“This Market Correction Means Business”: Nevada
The Reno Gazette Journal reports from Nevada. “The housing market in the Reno metropolitan area continued to soften through the third quarter. During the third quarter ended Sept. 30, the median price of an existing single-family home in greater Reno-Sparks dropped 9 percent, to $324,500, compared with the third quarter of 2005, according to the University of Nevada.”
“According to the report, the median price has fallen every month since May when the price sat at $340,000. ‘During the first half of the year, the declining sales prices were noticeable but pretty moderate overall,’ said Brian Kaiser, analyst for UNR. ‘The third quarter’s 9 percent drop makes it clear that this market correction means business.’”
“The number of sales also dropped 38 percent, to 1,063, during the three-month period compared with the third quarter of 2005.”
“Agent Pat Martinez said newer areas with more competition from newly built homes present more challenges for sellers. That could reflect the steep discounts and incentives new-home developers are offering, making it more difficult for sellers of existing homes to compete, he said.”
“‘As long as there are those move-in homes that are brand new that prices keep going down on, they will affect the resale market much like the (high) amount of investors on the market,’ Martinez said.”
“The city of Reno fell the furthest during the quarter, dropping 10 percent from the third quarter of 2005. Sparks dropped 9 percent and the North Valleys fell 6 percent. The number of condo resales in the Reno area fell 39 percent to 184 during the third quarter while the median price dropped 9 percent to $178,000. In Carson City, the median price fell 5 percent.’
From Las Vegas Now. “Experts say there’s been a 21.5-percent decline in new home building permits in the past year. The housing market slow down is bringing back a wild, Wild West staple, the ghost town. There are valley neighborhoods where vacant homes seem to outnumber the homes where people are living.”
“Eyewitness News visited one of these ghost town neighborhoods near Cheyenne and Torrey Pines where there were ten vacant homes on one block alone. A nearby sign shows that the homebuilder is anxious to get those houses sold. The problem is buyers aren’t buying.”
“In the middle of Las Vegas lies a neighborhood where all you’ll hear is silence because most of these homes are vacant. ‘This property is about 2,600-square feet and we’re on large lots,’ Real estate broker Thomas Love says. It sports four bedrooms sitting on about 7,000-square feet of land nestled in a very quiet neighborhood. ‘All of them come standard with granite,’ Love points out.”
“‘The trend is there’s a supply that exceeds the demand and it’s Economics 101. When the supply exceeds the demand, a couple of things happen. Prices are starting to come down and we just have more inventory than we have buyers right now,’ Love explains.”
“Right now there are about 22,000 existing homes on the market across the valley and 9,800 of them are vacant.”
“Love has sold houses in Las Vegas market for 20 years and says one thing that’s added to this trend is the buyer’s mentality. ‘They’re not buying. These investors that own all these vacant properties they can’t sell are turning to rental markets. So they’re renting them out at actual rents that are much less than what these people would pay if they were owning them,’ he said.”
The Las Vegas Review Journal. “Dennis Smith of Home Builders Research has suggested for several months that prices would be flat at best and possibly turn negative toward the end of the year. ‘We’ve reached the flat part, and now we’ve got three months to see if it’s going to stay that way or get worse,’ he said. ‘Get ready for some negatives, but probably not more than a negative 4 (percent) to 5 percent.’”
“Home Builders Research reported 2,847 new home closings in September, a 22.3 percent slide from 3,665 in September 2005. Existing home sales fell to 3,069, down 40.7 percent from 5,179. The median price of a new home was $321,160, a 7.7 percent increase from a year ago.”
“Smith said there was a big change in consumer demand between the first and second quarters. Net sales in new subdivisions, or new contracts for homes, were down in every area of the valley, from 26 percent in the east submarket to 38 percent in North Las Vegas.”
“‘We expect the fourth quarter will be a continuation of the bad numbers before some improvement appears during the first quarter of 2007,’ Smith said.”
“Barbara Lee said her home in the Seven Hills community has been sitting on the market for 2 1/2 years, first listed at $625,000 when the market was bubbling. The problem, she said, is other people in the neighborhood who had to sell undermined her by listing at $600,000 to $610,000.”
