and more tentative maps expiring — these represent units that were approved in the past few years but, due to the economic downturn, builders have not been able to bring these units to market within the allotted time frame.  Seeing as there are still over 31,000 approved-unsold units in the Truckee Meadows, this trend in tentative map expiration will likely continue for some time.

To put that in perspective, there were less than 1,000 new homes sold in 2009, and 2010 is carrying on at a similar pace.  The sheer volume of approved-unsold units in the area tells me that builders are going to be extremely cautious before attempting to add to that number with additional project approvals.

Also note that we have started reporting the average sales price of homes BY SUBDIVISION in our quarterly housing reports, and have started showing the total number of BANK OWNED homes within each of the approved subdivisions.  This data is part of our comprehensive Market Activity Report available for Washoe County.  For more information on these reports, visit our website, or call Brian Kaiser at 775-287-1237.

What is looks like to me is that banks started to move on some of the stockpiled properties that have been sitting on their books for the last several quarters.  There is clearly a backlog of distressed homes that have not been dealt with yet, and we will likely start to see those working their way through the system in the coming months.  While it’s great news that the new defaults (NODs) were down in the second quarter, it’s still distressing to see actual bank ownership increasing.  At its worst, over 70% of the homes on the market were “distressed” with either a short sale listing or a bank owner…as of June 2010, that number was still at 65% (that is, 65% of all active MLS listings were distressed).   Most of those listings were in the North Valleys and Spanish Springs (see attached file) – not surprising since those two areas experienced the most frenzied growth during the bubble years.

Also note that the median sale price of existing homes actually increased 2% in the second quarter to $175,000 – that marks the first such quarter-to-quarter increase in over two years.  That’s not to say we’ve bottomed out – but it DOES say that we’re close.

Sales of NEW homes rebounded in the second quarter, but as we discussed earlier, it was mostly on paper because I believe that the 1q numbers were underreported by the lag in the assessor’s data…I ran across several subdivisions which posted huge sales numbers in the 2q update, only to discover (by looking at the individual sales records for each sale) that many of those sales actually occurred in the first quarter.  So new home sales are plugging along at a slow pace this year and we likely won’t see more than 1,000 new home sales in 2010.  That’s just a fraction of what a “normal” year would look like for the Truckee Meadows, but it looks like that’s our new-normal for the time being.

For more information on the area’s housing market, take a look at the housing data on the Center For Regional Studies’ website!

• There were 209 new single family home sales in the second quarter — up 365% from the first quarter and roughly even with 2q09 new home sales.  Because of unusually pitiful new home sales in the first quarter of this year, that percentage increase looks far more impressive than it otherwise would, but it’s still a bit of good news for the area.  The median sales price of new single family construction was $212,000, which was 4% lower than it was last year.  New condo sales were up 53% in the first quarter with 26 new units finding owners, but the median price of those units declined slightly to $161,900.
• Existing single family home sales were up 22% in the second quarter compered to the first, and up 12% compared to last year.  The median sales price of existing single family units dipped only slightly to $172,250 — we’re starting to see existing home prices flatten out somewhat in spite of continued volatility in the foreclosure market.  Prices appear to be near the bottom of the trough.
• Home foreclosures spiked (again) in the second quarter, posting an 84% from 1q10 and 33% increase from a year ago.  Equally troubling was that SALES of foreclosed homes has been declining — this has been a briskly performing submarket for the area over the past few years, and it’s showing signs of slowing.  Is the pool of qualified people willing to endure months of negotiations with banks finally starting to run dry?

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But amid this horror, there IS some good news:  16 of Nevada’s 17 counties posted LOWER unemployment in May than they did in April, and the 17th county (Douglas) held steady with 15% unemployment.  Some other fun facts:

• The unemployment rates decreased between 0.1 and 0.8% in 16 counties — Clark (14.1%) and Washoe (13.3%) both decreased 0.1% in May.
• Lyon County remains the hardest hit county in Nevada with a staggering 18.3% unemployment, but that’s down from 19.1% last month.
• Lander County reported the lowest unemployment rate in May, with just 7.6% unemployment thanks to strong mining industry employment.  Mining, in fact, is what’s buoying most of rural Nevada and keeping people employed these days.

