Speculators ‘The Only Takers These Days’ In Reno
Some reports on the housing bubble in Nevada. “The number of sales made through the Northern Nevada MLS fell to 917 in the first quarter, down 27 percent from the same period in 2005. ‘This is the sort of soft landing that everybody has been talking about,’ said (analyst) Brian Kaiser. ‘It’s finally hit the market.’”
The Reno Magazine. “Barron Caronite, engineering manager for the city of Reno, says the large number, some estimates run as high as about 6,000 units, of condominiums/town homes planned for the area could be problematic. Developers are eager, perhaps too much, to meet the demand, he says.”
“‘There is an awful lot of product in the pipeline and proposed but not that much that has hit construction,’ Caronite says. ‘I don’t know how deep the market is and..if the downtown and the river are strong enough to anchor that.’”
“Production has caught up with demand and prices are beginning to stabilize, says local real estate agent Linda Nicoll. ‘We have so many houses on the market, it’s actually leveled it out,’ says Nicoll. ‘The sales haven’t gone away, there is just more to choose from.’”
And a press release from an area realtor. “Reno Nevada homes are staying on the market longer, and longer. Over the last three months the Reno/Tahoe real estate boom of a few months ago has all but dried up. Buyers are not snapping up those million dollars homes that are offered, heck, they used to be less than half that price one year ago.”
“A lot of folks in Reno who have been trying to sell their recently re-financed [over inflated homes] are saying ‘few calls, much less buyers have come their way since last summer.’ One Reno realtor said some of his million dollar properties for sale have ‘dropped more than 25% in price since January.’”
“Many Reno residents predict that..it will leave thousands of real estate investors with properties they suddenly can’t afford. But, if there is a silver lining to this black cloud, they would have to drop the prices at auction to avoid their own financial ruin.”
“What should a house in Reno cost? Remember, a 3 bedroom home with an acre of land would cost $200,000 in Reno just a few years ago. Now the same piece of dirt is now being offered at a million dollars or more.”
“Land that was just $25,000 an acre a few months ago is now more than $100,000. Some experts blame the price explosion on uneducated buyers from San Francisco and Las Vegas. ‘They are used to paying a million for a studio’ said one Reno Nevada realtor. ‘They are the only takers these days in Reno.’”
“The number of million dollars homes for sale in Reno and Tahoe is astounding. The problem with the area is the lack of anything affordable. A huge portion of Reno Nevada News readers surveyed said, ‘Something has to be done about the lack of affordable housing.’ They are also glad to hear that prices are beginning to come down.”
Thanks to the reader who posted some of these links. Here is a database also posted.
If my company took a 23% hit in revenue, I would not consider it a soft landing. I would consider 5-8% a somewhat soft landing. Are people really this dumb to believe all the b.s.????
I was just in Reno a few months ago. What industry do they have there ? The downtown is terrible. Casinos have closed and several are either being redone or severely need to be. The place is a ghost town as far as I can tell.
And there is land as far, far, far as the eye can see ! Going west there are 3 towns from Reno to Donner’s Pass.
I can’t believe that they would have a bubble. Absolutely no reason for it. But they probably do.
Industry: Tax evasion for Californians.
You must not have gone to the south end of town. Here is a new mall that has opened. http://www.thesummitonline.com/sierra/index.html Take a look at the stores. J Crew, Orvis, Dillard’s, Coldwater Creek, etc. I am sure that you are thinking that this is nothing but overbuilding of retail since Reno has no industry, but do you think that maybe Orvis and the rest might’ve done some market research, as opposed to your off-the-cuff remarks of a ghost town Reno has become? Inc Magazine rated Reno as the #1, yes #1 city in the country to do business in last year. That said, the condo projects downtown are silly, IMO and real estate in general in Reno has been overdone.
You’d be surprised. Many tech companies have their licensing and treasury divisions located in Reno. Microsoft has a presence there, as does Intel, and Apple recently announced that they are moving their treasury operations there.
