Reno Home Blog

RENO & SPARKS Buyers & sellers: SUPPLY CAN'T KEEP UP WITH DEMAND!

If supply of homes stay the same. We will run out of homes to sell.

Months supply of inventory:

Reno:

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Sparks:

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What does this mean for you?

Buyers:  If you're buying a home in the $200,000 and below price range, don't be surprised if you would need to add $10,000 + in order for your offers to get accepted.

Sellers: I know it's next to impossible to compete with short sales and bank foreclosures due to their unbelievably low prices.  But if there is a good time to compete with them, I think now is the time--you will get more attention because supply is extremely low.

Don't forget to price your home at the best price you can and make it look as pretty as can be.  Buyers, have been known to pay tens of thousands more for homes they really really like.

Reno and Sparks' homes sold up by 17.29% and 39.18%!

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"You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

                              -Jim Stockdale, 8-year POW  in the Vietnam War

This is the biggest jump in five years (homes sold) in the the Reno-Sparks real estate market. 

Buyers are more comfortable at current home prices than they ever were in the last three years.   Don't make the mistake of thinking that the market has bottomed--not necessarily. 

But the good news is history has shown us that a market bottom takes place when supply can't keep up with demand, buyers competing with each other.  

This is already happening in the $250,000 and below price range.

If you have followed the news in the last six months it has gone from "worst" to "getting better".  I talk about the news not to profit from their information but to get an idea on how people feel about real estate. The less afraid people are about the economy the more they buy--including homes. 

The S&P 500 has been going up since March 10, 2009:

(click image to enlarge) picture from: moneycentral.msn.com

But the biggest factor in the increase in sales is affordability--more people are more comfortable in their mortgage payments than in the last five years. 

Investors are seeing cash flow potential, especially in North-Reno  where a $67,000 home ( $445.75/month mortgage: 7% interest, 30 year fixed ) can be rented for $700-$900 /month.    

In summary, sales are up, prices are still going down--but for how long? 

Let's wait and see.

Reno-Sparks real estate's Months Supply of Inventory (MSI)

superb photo by: positive news

Months supply of inventory is the time it requires for all the homes to be sold at the current sales rate. 

For example, if the MSI for this month is 6.8 months, it simply means that at current sales pace it would take 6.8 months to sell all the inventory.

"Why is this important Joe?"

Knowing what the MSI is doing would give you a clear picture on the general supply and demand of the market.  Many will talk about the market using sophisticated diagrams and elaborate 'systems' but if you really want to know the pulse of the market, supply and demand (see 'Reno Market' category) still rules:

Reno Months Supply Of Inventory:

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Note:  MSI has been steadily going down (a good sign) due to the consistent increase from  buyers even in the low winter season.  The past two year's month March have been considerably higher than the current March--a great sign of strength for the Reno real estate market.

Sparks Months Supply of Inventory:

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Note: Sparks real estate's MSI looks eerily similar to Reno's graph. 

I have observe this for myself, buyers, first time home buyers and investors (looking for cash fow) have been eager to invest in Sparks. 

Prices remain to go down (especially in the $300,000 and above market) but if strong demand continue prices in the $250,000 and below will stabilize.

Reno & Sparks Homes Median Price

superb photo by: supercuffs

Median price of a home. 

In simple terms average price, ok maybe not exactly.  But it's almost the same thing.  But just to be sure we know the slight difference:

Median price: means half of all purchases fall below that sales price, and half are above it.

Average price:  is adding up all the sale prices and dividing them by the total number of sales.

Example:  Let's say there were 5 home sales, totalling $2, $3, $4, $5, $9. The median is $4 because half the sales were below and half were above. The average is $4.60.

*From Yahoo! question and answer

RENO REAL ESTATE MEDIAN PRICE

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SPARKS REAL ESTATE MEDIAN PRICE

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Note:  Though demand has been going up, prices have yet to find a bottom. 