“‘Now the market’s bad and I’m just disgusted with the Realtors in this town. My agent told me, ‘Give me six months, and I can sell your house.’ That was four months ago and he hasn’t brought one single person. I’ve taken the sign down. I just give up,’ Lee said. ‘I’m going to try to sell it myself after my contract ends. My whole point is Realtors just put their signs up all over town and hope somebody’ll pick it up in the MLS or drive by and see the sign, and they make a nice crisp commission without lifting a little finger.’”
Also from Reno:
‘The slump in new home construction has led to dropping prices for framing lumber and some other construction supplies, Blackwell said. The cost of common pieces of framing lumber sold at B&C Builders have dropped in price about 37 percent from the same time last year, Blackwell said. Wood panels used for roof sheeting are even cheaper, down 53 percent, while plywood is down about 29 percent.’
‘A lot of subcontractors would simply tell you they couldn’t do it a few years ago. They would refer you to someone else,’ Darney said, adding subcontractors are taking smaller jobs now. ‘I just notice the response time, especially for problems that are not part of a schedule, are simpler now,’ Darney said. ‘You can get someone to come out that day or in a couple of days as opposed to a week or two.’
‘Six months ago, if someone had approached Gregg Leiss, president of Verus Construction of Minden to put in concrete sidewalks or decks at their home, he would have turned them down, Leiss said. ‘Now, to keep our crews busy, we’ll look at it, and be pretty aggressive with pricing, too,’ Leiss said.’
Ben,
Thanks for bringing to light this very important aspect of the bubble. With so much focus on int. rates, mort. app’s, flipping and cap. gains exemptions many of us have lost sight of one the most basic aspects of what goes into the pricing of a home. The cost of materials! It doesn’t stop w/lumber and granite though, everything from copper to concrete dropping will become a bigger factor each day. Look, I’m really sorry you over paid for your ‘top of the market’ POS Mr. Seller and that implies you overpaid not only for the “momentum” but for the materials as well! We need to beat on this thing “like a rented mule”!
(I knew you and all the other native Texans would like that one)
With material costs dropping and subs willing to take smaller and cheaper jobs, sounds like home builders will… keep on building, since they can churn out lower cost units to sell.
“My whole point is Realtors just put their signs up all over town and hope somebody’ll pick it up in the MLS or drive by and see the sign, and they make a nice crisp commission without lifting a little finger.’”
Anybody else see the correlation here between street hookers and realtors?
Yeah, but I don’t cut the seller any slack either.
Seller is a complete waste of the realtor’s time here as well.
Who lets a house sit on the market for 2 1/2 years while blaming the neighbors for it not selling. She’s an idiot, plain and simple. Betcha she lists it herslef at the same price , maybe even higher , cause she knows better after all.
“Anybody else see the correlation here between street hookers and realtors? “
Here’s a woman that wouldn’t budge with her 625k price when others were selling at 610k. What a total idiot. She’ll continue to filter out all the news and continue on with her 625k demand.
Normally 625k in Vegas better buy something akin to Wayne Newton’s house or I ain’t buyin’. It’s Vegas afterall.
“‘As long as there are those move-in homes that are brand new that prices keep going down on, they will affect the resale market much like the (high) amount of investors on the market,’ Martinez said.”
I explain to people daily why this continuation of new construction, although way down, is a bad thing. Everyone thought it was so great when all these big time, publicly owned developers came into town and went nuts. Well, now these big builders have ‘em bent over the proverbial barrel. They don’t give a damn about you or your community. Right now they’re sucking the last of the profits to be made, and when the carcass is picked clean, it’s adios muchacho!
Yep.. your right.
So they’re renting them out at actual rents that are much less than what these people would pay if they were owning them,’ he said.”
Yep. He’s almost got the picture: Price-to-rent is outta whack.
Here’s one realtor’s contortion of price-to-rent: http://boulderrealty.blogspot.com One of the comments noticed the lack of price-to-rent or cap ratio in the spreadsheet.
WHat will they think of next.
I see a lot of these new developments doing what new developments did in the Riverside area of S. Cal in the early 90’s bust….turn in to slums!
posted “Riverside area of S. Cal in the early 90’s bust….turn in to slums!”
True! I think with some of the nutty things they did in the IE this go around places like Chino are ground zero!