You can reach 16 Western states within 24 hours by truck in Reno–there are massive distribution facilities being built east of Reno, in a development called the Reno-Tahoe Industrial Park (something like 30,000 acres of buildable land–will eventually create 10’s of thousands of jobs). Amazon ships from Fernley, NV, east of Reno, Wal-Mart is building a massive refrigerated distribution facility, and because of that, other users like Sara-Lee are moving there to be close to Wal-Mart.
Cabela’s has plans to build one of their regional stores West of Reno in Verdi (225,000 square foot building–the first on the West Coast). My understanding is that outdoor enthusiasts drive hundreds of miles to Cabela’s stores elsewhere in the US. A choice to be in Reno must be geographically and tax driven (or else they would be going to CA or Vegas).
And add in people from CA moving there to be close to Tahoe and not have state income tax.
I think the reason for the steady growth for Reno has two primary reasons–tax, and distribution for the Western US.
It may not be, that only speculators are buying… More like: “all the speculators have quit this game” — leaving behind only the 70% of the market that comprises the “real buyers.”
I guess we keep hearing mixed reports from different people. We’ve heard that the speculators are gone, but this article is quoting someone saying that only the speculators are left.
I would hope for the latter. That would communicate that real buyers are smarter; last speculators are dumb tools.
If the real buyers are hurt, I feel bad for them.
Bubblegram:
Reno Home Prices =
“Moronic R.E. sheep.”
“Rich on mere pose.”
‘This is the sort of soft landing that everybody has been talking about,’ said (analyst) Brian Kaiser. ‘It’s finally hit the market.’ -
HUH? a 30% drop in sales in the “soft landing” everyone’s been talking about? Stop the glue sniffing, genius.
There are something like 8,000 homes for sale if you follow the link. In a city of what, 200-300K? Pretty amazing.
I don’t get how all the “speculators” were able to push prices so high? Surely they are the only ones buying…why don’t the locals sell all of their houses and make a fortune?
I guess the speculators are figuring that eventually people will want to live there from SC and have lots of money, so they are pricing the houses accordingly.
917 houses in one quarter, so they have a 2 year supply so far.
What , the houses are just sitting vacant ? I am amazed at how the speculators had so much power to move this market this high also .I can only conclude it was the easy money , good loan underwriting was absent , and the appraisers allowed the comps to go up on speculation buying . Speculation buying is not a stable market because they are not long term home users .Now in alot of markets the long term user can’t afford the prices or the demand just isn’t there .My god ,there is such a excess inventory of condos almost everywhere with no buyers .
Yes, I live in the area, and I would guess about 1/2 of the houses I see for sale are vacant.
I think the Reno MSA is at about 400,000 people and has been growing at a pretty steady rate for the last 35 or so years. I think about 2.5% per year is a pretty good number, including significant in-migration over the past several years (about 7,000 people in 2005).
http://recenter.tamu.edu/data/popm/pm6720.htm
Might not stave of the affordability effect, or supply effect, but I think Reno will be in better shape than other places. I’m not so sure about the downtown condos or townhouses in Reno, but I think that reasonably priced SFHs in Reno will ultimately be OK (by OK, I mean smaller than average price reductions relative to other places with overhangs of supply).
You mean everyone doesn’t want to live in Reno?
Who wants to live in reno? Everyone who wants to live in Tahoe but can’t will say they do.
Who is going to be left to sweep up in Fres-Baker-Reno-mento?
Cote, what do you think of the vonage IPO?
Off topic and I have no special knowledge even though I am a systems admin. Just another case of disintermediation. Disintermediation and commoditization are going to kill both telecom and housing industries while strengthening the utility of communications and house ownership. Here’s another word phrase that will reappear after a half century of quiessence: dymaxion house.
lmao. translation please.
Long live Bucky and his balls!
Me too…Over the top for me Cote..Please bring it back to dog, cat, lawnmower so I can get the gest of it…
Disintermediation cuts out middlemen.
Commoditization means you can accurately price anything.
Dymaxion House was the brainchild of Buckminster Fuller who essentially said; “if we built cars like houses it would take 2 years and $100,000 to get a Yugo.”