This is not unusual in a down market.  Prices don't just magically stop falling and start flying up.  History tells us that demand goes up before prices, which means that the bottom might just be around the corner---I can't wait.

Reno,Sparks,Carson,Dayton,Minden,Fernley,Fallon and Gardnerville: QUICK OVERVIEW

For you Curious George's out there.  If you're wondering how the the major cities in Northern Nevada stack up to each other, this post is for you. 

Once in a while I'll have people ask me about places like Gardnerville or Fernley, I wish I knew more about these markets.  Maybe one day I'm also going to blog extensively about these places.  Now, that would be a good excuse to go there!

Percent Growth Volume:

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Percent Growth # Units:

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Percent Growth Median Price:

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Quick Notes:

• At first glance the data above just looks gloomier than Armageddon.  But I want you to look at the number of units graph (second).  I've been following this since last year and what I noticed is that the past two months the units have just been growing at a fast rate.  This is good news if you are waiting for a market bottom.

Foreclosed Homes in Reno(Washoe County): An Easy To Understand Report(updated: Oct 16,2008)

Picture by: mortgage foreclosure solutions

"SOLD!"

Foreclosures have been selling like pancakes (see: 2nd graph) since November of last year.

I'm no longer surprised when my buyer's offer for a foreclosed home is in competition with two others. 

Once the foreclosures are priced right it is getting harder and harder to get a deal below asking price (I have made three offers above asking price).  Even before we show the foreclosed homes to our client, the home gets an offer the same day!

And it makes sense. Prices of homes have gone down to the point where more and more people can afford it.  Many of them have waited patiently for this time to come- and believe me, they are making offers left and right.

I want to show you what's been happening in the past year.  If you're willing to do a little bit of homework and an ounce of hard work.  Foreclosures can be a great deal!

Hope it helps:

Reno Home Foreclosures: Reno,Sparks. Washoe County NV
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Reno Home Foreclosures Sold: Reno,Sparks,Washoe County, NV
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Reno Home Foreclosures Median Values: Reno,Sparks, Washoe County,NV
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                                " Interested in looking at the complete list of foreclosed homes in Reno? Call Joe (775-338-7653) today for a no hassle-no pressure 10 Minute phone meeting!"

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Updates: 4'th

Hope and fear

 Superb photo by: amoeba 84

"People hope when they should fear and fear when they should hope"

This statement really hit home for me after experiencing for myself the financial meltdown that occurred in the last four years.  

And knowing what to do is not a walk in the park.  Ever since we started school we have been trained to be like everybody else.  While there are good things we can get from the crowd, there are far more exciting things in store for us when we rise up from the crowd. 

What I'm talking about here is not based on bravado.  Facts and intuition play a huge part in determining whether it's time to fear or time to hope.

Back in early 2006 when I realized I made a mistake in my personal investments (bought too late) I immediately called an emergency meeting with investors I was working with.  I told them bluntly, that we need to cut our losses short.  I tried my best to explain to them that the time for hoping was over and now is the time to fear.

Fortunately they listened.  Even at that point it was still hard to talk them about cutting their losses short, for there was no win-win situation anymore.  No matter path we chose were going to lose money.  The question was, how much money did we prefer losing.

The media by this time were giving hints of a real estate meltdown but none were bold enough to declare a topping of the market.  This is one of the hardest obstacles to overcome.  I realized, we have become so dependent on the media that it becomes a confirmation, a sage if you will, in our business dealings.  My stand on the media has never changed:  We cannot depend on them in regards to our financial future. They're  chronically late in informing us news that will benefit us.

So for the million dollar question:  when will it be time to hope again? Now.  Let be clear with this.  Be on the lookout for markets that are beginning to experience heavy spikes in demand.  That have stable median prices.  In short, look for stability.  For the markets that are showing stability today will be the ones leading the Reno real estate market tomorrow.

