Lots of changes in the market this month. Sales are holding very well against last year and the overall market is only off about 5% for my primary market and values are off about 12%. More on that next month.
Countrywide's statement the other day was not the surprise to those of us dealing with sellers every day. The fact is the real estate market in much of the US that had very heated markets over the last few years are going to give back much of the gains. My guess is that most markets will strip back excess appreciation to net gains of 5%-7% depending on area on a year to year basis. That of course will leave people that refinanced their homes 2,3,4 and yes 5 times owing more than their homes are worth. It was one thing to re-finance for better terms but the number of people that looked at their homes as piggy banks is astounding that took real cash out of the homes and spent it.
What is import to focus on is the unit sales, other than a major adjustment in expectations of value, homes are selling and will continue to sell. When asked if this is a good time to buy the answer is yes, but only if you feel comfortable that you will be living in the home at least 3 years, otherwise rent for the next year or two. Owning for 3 years or more will make the purchase of the home a justified purchase and the market will have worked itself out by 2010.
Friday, July 27, 2007
Friday, July 6, 2007
July the 4th
June finished out in a rush and it has been 7 days a week since the middle of the month. The market has continued to tighten up and as the numbers roll in for the full 6 months the news is what you want to make of it. For us, good but clearly that cannot be said of many people in the market today. Last year at this time the market for the areas of N.W. Reno (Somersett), Caughlin Ranch, S.W. Reno, Arrowcreek/Fieldcreek/ Saddlehorn, Galena, Double Diamond/Damonte, Wingfield Springs and N. Sparks had 796 sales in 2006. In 2007 we had 792 sales. Not bad for a "bad" year. Across the board the average price difference is about 13% down over the year before and we seem to be holding as of the 1st of July in most markets a 18 month to 28 month supply of homes.
An odd thing about the Reno market is our price difference between new homes and re-sales. In many established markets the new home construction will set the base values for the re-sale production home market, but not in Reno. Persistently for the 5 year in a row our re-sale market continues to try and sell for more than the new home market. In our current market that is just driving many buyers into the arms of the production builders. As it is they are virtually "buying" the buyers with some of their discount programs. In the last month I have seen buyer incentive programs of $50,000-$90,000 being offered to new home buyers, plus additional benefits. The re-sale market is not immune to this type of pricing and the drop in values is showing just what is happening but the unsold homes are acting as if nothing has happened. The split between asking price and final selling price is just to great to explain. Obviously the buyers are able to choose only those selling that are pricing for 2007 and avoid the sellers stuck in 2005.
With all of this going on I took 5 days and took a quick trip to Duluth, Minn. We had a grand time, great weather and some good local food (smoked lake trout and smoked whitefish). We flew our plane out for a 2,518 nm odyssey (that is 2,895 standard miles). We overnighted on the way out and visited Rapid City, S.D. and saw Mt. Rushmore, Crazy Horse, Custer State Park, drove the needles road and found a great little restaurant called the "Corn Exchange". To be back at work we decided to come home in one day. One very long day with headwinds on the nose for 9 hours. But we made it home by 2 in the afternoon (4 Duluth time) with one fuel stop and some rest.
What does the rest of year look like, I will answer that question on my next blog.
The first week of July has started out as a record breaker, in the area of heat. Yesterday we tied our record of 108 degrees, but it sure made for a great 4th!
An odd thing about the Reno market is our price difference between new homes and re-sales. In many established markets the new home construction will set the base values for the re-sale production home market, but not in Reno. Persistently for the 5 year in a row our re-sale market continues to try and sell for more than the new home market. In our current market that is just driving many buyers into the arms of the production builders. As it is they are virtually "buying" the buyers with some of their discount programs. In the last month I have seen buyer incentive programs of $50,000-$90,000 being offered to new home buyers, plus additional benefits. The re-sale market is not immune to this type of pricing and the drop in values is showing just what is happening but the unsold homes are acting as if nothing has happened. The split between asking price and final selling price is just to great to explain. Obviously the buyers are able to choose only those selling that are pricing for 2007 and avoid the sellers stuck in 2005.
With all of this going on I took 5 days and took a quick trip to Duluth, Minn. We had a grand time, great weather and some good local food (smoked lake trout and smoked whitefish). We flew our plane out for a 2,518 nm odyssey (that is 2,895 standard miles). We overnighted on the way out and visited Rapid City, S.D. and saw Mt. Rushmore, Crazy Horse, Custer State Park, drove the needles road and found a great little restaurant called the "Corn Exchange". To be back at work we decided to come home in one day. One very long day with headwinds on the nose for 9 hours. But we made it home by 2 in the afternoon (4 Duluth time) with one fuel stop and some rest.
What does the rest of year look like, I will answer that question on my next blog.
The first week of July has started out as a record breaker, in the area of heat. Yesterday we tied our record of 108 degrees, but it sure made for a great 4th!
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