Even locations are getting disintermediated and commoditized. School ranks, taxes, weather, jobs prospects; all online with a few clicks. What took me years and subterfuge and favors can be had today for free; the very best places to live, and/or invest.
Yeah at some point when you strip away the inflation people will realize that homes deprciate just like a car.
Oh, I really met Fuller. One of the 6 smartest people I’ve ever known. Understand I also worked for Burt Rutan and have in the past had Nobel’s as lecturers and then current presidents of the ASME as faculty advisors.
I knew you were the real deal early on Cote….
…real deal”
[blushes] Thanks but honest this is a hobby. Don’t treat anything I bluster or spew out in a drunken slur as anything more than that.
[grimmace] I knew there was something wrong. [laughing]
Lingus,
“This isn’t right. it isn’t even wrong.” - Freeman Dyson
Another man I’ve met. Carful before people begin to believe “The_Lingus” is a contraction of “The laughing stock of the US.”
Lingus,
“This isn’t right. it isn’t even wrong.” - Freeman Dyson
Another man I’ve met. Carful before people begin to believe “The_Lingus” is a contraction of “The laughing stock of the US.”
Its just my Adultered mind and the lack of the mental capacity to express myself on the level that you, HD, Lingus (when he is not on burnning down he town) Ben and many others that make me appreciate this blog..I learned a great deal in the short time I have hung out…
I regularly am grafeful for the good fortune to find Ben’s blog — I can’t imagine this combination of quick wit, wisdom and expertise, on a super-useful topic at that, any other place. What a fun way to learn that which will save my hide.
Geez… lemme guess. You’ve met george washington too.[lmao]
Your guesses are as bad as your presumptions. Find someone who falls for your trolls. Your intent is to distract not contribute. Small cowardly children throwing snowballs always seem to think bad attention is still attention. Run along, the adults are talking big person stuff and don’t have time for your plaintive bleatings. If you ever actually did laugh your ass off your brain would disconnect from your fingers and we’d all be saved your tedious sniping.
Clearly you’ve fallen for it…. again. lmao….. Pour yourself another Cote. It will solve all your problems.
Cote,
Are you an M.E.?
Robert Cote:
We have disagreed before, but I do respect your opinion and you are very knowledgable (but not always right:) ).
Now that you are dropping Bucky knowledge, you have moved up a notch on the blog respectability meter!
A world that works for everyone in the shortest possible time was on of Bucky’s mantras.
And yes the man had balls!
When you guys are finished stroking each other off, would you mind joining the RE topic again?
Thanks for those posting supportive comments. “The laughingstock” isn’t going to get any more attention from me to feed his condition. That means we’ll have to endure a few more pathetic attempts at provocation posts before he shrivels up. I’m not always right but I do imagine I learn from my mistakes. Back to RE at least tangetially.
Robert,
What are your degree’s in and from where?
Hallelujah! Well said We rent!
I haven’t heard so much boasting, fawning, and sniping since listening to Rush Limbaugh this morning. Embarassing….Let’s get back to all the money we will seize from the dark overlords of the real estate apocalypse!
Plants alot and We Rent!:
It isn’t hard to use the scroll button.
Practice your skimming skills.
There are a lot of posts, that I am not interested in and I glide right over them.
Very familar with Fuller also, a great pioneer in ZPE technology.
Where’s my bucky chain thread thats 100 times stronger than steel?
Don’t tell me in the fireplace.
“Bucky” is the last “Nano” in my book. We all love talking about it but it’s so F*#@ing expensive that I don’t expect to see any of it in our lifetimes.
Hype, and everyone who invest in this stuff will lose their arse.
Good Science though, I love to read about it.
It’s 730am pacific time. I’m willing to wager Mr. Cote poured his first glass of liquid death to ward off the raging hangover from yesterdays haunting resentments.
Pity the fools that got into this market.
http://www.dcbubble.blogspot.com
who are these idiots still buying these days? not just at the high end but at the low end as well.
Instead on speculating on houses the last year, would be been more fun to lose a few grand over several months at the casinos in Reno. At least you get free food, hotel, drinks and show tickets.