My ex-boss bought a 4,000 sq. foot house near a dairy farm and butt up againt the State Prison land. He did this in late 01′ or early 02′ …. paid 295,000, prior to my leaving the Co. he would blather on about it being worth near 800,000 US Dollars.
He was is a vain youngman who would talk down us older guys about the “down side” of realestate. He said he only invests in Real Estate.
I hope his wife and 4 kids like thier daddies new haircut. I can say one good thing he did lock up a fixed 30year loan when he bought. In full disclosure he said he was on a plan to pay it off in 7-8 years…. but still…. Good after bad?
The property taxes will reset from $2,000. with the new owner to $5,000-$6,000. It may then increase at the low rate this guy claims. What about the sales commission of 6% ($30,000 to $40,000) to get out of the house? His rental estimate of $2,400. a month for a $500,000. house is way to high.
Let’s put that last statement a little differently. Houses for which $500,000 is now being asked, are unlikely to rent out at $2,400; but in fact a house that rents out for $2,400 is WORTH NO MORE than $500,000, really WORTH NO MORE than $400,000 assuming typical property tax, maintenance, & today’s int rates.
2 1/2 years is a lot of time to wait for 15K. How much did this idiot spend in carrying costs over that period of time.
Nutcase. There’s probably a reason the realtor has ignored her.
“‘Now the market’s bad and I’m just disgusted with the Realtors in this town. My agent told me, ‘Give me six months, and I can sell your house.’ That was four months ago and he hasn’t brought one single person. I’ve taken the sign down. I just give up,’ Lee said. ‘I’m going to try to sell it myself after my contract ends. My whole point is Realtors just put their signs up all over town and hope somebody’ll pick it up in the MLS or drive by and see the sign, and they make a nice crisp commission without lifting a little finger”
___________________________________________________
LOWER THE PRICE you greedy bastard!!!!!!!!!!!!
I’m seeing more and more “for sale by owner” signs….maybe its the same kind of sellers..
Jag “I’m seeing more and more “for sale by owner” signs”
When this happens at this point in our current market it is the kiss of death. I doubt if 2% of these will close. Over half the time the seller is busted and cannot pay an agent. Who by the way will wear them down. First 6% listing fee add about 1% closing cost….. then it begins the pressure to lower 10% by 10%…. then your same house down the block sells and closes for 70,000 less than your listing. You are gutted. Hung by new comps.
“In Carson City, the median price fell 5 percent.’
But CC saw the least amount of appreciation of areas along the 395 corridor. Not a whole lot of high end stuff, either. Even so, they’re in the middle of getting their ass whooped as well.
What did the Moody’s study say about RENO - If I recall it was down 10%. I hope they meant this qtr?!?!
Moody’s put Reno second on the list at 17.4%. I think 50% is “in the bag.”
“Barbara Lee said her home in the Seven Hills community has been sitting on the market for 2 1/2 years, first listed at $625,000 when the market was bubbling. The problem, she said, is other people in the neighborhood who had to sell undermined her by listing at $600,000 to $610,000.”
That is just mindless. How does a person not realize that if the house is still for sale after 2.5 years that there is a problem that needs a solution more than ‘take the sign down and sell it myself’.
I’ll be the property would sell for if it was priced at $350k, or even $400k. Who knows, maybe even a little more. So the ability to get the property sold does not rest with the agent, it’s not even the ‘buyers’ fault. The owner could make it happen if they wanted to. They would even make a profit doing so. According to property records, a ‘Barbara Lee’ bought a unit in Seven Hills for $193,990. Now, whether she is HELOC’ed to the moon is s different story…..
Seven Hills is one of the nicest places to live in the entire Vegas area. With that said, and it being Vegas, 193k is about the maximum I’d spend and that’s probably what she spent about six years ago. The lady is an idiot.
she’s not an idiot…lol. She probably heloc’d every penny. So, she must sell for that price to cover all loans and commissions.
I thought the “Seven Hills” were in Rome, Italy. Perhaps they moved Rome to Vegas like like they did with New York City?
It’s called “Caesar’s Palace.”
I love it how the fact that her neighbors were able to sell at about 4% less than her price was not lost on her. But instead of lowering a bit and selling while she still could, she complains that they “undermined” her and blames her realtor.
