Bad news for anyone in Douglas County thinking of selling a house…the market’s down. According to an article in the Record Courier, the average selling price in the valley dropped from $675,000 to $544,600 in a matter of just a few short months. That’s about $130,000, or about 20% less! I’ve seen evidence of this myself when I drive around looking at the “Take Me”s they post in front of the houses. Many of them are less now than they were a few weeks ago, or they proudly proclaim, “Price Reduced!” One Take Me had a giant sticker with the price on it. When I peeled back the sticker I found the old price, which was $10,000 more. And this is a brand-new home, never been lived in. Even the builders are having trouble selling.
The number of homes sold was also lower, dropping from 229 to 171. And the average time on market went up from 61 to 90 days. So all of this adds up to bad news for sellers, but slightly better news for buyers. I mean, $544,600 is still a lot to spend on a house, and it’s probably still overpriced. But it’s more realistic, and prices dropping means that you might not need a six-figure income to own a house anymore. The Carson Valley has been the hottest market in Northern Nevada for a long time now, and possibly the most out of line with what houses should be selling for. I mean, a million dollars?
So now I find myself in a bit of a pickle. I’ve long thought the housing boom was out of control, and the only reason prices were so high here in Nevada was that prices were even higher over in the Bay Area, so everyone that was selling there was bringing their cash here, and didn’t care how much they spent as long as it was less than what they sold for. That led sellers to believe they could get whatever they asked for, and prices went up, up, and up until they were in the ridiculous range. Now that things are turning around, because the buyers coming from California are a little more picky, I see that as things getting back on the right track at last. But, at the same time, I own a house in the Carson Valley that I want to sell in a few years. And I was kind of hoping that the boom would last just a little bit longer so I could get in on it too. So this softening in the market is pissing me off at the same time that I’m applauding it.
Damn economics. They get you every time.
It is a buyers market now, which is good news for me, I’m one of those picky California buyers you mentioned. We’ve been looking for a house for months now! What I want to know, is why are the houses up there so small??? 1120- 1500 sq ft is average!!! I don’t want anything fancy just a nice normal size home. My poor realtor out of Minden, isn’t able to find me anything reomotely close to what I want, and how come most of the yards in the back are just dirt? (yes, I guess I am picky) Some of the homes say RV parking…but that’s just dirt too!! What happens in the winter months, when the ground is wet? You’ll have to pull your RV out of the mud!!
The backyards are all dirt here because we live in a desert. It’s too dry and too hot to grow anything without a shaman on hand, so nobody bothers and they just leave it all dirt. Actually, you’re lucky to get dirt. A lot of backyards are just a wasteland of sagebrush.
And as for the size of the houses, it depends on the age. 20-30 years ago there was a big boom of affordable housing built in the valley. Cheap materials, cheap construction, and low square footages. But then in the last ten years the valley has been “discovered”, and now they’re able to build bigger houses. If you look at anything built in the last five years you’re going to find 2000+ square feet. Many of them have RV garages, too.
So, the thing I always wonder is, where are these people working to afford these kinds of houses? When I lived in G’Ville, there didn’t seem to be an abundance of high-paying jobs, but maybe it’s just that they aren’t in any of my fields. The average price you cite is much higher than the median in the Seattle area (I couldn’t quickly find the mean, but I’m sure it’s higher than that too), yet it seems that jobs must be much more plentiful up here. So what’s the secret?
I’m really trying to figure that out too. The simple answer I always hear is that it’s people who sold their homes in the Bay Area or L.A. for seven figures, and so they’re able to pay cash for a house here. Then they don’t have to worry if they get a low-paying job, because they don’t have mortgage payments. But that answer seems too easy. And how many of those people could there be, anyway? Not enough to fill all the houses that they’re building, that’s for sure.
It is not a buyer’s market. Not yet. That is the current spin of the real estate industry to try and generate some action in a market in which commissions are way down. All that has happened so far is that sellers have reduced their asking prices from the absurd to the only ridiculous. Prices are still way out of line with fundamentals, which is the point you raise about affordability. The median cost of a house in the Carson Valley bears no rational relationship to the median household income. So how have people been “affording” to pay recent prices? This worn out explanation about multi-millionaire Californians coming here and single handedly raising the market is, quite frankly, nonsense. Look to the suicide loans. Nothing down, interest only, negative amortization, stated income. Hair dressers making $35,000 a year gettting $400,000 loans. Then they take their monopoly money out into the market and bid up prices. Works fine as long as values go up 15% every year. In the next 18 months these teaser interest rates will reset upward, way upward, and the ponzi scheme will unravel. If you want to lock in declining value on a Reno/Carson Valley house, go out and buy now.