And also Suzanne… She will be back in the line up soon @ Mustang…
Is this mustang still open? I thougt they shut down awhile back. A college buddy would get serviced up there all the time back in 90’s.
7 extreme home additions
Forget a ping-pong table in your basement; some people are building full basketball courts, bowling alleys and climbing walls.
By Christopher Solomon
http://realestate.msn.com/Improve/Article.aspx?cp-documentid=487178>1=8187
Tahoe is beautiful, so if the market takes a 27% dip this year, and for the next five or six years to bring prices into line with reality, I’m moving there!!!
House prices in Tahoe have been just this side of ridiculous for some time now. I first bought a house there in 88 and after selling that one and building another there in 97, I sold it in 04. Between 97 and 04 there was an incredible run up in prices (like everywhere else I suppose) but where a house might be say 500K in Sac. on a nice lot, the Tahoe house would be in the 1.5 to 2.5 range depending on view (with smaller lot).
There were a lot of just average folks living there when I left but they were becoming increasingly rare as the tax assessments were going up 10-15% yoy and employment there is predominantly 1). entertainment/leisure industry or 2) retired/independently wealthy. A lot of them were moving down to the galena area which is in the foothills of Reno just as you come down Mount Rose Hwy from Tahoe. That area exploded as did the whole route 395 (10 miles or so) into Reno. It was mostly desert back in 88 when I moved there. Thousands of condos and tightly packed SFH’s now (with the attendant strip malls)
The billionaires started kicking the millionaires off of the beachfront property around 99 or so.
It wouldn’t surprise me to see a big % hit to the prices but relatively speaking, I think it will always be a high priced area.
I’m speaking about the Incline Village area mostly as that is where I lived (Nevada side, NE corner of lake).
Auger, my fiancee and I are staying at the Hyatt in Incline Village this summer…looks pretty sweet…what do you know of that place?
It’s a nice place.
The Hyatt went through a 6-8 million dollar rehab on their casino back in 01-02 timeframe, as I recall. While it is smaller than some of the big names on the south shore, it is very nice. The hotel is right across the road from one of the beaches in the Village. Nice pool and amenities as well. A great restaurant/bar is right across the street on the lake.
If you like to hike/bike I would recommend asking about the flume trail which starts nearby. There is plenty to do in the area besides the casino, they’ll have all of that at the concierge desk. You will like the hotel for sure!
The Hyatt at Incline is very nice. I’ll be there this summer for a bit as well.
I remember years and years ago being told Tahoe was loosing it’s middle class. Prolly more so now.
I’ll be in Tahoe this weekend, enjoying everything it has to offer while staying in a beautiful room at the Sheraton for $50 a night. I won’t have to make the bed in the morning and cleanup when I leave. I’ll enjoy the weekend more than if I was going to a vacation home and I don’t have to spend $2000 a month on a mortgage.
This year my girlfriend and I have enjoyed trips to Mexico, Germany, France, Holland, In adition to weekend trips to various california locations. We Have moderate incomes and no debt. How do we do it? Our rent is half of what a mortgage would be. You can do alot when your saving $1000 a month.
Hence “Happy Renter”
‘The sales haven’t gone away, there is just more to choose from.’
_____________________
Anyone else tired of this line? We never needed “more to choose from,” just better prices. There are always houses which satisfy our needs/desires, but paying $500,000+ for them is the real problem.
I understand the whole supply/demand equation as far as markets go, but Realtors are acting like there weren’t any nice houses for sale these past few years. We’re not taking our time trying to find the right house. We’re taking our time trying to find the right **price**.
Bingo …….I am so tired of the “more to choose from “line from realtors . The other line I hate is “houses are just taking longer to sell”. Does that line mean that its taking sellers longer to come down in price ,or does it mean that its just taking longer to find the greater fools out there willing to buy ? Does it mean that buyers are taking longer because they have a massive amount of inventory to look at ? Also realtors will expose buyers to the listings they want to show them . I have been with realtors that skirted around streets to avoid certain listings .
