Buy now or be priced out forever? Get ready for the realtor spin jive when the official MLS based May Median sales reports start getting released. They will show something like a 5% month over month increase to the median selling price of a single family residence.
I do my own median calculation of existing home sales based on the Assessors data. I sort for SFR, Sales Verification code 2D (this eliminates bank foreclosures and the sale of REOs), and eliminate houses built in the last 2 years to screen out developer houses. Not perfect but consistent – a micro Case Schiller. I show the May median up over 6% from April 2013, $222K from $208K.
It has long been my premise that Reno home values had over-corrected and could bounce back rapidly. At a 2% annual appreciation rate from May 2001, the current median would be $201,333 today. At a 3% rate it would be $226,339. I would contend that based on long-term look, our housing priced have “normalized”. But after a few more months of this torrid pace of increasing medians, we will be back in bubblicious territory.
You would think that the lack of inventory and rising median would have put the developers into overdrive building new product. Well it hasn’t, in spite of the “waiting lists” and “pre-sold releases” their PR departments are crowing about. Only 44 permits for new developer SFRs were pulled in Reno last month (Reno only, excluded unincorporated Washoe County and Sparks). This compares to 31 in May 2012 and 25 in May 2011. OK growth, but nowhere near a boom. The cynic (or realist, you pick) in me suspects the builder cartel has joined the banking cartel in artificially limiting supply and therefore drive up prices.
And what’s up with the banks? They had 254 Notice of Default filings in May, 287 in April, and 259 in March. The first week of June saw only 9 filings. NOS filings are about pacing the last few months, but being fueled by HOA filings. And TDs are on pace to drop nearly 50% this month – only 11 recorded filings this week. Another AB 284-like syndrome? Reaction to our rising resale values lifting some homeowners above water again? Or is it more profitable right now for the banks to manipulate the market by keeping inventory low?
For you map folks, here’s a link to the full sized 1907 Reno Map.