“Agent Pat Martinez said newer areas with more competition from newly built homes present more challenges for sellers. That could reflect the steep discounts and incentives new-home developers are offering, making it more difficult for sellers of existing homes to compete, he said.”
Yes Pat, the builders led prices on the way up and they will lead prices on the way down. Builders are the most rational sellers, after all. The GFs out there are still stuck on stupid with their wishing prices and delusional expectations. Wait until this irrational group of sellers wakes up, however.
The speculation here continues to blow my mind. We have an example of a local builder who borrows 10mil to start an upper end gated community (about 50 homes from 650K-900K) This yahoo drops mega bucks on the infrastructure and landscaping, and throws up 7 homes on spec. They’ve all been on the market since last spring without a sniff. Meanwhile this lucky guy is sitting on a bank note of 10mil. I wonder how this ends?
Gas, bullet, leap, or rope?
nnvmtgbrkr,
Is that in Reno, Carson or Gardnerville? Which development?
Umm, I try to remain as anonymous as possible. All I’ll say is “Go south, my friend”.
Got it…I figured it out. Thx for the local postings. Pls keep em up.
I know exactly where this is because I drove through by it on my way from Tahoe to Mammoth on July 4th.
I was looking at those things and wondering how anybody in the local are could afford them - and how/why anybody from out of the are would want to spend that kind of money there.
Just amazing.
To me, anyway.
My apologies for the tortured syntax above… in any case, I’ve been meaning to ask nnvmtgbrkr about that place since.
here’s to hoping it doesn’t
dd
There is a guy here locally that a client of mine has financed (along with 10 others) and he did a similar thing. However, he has not made a monthly interest payment in two months. The foreclosure process has begun. Unfortunately, there are a several hundred thousand dollars of mechanics liens on the property for all the dirt work and other infstrature costs. Let the bloodbath begin for these small builders!
crispy & cole,
I feel for these smaller contractors, really I do. My father was one for years. He used to say “doing the work is the easy part, collecting is the tough part”. But at some point even a guy that works a back-hoe for a living has to pick up the paper! The less you have in terms of financial resources, the more careful you have to be in the extension of credit! They’re just not in a place where they can afford to go out 90-180 days before they see some “scratch”. The end of the momentum was bound to look ugly.
“The trend is there’s a supply that exceeds the demand and it’s Economics 101….”
I’m afraid it’s not as simple as you describe Mr. Love. It’s Bubblenomics 101 and the theories of this science dictate that with excess supply and limited demand, prices don’t simply fall, they plummet.
“Now the market’s bad and I’m just disgusted with the Realtors in this town. My agent told me, ‘Give me six months, and I can sell your house.”
Barbara, you poor unsuspecting sap.
They told her what she wanted to her….sounds like she would have listened to nothing else anyway.
Next year we get a new crop of media stories:
(I bought in -04-05-06 and my home is worth X less)plus all the folks who thought their home was worth big dollars will wake up to the fact that their sitting on a asset that’s going down!!
“‘All of them come standard with granite,’ Love points out.””
Really? Granite?? What a rare find! With a distinguishing feature like that, it’s amazing their sales office isn’t being overrun with buyers.
I’ve read that stainless appliances and granite countertops are going the way of the avocado-green appliances of the 70’s. Granite may soon be a liability.
Aren’t granite countertops vulnerable to damage from things like lemon juice?
tumbled marble and quartz are the new hotness
It doesn’t take long these days. Even countertops and appliances only have 15 minutes of fame.
I’m surprised he didn’t mention the indoor toilets as well.
Note that, despite all these homes coming already equipped with”granite”, none of them has sold. It amazes me that people think that granite countertops are a huge selling point. Anyone who must have granite countertops in their home can have them installed (and choose their preferred color) for what, maybe $10K max? And granite is supposed to make a $700K house look good? Personally, I prefer Corian.
I live in Reno, and yes Moody’s said a decline of 17 percent at the bottom in 2008. What a joke. We are already at 10 percent, and we are still in 2006! Moody’s was way too conservative. The stuff is ready to hit the fan, and there will be feathers all over the place.!
The recent reductions and new low-ball listings have not taken their bite yet. If we can get some of this stuff to sell we’re past 17%!