Yeah,
I can only speak for myself, but more “homes to choose from” at $500k to 1M is not much of an improvement, especially when anyone with a pulse knows they were worth less than half that two or three years ago! And now power is shifting to the buyer….Er….Power to do what? Pay some flippers and subprime lenders to destroy your personal finances (and city) in the process. What obtuse, self-absorbed roaches ..
Right on
OT but I have a question for the board…you know how we always say, “what will the next bubble be?” Well, is it possible that there be no bubble in anything for a while? Have there been times in recent history where the stock market, housing, precious metals, etc. were just stagnating all together?
Yes, it is called a depression.
However, this will require removal of liquidity. That may or may not end up happening. It is a distinct possibility but not for sure.
I’m convinced were headed for bubbles with no profit. Fishfarms, mushroom farms, ” Baby boomer” Gyms, restaurants ect. The Dumb money acquired by the lucky reckless will continue to flow.
One Reno realtor said some of his million dollar properties for sale have ‘dropped more than 25% in price since January.’”
I think that anyone who uses an RE agent to buy a house needs to ask them how many houses the agent is trying to sell. How can one believe RE agents when they have such a stake in the market?
Test
OT- ABC’s Nightline just had a piece about the startling rise in home forclosures.
Any idea how long does it take for forclosures to make it into the statistics?
We would need a reference. We’re in new territory, all we can say is the market is currently falling apart.
So did ‘Good Morning America’ last Thursday. Here’s part of the transcript from that piece:
Dan Harris (ABC News): Heidi, who did not want us to use her last name, bought her dream house in Texas, using what’s called an adjustable rate mortgage. Like millions of Americans, Heidi got her mortgage at a time when rates were low. But with an adjustable rate mortgage, after a few years, she had to start paying the market interest rate, which had gone up.
Heidi (Homeowner): Once the adjustable rate kicked in, it just got from bad to worse, very bad.
Graphics: Foreclosures: 60%
Dan Harris: Her payments nearly doubled, she lost the house. It’s happening across the county. Over the last year, a 60 percent increase in foreclosures, the first step lenders take towards seizing the home of people like Heidi who fall behind on their payments. Some worry this trend could hurt the entire economy.
Mellody Hobson (Financial Contributor): It is not a good sign for people to be, basically, losing their homes. And I think we’re actually at the early stages of this bad foreclosure story.
Dan Harris: The early stages of the story, because in the next year or so, nearly a quarter of all people with mortgages will have their interest rates reset. If you are caught in the crunch should you consider one of the new 50-years mortgages, which allow you to make smaller payments over a longer period of time? They may not be an ideal solution.
Mellody Hobson: After the first five years, the rate fluctuates on a yearly basis.
Dan Harris: Meaning, 45 years of insecurity.
Housing prices to dip 20-30%
Yikes, this bubble is everywhere. That headline is from Korea!
The government is sending warning messages on the housing market, saying the bubble is about to burst with tighter antispeculation measures taking effect in the second half of this year.
…..
Housing prices would be stabilized, meaning they would drop 20 to 30 percent, as Finance Minister Han Duck-soo said, if the government continues to push forward antispeculation measures and increase supply of homes.”
full article
The fact that the bubble is ubiquitous implies that when prices drop (everywhere!), they will drop more than most folks anticipate. The problem is that the drops will be reinforced by a global economic slowdown, which will make prospective homebuyers extremely cautious about investments which require a long-term commitment to loan repayment (like buying a house, for example).
http://tinyurl.com/gqmdp
Polk’s Building Boom Cools in April
The reason it will go down so fast is one word that actually doesn’t crop up even on this website. Panic. Now, people can look ahead to their resetting ARM’s and hear it on main stream news. They can see what is coming. They will panic in droves. Sitting tight is just not an option for so many of them. That would be like saying “just sit tight” during the ‘29 stock crash. Panic is as bad as irrational exuberance.
Panic is the unhappy unraveling of the giddy optimism that fuels irrational exuberance.
Hey GS, you’ve put quite eloquently. You deserve a drink today.
He might deserve a drink , but I need a drink .
I just had a drink so there.
Harikari. Let the new era begin.
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