Prices stabilize as home sales pick up steam
For business tied to residential home sales in the Reno-Sparks market, flat is the new good news.
After seeing values plummet throughout most of the past two years statistics from the Washoe County Assessor’s office show that the median sales price for new and existing single-family homes in Reno dropped from $285,000 in the second quarter of 2008 to $194,499 for the same quarter of 2009 prices finally held ground in the third quarter, benefiting from an increase in sales volume.
Flat sure beats the precipitous plunges experienced in previous quarters.
Kris Layman, 2009 president of Reno Sparks Association of Realtors and broker with REMAX Realty Affiliates in Reno, predicts 2010 to be a year of recovery.
“Selling levels are far above a year ago as far as unit volume,” Layman says. “We are selling more than 500 units a month, which is a 60 percent increase. Prices don’t reflect that same sort of number, and at first blush it seems a little depressing year over year we are still sitting at a 22 percent decline.”
However, moving into the first quarter of 2010, Layman says, sales volume will continue to be a bright point in the regional home market as buyers continue to capitalize on the federal tax credit offered to first-time home buyers. Layman says the tax credit has helped shrink inventory levels, but it’s also kept prices down as first-time buyers absorb entry-level homes.
“Inventories under $200,000 are in high demand,” she says. “People are racing to get offers in on those homes and are overbidding. The high volume at lower price levels is working to keep the median price down.”
If sales continue at a brisk pace new and existing home sales spiked to 857 units in the third quarter of 2009 compared to just 481 units in the first quarter it will be a boon to brokers who typically see slowdowns in activity during the winter months.
Also boosting sales in 2010 will be the acceptance by banks of more shorts sales on homes nearing foreclosure, Layman says. At the start of the foreclosure crisis, she says, banks accepted about one in every 10 offerings on short sales. But as the crisis worsened, the number of short sale homes closing in escrow has improved to one in every five homes.
“Banks realize they typically are better off to close a short transaction than go through foreclosure,” Layman says.
In Carson City, the Carson Valley and Lyon County, a large decrease in the amount of standing inventory will further stabilize the market, says Dan Smith, president of the Sierra Nevada Association of Realtors and agent at Coldwell Banker Best Sellers.
Standing inventory for entry-level homes in Carson City is down to almost eight months worth, Smith says, and stands at 11.5 months overall. Some 22 months worth of standing inventory was on the market in Carson City in 2008. Smith says economists see a market as neutral or stable market when six months worth of inventory are available.
If buying continues in the Carson area, developers might start pulling permits again toward the later half of 2010.
Sales prices in Carson City through October softened to a median price of $208,000 versus $278,000 in the same 10-month period in 2008, primarily due to the sale of lower-priced bank-owned homes that depressed the overall market, Smith says. Pricing is at or close to the bottom, he says, and should begin to see improvement in the second quarter of 2010.
Sales volume in Carson City actually picked up slightly from January through October, with 361 units sold versus 343 units sold in ’08. In 2007 there were 407 units sold during that time. The expansion of the first-time buyers credit to include trade-up homebuyers helped spur business in 2009, Smith says, and the extension of the deadline will further help absorb inventory in the first two quarters of next year.
Homes sales in Dayton rose significantly, although prices also fell. Through October there were 273 homes sold compared to 161 in 2008. However, the average asking price plummeted from $229,000 in ’08to $171,000.
The rate of foreclosures also is on a downward trend for 2010, Smith says. His office tracks Carson, Douglas and Lyon county foreclosures, which fell 28 percent. In October there were 89 foreclosures, and in November it was 69.
Due to the strength of record gold prices, Elko County continues to buck statewide trends in home foreclosures, sales and pricing. Paul Bottari, owner/broker with Bottari Realty Inc., says Elko County has seen just a 5 percent dip in pricing. Demand also remains high, with retirees attracted to Elko’s relatively inexpensive home and land prices.
Demand has softened for high-end properties, Bottari says.
However, plans further residential development in Elko County probably will stay on the drawing board for 2010, he says, unless the major mines in the area expand their operations.
“Until we get more growth and have got more people employed we will have to hold off on development until we have demand for additional homes,” Bottari says. “I think we will development in a waiting mode.”
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