Let us not forget ..Moodys had ENRON rated AAA two weeks before its bankruptcy!
Oooh! Granite! That magical substance that converts standard kitchens into gourmet kitchens, and adds $50k to the home price! Yay!
Hell, it’s almost as cool as that micro-thin layer of stainless steel which magially transforms a crappy GE fridge into high end luxury!
Has anyone ever figured out a fast and easy way to get fingerprints off a stainless steel fridge?
Q: What’s the best way to remove fingerprints from stainless steel appliances?
A: We called the Specialty Steel Industry for your answer. And it says stainless steel is known for its hardness and is used for utensils, sinks, counter tops, and other appliances. And while stainless steel does resist stains, it will occasionally dull or show oily fingerprints. The Specialty Steel Industry says fingerprints and mild stains are the most common surface contaminates. To remove fingerprints, use a glass cleaner or gently rub the appliance with a paste of soda ash and water applied with a soft rag.
Follow this up with a thorough warm water rinse, and wipe the surface completely with a dry towel. For more aggressive cleaning, a small amount of white vinegar can be added to the scouring powder. The Steel Industry says stainless surfaces thrive with frequent cleanings because there is no surface coating to wear off stainless steels
“The Steel Industry says stainless surfaces thrive with frequent cleanings because there is no surface coating to wear off stainless steels “
So stainless steel is stainless as long as you clean it often.
“Stainless” means that it doesn’t rust, not that it doesn’t stain. The reason they want you to wipe it dry is that the chloride and fluoride in tap water, and the acid in vinegar, DO attack stainless steel, very slowly, over time.
And just try our iron-rich water here in Maine, which will turn the inside of your stainless steel dishwasher orange.
As someone who’s Dad used to have a sailboat docked in salt water, I can assure you that stainless steel does indeed rust. It’s just resists the rust longer. Iron-rich water is a great way to seed that whole rusting process and get it started.
If you live in the West, vinegar is the key to cleaning anything that gets wet. Glass, steel, tile… all of it will get hard water stains, but vinegar takes it right off.
To clean copper, brass or bronze jewelry or hardware, stir in a pot with a weak mixture of vinegar (ketchup also works fine), then rinse clean in a collander, and dry with a rag.
Wear cotton church gloves at all times.
Insist your husband and his friends do the same.
Co2 water…is how we did it when I was a teen working @ Micky D’s…. Soda water!
“‘The trend is there’s a supply that exceeds the demand and it’s Economics 101. When the supply exceeds the demand, a couple of things happen. Prices are starting to come down and we just have more inventory than we have buyers right now,’ Love explains.”
That’s ridiculous. It’s not so much that the supply has exceeded demand in Vegas, it’s just that the product (housing) has priced itself out of the mainstream market, and has now become a luxury item. It’s not Economics 101, it’s Marketing 101. You take a product whose customer base is 50%+ of population, shrink it to 10%, and expect 50% to buy it? Marketing 101 told me that you’ve just changed your target market. So yeah, the supply exceeds demand, but only because they’ve changed their target market, not because demand in the population for the product shrank.
I believe it is a combination of supply and price. In England, it appears that people are spending 40 percent on housing, that it is too expensive, or nearing it, but there is scant demand. It may not burst for awhile there.
It’s not so much that the supply has exceeded demand in Vegas, it’s just that the product (housing) has priced itself out of the mainstream market
False dichotomy. Supply exceeding demand means that the product is being priced about the market clearing point (where S and D meet).
>>My whole point is Realtors just put their signs up all over town and hope somebody’ll pick it up in the MLS or drive by and see the sign, and they make a nice crisp commission without lifting a little finger.’”
Oops…anyways, the blame game in full effect, maybe this nimrod needs to LIFT the phone receiver, call her agent, collaborate on a price reduction well within her comps and get her house sold. Quit playing the victim, be proactive and quit blaming, cause when it all boils down to it, it takes two to tango.
The eyewitness report last night on ghost town communities is every bit true to report. I’m very fortunate to be living and seeing it for myself and I know what that Love guy is talking about, a close relative of mine just rented a 4/3/3 in a premier gated community in Aliante for 1395.00 per mo, the investor couln’t get it sold for 679,000 so reverted to the rental market.