And lastly, in determining whether to hope or fear, the market will be your best friend.  Spend a few hours going through this blog, if there are things that remain vague to you, call me and I'll try my best to answer your questions.(Joe: 775-338-7653)

The tyranny of the "OR" VS the genius of the "AND"

Photo by: rachaelvoorhees   

Almost two years ago when I was thinking of starting this blog, I had some reservations about being "another guy" who gives real estate advice in Reno. 

We are constantly bombarded by opinions and advices, some I have no doubt are helpful but usually it can be more of a detriment than a blessing.

Some will say (usually our wonderful folks), "Be conservative, keep money in the bank."  Most will say, "Don't keep your money in the bank, inflation will eat you. INVEST INVEST INVEST!"

Both makes sense.  You can make money using both roads. 

But you have to choose one.  But do you really?

Jim Collins calls this, "THE TYRANNY OF THE OR".  This pushes people to believe that things must be either A or B, but not both.  It makes such proclamations as: "You can be conservative OR aggressive."

I think if we want to have the best chance in winning in our real estate investments, we should practice the, "GENIUS OF THE 'AND' ".  Instead of being oppressed by the tyranny of the or, wise investors act based on the opportunities the real estate market presents to them. 

We evolve.  We change.  We adapt.  I'm not suggesting relativity.  This does not mean that we won't follow a set of rules in our investing regiment (I'm a big fan of rules).  It just means that we are willing to adjust--refining it.

"If you are thinking of buying a home in Reno and Sparks at the $150,000 to $200,000 price range you are very smart"

I have something to say to you patient reader..

If you are thinking of buying a home in Reno and Sparks at the $150,000 to $200,000 price range you are very smart.

I imagine you as the patient buyer who have been waiting for years now.  You watched almost enviously as your friends and family got in the market a few years ago.  There were forty-three of you last month ( a meager six in September 2007) who got in the market.

(Keep in mind that the graphs are only for the $150,000 to $200,000 price range for Reno-Sparks.)

Reno units sold 2006-2008
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Reno median home price 2006-2008
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Sparks units sold 2006-2008
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Sparks median home price
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Suggested readings:

• The first market bottom in Reno real estate

• Reno market update: what's happening in the last six months?
  

• Reno real estate: demand

"This real estate market downturn would be like a long and unforgiving marathon"

 Jason harper

July 2005 was when the real estate market topped.  We just passed the three year mark. 

The silent question on our minds:   how long will this real estate bear market last? 

Experts can't agree on one time frame but most would say that based on the history of the market a real estate market downturn lasts 3-5 years. 

I couldn't help but wonder with the media going gaga over the market and more and more people having sleepless nights over their financial future: are we hitting the "it will get worst before it gets better" time line.  Are we right on schedule?

"This real estate market downturn would be like a long and unforgiving marathon" somebody once said.

Perhaps marathon runner Jason Harper's experience could shed some light to our questions.

I met Jason Harper not too long ago in Reno--one of the most fascinating human beings I have ever met in my life.  Last May he completed a 100-mile-run for the inner city Sacramento's roughest neighborhood. 

He was fighting to create awareness and support for the uninsured children of Oak Ridge Elementary school.  Eight hundred people watched him endure the intense heat (100 degrees) as he reached the finish line at (took him 29:35 hours). 

"Harper, 36, crossed the finish line on the playground of Oak Ridge at
29:35. Slightly dehydrated and exhausted, Harper's motivation never waned,
though his body did."

Notice what he said heading towards latter the part of his grueling run: 

 "At the sixty mile mark, I was very nauseous and couldn't hold much down."

I believe our current state in the Reno real estate market is not far from where Jason was when he was "very nauseous and couldn't hold much down."

Would it get worst? I would say More than likely.  But hold on, we must, friends.  We might be heading on the last leg--the hardest one at that. 

Our group have always believed deeply in Jim Stockdale's iconic statement " Confront the brutal facts but never lose hope that in the end we will prevail."