General Overview of the Reno/Sparks Multiple Listing Service data for October 2009:
Transactions were quite positive for both September and October registering a 14% and 4% monthly increase respectively with a 55% year over year increase for October. Prices seem to have bottomed – up a little bit then down a little bit – I have used the analogy of a fishing lure being dragged along the bottom contour of a lake or stream. I don’t anticipate a sustained up-tick until job creation turns positive and when that will occur is anyone’s guess. However, the devastating decline in prices seems to have abated.
There were 538 October MLS single family detached closings and in what I would consider another positive sign – 42% of the transactions were ‘Normal’ sales; 33% were REO transactions and 25% were short sale transactions. The greater percentage of Normal and Short Sales there are should indicate some stabilization as the more arms length a transaction is the more likely (by definition) it is to reflect true market conditions. The REO properties have been artificially (in my opinion) under market hoping for multiple offers and ‘silent auction’ type bidding up of prices. That being said, many bank owned properties are automatically reduced on predetermined monthly basis if they haven’t moved. So even if prices are stabilizing if a property hasn’t been sold within some predetermined time period the price is automatically reduced.
The following table shows the Average & Median prices of MLS closed transactions since January 2008 with the percent change in month-over-month transactions.
Price | Average | Median | COE | % Change |
Jan-2008 | $386,286 | $285,000 | 165 | Transactions |
Feb-2008 | $327,178 | $289,000 | 195 | 1.4% |
Mar-2008 | $324,982 | $273,000 | 237 | -5.5% |
Apr-2008 | $328,617 | $275,000 | 314 | 0.7% |
May-2008 | $341,161 | $260,430 | 313 | -5.3% |
Jun-2008 | $330,738 | $262,500 | 366 | 0.8% |
Jul-2008 | $293,702 | $251,000 | 397 | -4.4% |
Aug-2008 | $298,795 | $250,000 | 320 | -0.4% |
Sep-2008 | $304,765 | $239,750 | 354 | -4.1% |
Oct-2008 | $268,950 | $230,000 | 348 | -4.1% |
Nov-2008 | $271,311 | $220,500 | 253 | -4.1% |
Dec-2008 | $254,040 | $218,900 | 286 | -0.7% |
Jan-2009 | $243,165 | $200,000 | 208 | -8.6% |
Feb-2009 | $235,857 | $200,800 | 286 | 0.4% |
Mar-2009 | $231,038 | $200,000 | 353 | -0.4% |
Apr-2009 | $238,290 | $187,750 | 408 | -6.1% |
May-2009 | $226,052 | $175,000 | 400 | -6.8% |
June-2009 | $226,243 | $181,000 | 521 | 3.4% |
July-2009 | $215,077 | $180,000 | 501 | -0.6% |
Aug-2009 | $214,230 | $179,000 | 454 | -0.6% |
Sep-2009 | $224,177 | $186,000 | 517 | 13.9% |
Oct-2009 | $217,656 | $180,000 | 538 | 4.1% |
Median sales price per square foot like the median sales price is up and down from month to month but has been fairly flat for the last 5 months. The REO median value ratio still seems to be trending downward. Having hit a new low in October – off 17% since the first of the year.
The Reno/Sparks market has shown a greater amount of volatility in pricing and sales volume than the Las Vegas metro market, however, overall northern Nevada seems to be less affected by the huge number of REO properties that has plagued southern Nevada and, as indicated above, the percentage of both normal and short sale transactions has been increasing as of late.
There has been a lot of speculation that the banks are sandbagging foreclosed properties in an effort to arrest the dramatic price declines in both markets. However, we have not seen any hard numbers from any of the sources who talk about this shadow market that could accelerate the downward move in prices – the Mortgage Bankers Association has been increasing numbers of loan defaults for the entire state which should precede an increasing number of foreclosures.
Since the federal loan modification program is a fraud, in my opinion, attempting to make debt slaves out of underwater home owners – perhaps the increased number of successful short sales is mitigating the number of foreclosed properties without affecting the increasing number of defaults.
Financing: cash and FHA transactions continue to dominate in REO purchases accounting for 27% and 41% respectively. FHA transactions represent an ever increasing share of financing choices and depending upon your point of view this does not bode well for future market health. The percentage of recent FHA loans in default has reached a historical high as the job market deteriorates and FHA buyers have little ‘skin’ in the game – making it easier to walk away from a home.
FHA and the Government Sponsored Enterprises (Fannie & Freddie) continue to report increasing rates of defaults across the loan product spectrum and increasing levels of losses in their portfolios preordaining new taxpayer bailouts of all 3 agencies. Borrowing our way out of debt as the federal government seems determined to do does not seem to be working very well for the housing industry.
For REO Only: Average Sales Price of $166,850 and an average of $92.08 per square foot while the median sales price was $145,900 and a median value ratio of $89.11. Sales prices ranged from $32,000 to $591,500 with sizes ranging from 624 square feet to 5,782 square feet.
For non-REO:
For the 227/133 normal/Short Sale transactions the Average Sales Price was $266,305/$202,623 and an average of $126.08/$101.34 per square foot while the median sales price was $215,000/$175,000 with a median value ratio of $121.20/$96.75. Prices ranged from $46,000 to $2,250,000 with sizes ranging from 800 square feet to 5,894 square feet.
Days On Market: Median Days on the MLS were 111 and 59 for non-REO and REO transactions respectively; short sale transactions were on the market for a median 173 days prior to contract.
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