Who said this landing was gonna be soft?……YEAH RIGHT!
1395. per month is cost of “adequate” 1 bd apt in W. LA area.
How long can you rent something bought for 679k for 17k /year? You don’t even net 2 %!
That “price” is 487 times the monthly rental! Isn’t that one for the Hall of Fame?
“maybe this nimrod” - that poor homeowner is also a hunter?
everythings cool
dnn.com real RE news
I posted this on the other thread, but that Casey Serin guy (facingforeclosure) is actually for real. Unbelievable. I was starting to thing it was all some kind of weird web nerd joke. I pulled up the title on his Modesto property and sure enough, he is the owner. $323K with 100% financing. Last sale price was $133K in 2000. No bubble here. Sacramento is awesome, everyone wants to live there! What an idiot.
Modesto’s not even all that close to Sacramento! Modesto’s a hole, like most of the Central Valley. It’s a dusty agricultural town surrounded by crop fields …. on a breezy day you can enjoy the lovely smell of crop pesticides in the air. You can see the small prop planes spraying the fields all around town on a regular basis. Although now many of the fields are being converted to subdivisions of overpriced homes for Bay Area and Sacramento commuters.
You’re right. Smells just like most of the east coast, but with an animal tint, not the human kind.
Speaking of Sacramento…I wanted to mention that yesterday was a very bubblicious milestone here. Most coin operated newspaper stands in town carry both the Sac Bee and San Fran Chronicle. Both those papers carried the bubble stories that were posted here yesterday above the fold so you could read the headlines and the beginning of the story through the plexiglass.
I’m sure many a FB shat their pants when they saw not one but TWO headlines reassuring them how screwed they were!
This is only way most fb’s get “news”. Can’t afford paper purchase price.
I get the feeling that Casey might have gotten a lot of “cash back” at closing…. who knows?
Any Vegas locals here? Can you give me the address of these “ghost towns”- I am coming out there next week and will do some driving around- maybe take some pics.
Thanks!
Try Aliante in North Vegas, or try the 215 and Durango, Woodside homes, they’re tri levels, new community with unsold homes in the first phase and I believe, they’re building into the 3rd phase but don’t quote me, I’m more familiar with the North near 215 and Decatur. You shouldn’t have a problem though, virtual ghost towns in every part of Vegas, South, Southwest, Southeast, NW, NE, take your pick.
I lived in NW Vegas (Ann Rd & US 95) from 2002 until earlier this year when I moved back to CA. It’s a fun place to live and I liked it a lot, but it’s no longer cheaper than CA.
A HUGE portion of new development has taken place along the new 215 beltway, especially the west & north sides of the valley. Like bearishgirl said, you really shouldn’t have a problem finding unsold homes. Take the 215 west from the airport, you can’t miss ‘em.
Thanks! Will post any pics I take.
>>It’s a fun place to live and I liked it a lot, but it’s no longer cheaper than CA.
Values are sliding faster than most expected, so soon and very soon LV will be a bargain again.
They are esay to spot..
In the driveway or garage is a free gift Porche for any qualified homebuyer!
An astonishing 45% of all available MLS lisitngs are EMPTY! Thankyou California!
There’s a huge KB Homes development, looks like at least 1000 homes, on St. Rose Pkwy just east of I-15. I used to pass by it as it was going in a couple years ago. I’d bet anything it’s a ghost town.
Can someone explain to me why Reno became a hotbed for flipping and insane price increases? I’ve only been there to fly in, then drive to Tahoe to go snowboarding.
It’s an easy 4 or 5-hour drive to Reno from the Bay Area … I think that about covers it.
During the height of the Bay Area real estate frenzy, plenty of idiots in the Bay Area (fresh out of the latest Robert Kiyosaki or Dolf De Roos get-rich-quick real estate seminar) would flock to outlying areas to look for “bargains” to snap up. To these idiots from the Bay Area, just because houses in places like Reno, Merced, or Fresno were priced in the $200Ks or $300Ks, they assumed they must be bargains! That’s why we saw 20%+ appreciation rates in places like Redding, Bakersfield, Fresno, and Merced, California, as well as Reno. Reno does not have a strong economy, it’s virtually all tourism and gaming industry which is low paying.
