Reno Real Estate Bubble?

Ahhh… Starting is always the hardest part. Well I would like to spark some debate out there between those “bubble busters” and the “soft landers”. I for one would like to focus on the positive changes in the market. There are far too many people out there focusing on the media, who is making headlines though drama (not only in Reno, but, nationwide). Why is it that we only remember the negative reports? and What is really going on? and What started the Reno Real Estae boom?

Lets start with some facts directly reported from the Reno/Sparks Northern Nevada Regional MLS regarding strictly Residential sales (no land, Multi Family Properties, Commercial, or investment) from the Reno-Sparks MLS and compare the years 2002 thru 2006. I am not including any stats from 2007 yet because all the sold homes that have closed escrow did so through the holidays when prices almost always soften and market times always increase.

2002:
9,121 homes sold in the market
102 average days on market
169,000 median price

2003:
10,047 homes sold in the market
94 average days on the market
190,000 median price

2004:
11,621 homes sold in the market
88 average days on the market
245,000 median price

2005:
11,990 homes sold in the market
94 average days on the market
300,000 median price

2006:
8,137 homes sold in the market
112 average days on the market
295,000 median price

Yep - there sure was a dip in real estate prices between 2005 and 2006 (a whole $5000). No there is no appreciation being shown, although specific areas have. Average days on the market numbers are surprising and in my opinion not accurate as many of the sold listings have been re entered into the NNRMLS as “new” at some point before they were sold and this is not feasable to track. What happened. In my opinion after the dot-com “crash” the stock market softened and investors looked for a new place to make money. Overnight we ended up with “Real Estate Investors” (most of whom were speculators not investors - but we can address that later). Why Reno? Well property here was (and still is) “affordable” realative to our nearby markets and many companies headed our way out California because they didn’t have to lease property (they could buy it) and Nevada has very agressive tax programs for corporations. This was bringing jobs and growth which made it a no brainer when you combine that with our natural assets and the Fed making rates so low it almost paid to borrow money. So as the stock market corrected the housing market boomed (at an unhealthy rate) for over 5 years. People were easily making tens of thousands by simply buying and selling. Now they are spoiled and whining. These are the people loosing money right now. Real Estate, like most smart investments, is not something you get into for a month or two, but I digress.

Nation wide the median price of homes is up a little over 1% and most reputable economist are predicting that we are at the “bottom” of the downturn including Greenspan, David Lereah, Ken Fears, and Lawrence Yun and that the market will begin to accelerate by the end of the year. There is no crystal ball (I would not be working if there was) but I think we will see the market accelerate and retreat a few times in the coming years before the “correction” has equalized, but, I believe the numbers will still work out if very favorable manor to those patience. We are already starting to see the aborption rate show positive signs as the number of buyers and sellers out there come closer together, causing our “inventory” of homes on the market go from a 14 month supply to about a 10 month supply in the last few months.

So if you have owned your house for less than 2 years should you sell if you don’t have too? That depends but probably not. Should you buy a home now? ABSOLUTLY. Not only is the selection there for you but you now have the power. Yes the market could drop a little more (put that into your offer) but if this is an ivestment in your future how much will that matter? By the time the market comes back most people will wait until prices are higher than they are now to buy and then they will have to fight over properties with each other– why would you do that?

The media can make as much drama over this as they want and yes some people are losing money, but, over all I think this is still one of the best real estate markets buyers and smart sellers could ask for. Let’s hear your thoughts out there. And next time lets talk leverage — so what if your house only appreciated 2%?

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