Real Estate Market Update for Reno-Sparks, Nevada (September 2008)

It has been awhile since I gave some of my favorite and most important people a market update.

The only real sure thing in this market is that real estate values have declined.

AND, important to those who want to make a real estate investment, NOW could be the time. If it weren’t for the world and national uncertainties, it could be said that all of the indicators would be pointing to BUY NOW.

The unknown factor is - who knows what will happen with the elections, the war in Iraq and conflicts in Iran, Russia, etc. or the price of oil and will we drill in new places, build new refineries or build more nuclear power plants or will we go GREEN?

I am not an expert in these areas and I will not even try to guess what will happen in those arenas. I am an expert in real estate in Reno-Sparks, Nevada. I have had a track record for all of these 30 years of being one of the most active in dollar volume in sales and units sold. I read and analyze way too much on this subject and I will share a few figures with you.

One of the biggest reasons for this down market we are in is because so many major builders came to Reno at the same time. Did they not check with their competitors before they came and figure out that if six large builders come to the same market at the same time that there could be an over built situation? Did each of these builders just hear that their competitors were going there and they didn’t want to miss out? Did each of them really think that they could build a better product for less money or that their marketing was so good that they could outsell any of their competitors?

The only thing I will say is that the old saying is still true, “The only thing we learn from history is that we don’t learn from history”. Wherever you have a California type peak market you have to expect we might see a California type valley.

The big question most of us have is, will the Reno-Sparks market improve and will prices ever go up again. The only thing I know for sure is that our local market is in a position to only go up. The only thing that will keep our local market from going up is if some of the world and national items I mentioned above really get out of control.

Supply and demand was out of balance. Once buyers and investors heard the news they panicked and they became sellers. Many builders slashed prices in neighborhoods by as much as $70,000. This happened in areas where people had just closed their loans at the higher prices and many times with zero to only five percent down payment. This is why we started having foreclosures and yes, we all learned about “short sales”.

We still have builders and developers who own land that they need to sell or build on. Everything I am about to tell you will require that these parties have learned from recent mistakes and they go back to the old rules of real estate. These are 1) location does matter and 2) supply and demand does matter.

If builders see a little bit of sunny skies and think this is our chance and start all of their projects at the same time we could have a problem, because there is a huge backlog of approved and pending projects to be built in all areas of town and the suburbs.

Some figures that will help you understand where we are now and where we might be heading. When our market was crazy with multiple and frantic offers and when people were sleeping in lines to be the lucky buyers to get the next release of homes we were down to as little as 1.5 months supply of inventory of homes to buy. The only homes that didn’t sell were where sellers had a very unreal expectation of the market. This was also when only a very few wise builders were letting Realtors in the MLS sell their homes.

It is many times said that 0-3 months supply is a seller’s market, 3-6 months supply is a normal market and more than 6 months supply is a buyer’s market. We have been in a buyer’s market for sometime now.

We now have (July 2008) Reno with 10.6 and Sparks with 9.5 months supply of homes. In January 2008 Sparks had 15.9 months supply. In February 2008 Reno had 19.6 months supply of homes.

The market is improving. Earlier this year we had builders giving up to $50,000 in free upgrades and loan incentives to get people to buy standing inventory homes. It is now difficult to find builders with standing inventory homes.

If you know you still want that larger, newer, or just a different home, now is the time to call me so I can show you what your options might be.

Call Rick Lund today at 775-850-7033 or 775-742-6537 or email at sold@ricklund.com

Rick Lund is a lifelong resident of Reno-Sparks, Nevada. There are few Nevada natives that can teach you about the area like Rick can.

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