“To these idiots from the Bay Area, just because houses in places like Reno, Merced, or Fresno were priced in the $200Ks or $300Ks, they assumed they must be bargains!”
Boy, how true that is. I am always amazed when I hear this coming from people. In the overwhelming majority (99%+) of these towns there is a reason homes cost so much less. Weak economies with low-paying service jobs equals low housing prices. Why can’t people make the connection?? No doubt they will be flabbergasted when reversion takes hold.
My theory is that Reno is a 4 hour drive from the San Francisco Bay area. Many amature investors in SF Bay could not afford to buy into local market, but could drive to Reno and get started as an investor there. Since Reno has a very small population relative to the SF Bay area, this had a very big effect. Of course, with all bubbles, you just need to get them started, then they are self-sustaining.
Another possible cause is the difference between tax rates in CA and NV. Many small business owners in CA move to NV to avoid high CA taxation. My guess is that some of the real estate investors moved to Reno to preserve their gains. Northern Nevada has a booming business in firms which allow people to incorporate in Nevada.
You got to know when to hold ‘em, know when to fold ‘em.
Know when to walk away, know when to run.
Sit back and watch the stampede.
You are all right in your reasoning for why the Reno-Sparks area became ground-zero for the investor/flipping nonsense. Our close proximity to both the bay area and Sacramento made us a target for flippers. Many homes would sell and come back on the market a matter of a few months later with price tags increased by $110,000. The economy here is just not strong enough to support the median home price today. Check this out from the 10/4 RGJ about the $83,594 income Gap: http://news.rgj.com/apps/pbcs.dll/article?AID=/20061004/NEWS/610040317/1002
We moved to the Reno area 10 years ago but weren’t in a situation to buy. Our income has significantly increased, but not in any manner to keep up with the 32% increase in the last 5 years. I am sooooo grateful that we didn’t stretch ourselves and buy into the “you better buy now hype”. Hindsight is in our favor on this one!! It’s no wonder that apartment complexes in both Reno and Sparks are at almost 100% capacity!! I can’t wait for the snow to fly to see the “For Sale” signs buried in the snow…and the new home builders just keep building…
The locals and those of us that work to make an honest living and just want to raise our families have been screwed in this market!!
Having grown up in Reno, I am sickened by what the bubble has done to the city. Not only are hard working folks like yourself priced out (temporarily), but property taxes have been jacked up, and the overbuilding is taking it’s toll on the environment. Greed, fraud, and corruption are to blame. In order to prevent this from ever happening again, I believe there needs to be a significant luxury tax on second homes, and strict lending standards. As far as prices, they are up much more than 32% over the last 5 years. It is actually over 100% in most areas.
My general feelings about Reno: I wasn’t as nice as California, but less crowded and cheaper. But now with the increases in costs, there’s just no rationale to be there.
There was a companion piece in the Reno paper today about how rents are rising now that people have stopped buying houses.
>
I think you could apply that statement to basically anywhere in the metropolitan US.
I was always surprised when places (like Reno/Sparks) touted the potentiality of their geographical locations. Like the days of the dot-coms, it appeared inevitable that it would fizzle.
I never met such an odd mixture of people: Cowboys, immigrant workers, hillbillies, city folk, displaced Californians, ski bums, others in search of the proverbial dream…Reno was an interesting place.
This is the quote I was referring to:
“The locals and those of us that work to make an honest living and just want to raise our families have been screwed in this market!!”
I just move to the Owens Valley (Bishop, CA) I can’t find any data for the bubble years, or current trends. I’d be interested in knowing what the increase was here 2000 - 2005, as well as the % of recent loans that were 100%, I/O, option, etc. In other words, to be able to judge how big the bubble was here, and how big the pop’s gonna be. Pre-bubble price / income ratio data would be nice, too.
Inyo county’s population hasn’t changed in years, the only high-paid employers are CalTrans, DWP, and where I work, and 3/2 SFHs in Bishop are listing right now in the 300-400K range, which seems rediculous, and headed for a fall.
I intend to live here for a long time, and I’d like to buy a house and some land here, but I also would like to make an informed call as to where and when the bottom will be. Not to time the market for investment purposes, but to pay as little as can for what I want.