I just did an MLS search for all single family homes available in the entire Reno-Sparks market from Washoe Valley to Cold Springs and only 10 listings turned up under $100,000. Looking a little deeper I found that there are only 41 homes between $100,000 and $150,000 and 49 homes between $150,000 and $200,000. That's only 100 homes on the market under $200,000. There are approximately 1,950 REALTORS in the Reno-Sparks Association of REALTORS. If half of the agents in the area were to have 1 buyer looking to buy in the under $200,000 price range then we would have 975 buyers and only 100 homes. That's overwhelming. If you add investors who are looking to buy up anything they can get their hands on this really becomes a very large supply and demand imbalance.
So where have all the homes for sale gone? Only 18 of the 100 homes on the market are REO or bank owned listings. Where has all the bank's inventory gone? New foreclosures remain low due to AB284 and the National Mortgage Settlement. Over the past 6 months the number of properties taken back into bank inventory only average 75 homes per month with only an average of 48 new REO listings per month (Source: Ticor Title).
Short sales only account for 24 of the 100 homes available under $200,000. So why aren't there more short sales out there? Good question. There has never been a better time to do a short sale than this year. The Mortgage Debt Forgiveness Act has been extended through the end of the year giving many homeowners the ability to escape huge tax liabilities when doing a short sale. Deficiency waiver or full release from future obligation is provided by lien holders and most banks are urging more homeowners to consider this option verses just not doing anything or walking away. One reason more short sales might not be coming onto the market is the lack of urgency to act. With AB284 and the National Mortgage Settlement so few Notices of Default are being filed on delinquent homeowners that they just simply don't have any reason to act.
55 of the 100 homes under $200,000 are regular equity position sales. This is good news for the market and shows that with rising prices comes more homeowner's getting out of the underwater position and having the ability to now sell.
So what does this all mean? We have a severe supply and demand imbalance making it a seller's market. Sellers it's a great time to check the value of your home and think about getting it on the market. These market conditions bring multiple offers and over bidding on most properties. For buyers this means patience is in order and knowing what you're up against. If you are doing an FHA/Rural loan with no money down and need seller credit for closing costs right now might not be the best time for you to buy. Your competition has cash and plenty of it or they are getting conventional loans with 20% or more down. Buyers should expect to get out to see properties quickly. Working with an experienced professional in this market is key.
Not a day goes by that I don't get asked the question, "When do you think things will change?" If only I had a crystal ball. We may see some changes if the following things happen - sellers figure out now is a good time to act and they list their properties, homeowners who are underwater and not paying their mortgage figure out this might be the right time to do something about their situation, our State Legislators clarify AB284 so that banks can proceed with needed foreclosures. I certainly don't see a decline in buyer demand anytime soon with interest rates at 3.5-4%.