To download a copy of the latest unemployment rate map, visit our Maps and Data Downloads page on the website!

Foreclosures appeared to be lessening during the first quarter of 2010, but April and May proved that to be a short lived trend.  1,100 homes were foreclosed in the first five months of 2010, which was 6% greater than a year ago.  Foreclosures are a HUGE problem for the area, even though the total number of bank owned homes is small relative to the total number of housing units, they have a dramatic impact on the values of ALL homes in the area.  So long as we are seeing foreclosures rising, it’s going to be impossible to talk about recovery in the housing market.  And sales of foreclosed homes — which up until recently had been strong enough to keep pace with foreclosures — have really cooled off lately with a 36% drop in May compared to last year.  None of this points to a market nearing recovery…

Notices of Default (NODs) are issued by banks once a borrower is 90 days late with payment — these are seen as a “leading indicator” to foreclosures since they tell us how many distressed units are out there.  Not all units with a NOD filed end up in foreclosure, but a good percentage of them DO.  It’s encouraging that NODs filed in the first 5 months of 2010 were 9% fewer than a year ago, but it could be more indicative of banks dragging their feet than showing any actual improvement in the measure.

For more information on the area’s housing market, visit our website and be sure to subscribe to our News and Announcements with our RSS Feed.

http://centerforregionalstudies.org/about/what-we-provide/presentations/

On June 15th, Brian Bonnenfant spoke to the Association of General Contractors about the current state of the economy in Washoe County, and on June 18th Brian Kaiser was part of the Nevada Council for Affordable Housing’s conference in Reno.  PDF copies of both presentations are available for download.

Although total employment in the Reno MSA was down in March from the previous month and the previous year, the rate of decrease appears to be slowing somewhat, and many more industries were able to post NO job losses for the month than was previously possible.  After seeing declines in jobs almost across the board over the last couple years, it is encouraging to see the market begin to flatten out.  Overall, employment in the Reno MSA was down 3% compared to last year, with construction, manufacturing, and information services jobs taking the largest hits.

To download the latest copy of our Washoe County Economic Indicators file, please visit our Maps and Data Downloads section.

There were 43 new home sales in April, which was up 72% from the 25 sales in March, but still short of last year’s sales.  For a market that was accustomed to selling several hundred new homes each month during the “good” years, this is quite an adjustment for local builders but will likely be the new reality that we all operate under for the next few years.  Until the rest of the economy begins to stabilize — and I’m primarily referring to the JOBS market — it’s hard to see new home sales staging much of a comeback.  Unemployment is still hovering at or near record highs, and with this many households either out of work or fearing for the stability of their jobs it’s critical that people start to feel more secure with their own economic outlook before we can expect to see other areas of the economy settle down.

For existing home sales in Washoe County, April marked the first month since June 2008 that year-over-year sales decreased.  The market for existing homes has been propelled by a glut of low-priced bank owned or otherwise-distressed homes that have brought people out of the woodwork to scoop up the deals.  Could April’s 22% decrease in sales from last year be a harbinger of cooling sales?  It’s possible that the pool of qualified buyers in this economy has started to dry up, and that could be very bad news for all of the banks still sitting on a pile of unsold homes…and even worse news for the area’s median home price.

Foreclosures jumped in April after taking a little break in March — and these can be tricky to chart from month-to-month due to the volatility in the market and the constantly-changing Federal guidelines for distressed housing.  Still, there were 75% more foreclosures in April compared to March, and 32% more compared to a year ago.  At the same time, foreclosure resales tanked in April — down 61% from March and 48% from a year ago.  This is a critical factor to monitor for the area.  With record numbers of homes either falling back to the banks or being sold for less than what was owed, it’s vital that these “distressed” properties get absorbed back into the market quickly and not turn into neighborhood blight, which will impact other properties even more.

Washoe County has been hit hard by this recession, and although the worst seems to be behind us, there are clearly still some tough times ahead as the economy struggles to regain traction.  To stay on top of changes in the economy, be sure to subscribe to our News and Announcements blog, and join us in the discussion forums at UNR’s Business Services Group portal.