Market Conditions for Reno, Nevada   Reported by Diane Cohn, REALTOR, ABRAs of June 2, 2006.

Significant inventory increases, lower absorption rates, longer days on the market, prices holding steady. That’s May 2006 in a nutshell.

An increase in inventory in the under $300K category caused absorption rates to slip and days on the market to rise. In May, these properties closed for over 98% of asking price in under 91 days (up from 85) for an average $229,690 (down from $231,667). The market absorption rate for these properties declined to 35% (down from 41%). With 572 new listings in this price range (up from 462), we have a nearly three month supply of fresh inventory. Expired listings are holding at 13%.

The $300K-$500K market took a real hit last month. Inventory rose significantly, absorption rates dropped significantly, and days on the market increased while prices generally held steady. In May, of 892 new listings in this price range (up from 669), over 18% sold (down from 25%). The average selling price was $373,648 (up from $372,395). They closed in an average 101 days (up from 88) for almost 98% of asking price. We now have an almost five-and-a-half-month supply of fresh inventory, and expireds are holding at 12%.

My interpretation so far? The inventory increase in the under $300K range intensifies the competitive environment for sellers, perhaps leading to price softening ahead. The $300K-$500K range, however, is the one to watch. This category represents almost 45% of the listings in our MLS, where the inventory increase in May was pretty dramatic. Days on the market also stretched further while prices held. I’m still thinking that selling prices in this category will soften, though perhaps later on in the summer when people realize that the selling season is almost over.

Absorption rates in the $500K-$1 million range dropped yet again due to a significant increase in inventory, while prices increased slightly. Of 380 newly listed homes (up from 286) 52 sold (up from 49) representing a nearly 14% absorption rate (down from 17%). The average sale price in this category was $689,324 (up from $656,753). These properties closed in an average 101 days (up from 100) for almost 98% of asking price. We now have over a seven-month supply of fresh homes in this category (from six). Expireds were down to 11% (from 14%).

The $1-2 million market experienced slightly increased absorption rates, slightly stronger prices, but longer days on the market. The average sales price was $1,390,813 (up from $1,328,986). Close to 18% of newly listed homes (up from 17%) sold for 95% of asking price (up from 94%) after an average 171 days on the market (up from 128). The expiration rate decreased to 12% (from 13%). With 57 new listings currently in this category (up from 47), we have a near six-month supply of fresh homes in this range.

So, no real price softening yet in either of these two categories, but with the huge increase in inventory, maybe we’ll see some in the coming summer months. It all depends on how many buyers come out of the woodwork for the spring buying season.

In the $2 million plus range, it appears that some long term listings finally sold for more realistic market prices. Two of eleven homes listed closed for an average $2,375,000 (down from $2,474,333) after an average 561 days on the market (up from 119) for 89% of asking price (down from 98%). Expireds held at 9%. Average asking prices moved up to $2,674,999 (from $2,531,666).

229 residential listings expired during the month of May (up from 183), while 669 were withdrawn from the market (up from 445). Withdrawals are some combination of sellers giving up, sellers changing agents, and/or listing agents taking non-sellers off the market and re-listing them anew.

So, what’s pending?

In the under $300K range, there are 254 pending sales (up from 241). In the $300-500K range, there are 202 pendings (down from 217). In the $500K-$1M range, we have 95 (up from 90). In the $1-2M range, we’ve got 19 pendings (up from 18), while in the $2M plus range, there are three (up from two). This adds up to 573 total pendings (up from 568), representing 12% (down from 15%) of the available inventory of 4695 homes in the Reno-Sparks metro area.

450 homes sold in April, while 423 closed in May.

Reno is a hidden gem in Northern Nevada. Thirty minutes from the wonders of Lake Tahoe and surrounded by gorgeous mountain views, the area continues to attract new residents. Unemployment is low, quality of life is high, land is scarce and long term appreciation potential is significant.

Data source: NNRMLS
ZIP Codes: 89511, 89523, 89521, 89433, 89436, 89502, 89503, 89506, 89509

About Diane Cohn:
Diane Cohn began her real estate career as an investor. She has an instinct for appreciation that guides her to the best opportunities for long term gain, and she delights in helping others profitably fulfill their own real estate investment objectives.

Diane grew up in Stockton, California. She put herself through college, graduating from UC Santa Cruz, and went right into high-tech. She found her niche in marketing at one of the world’s most innovative companies, Apple Computer. Most recently she managed the company’s worldwide user group program. There she learned to execute complex projects on accelerated schedules, create motivated teams that get results and implement creative marketing plans.

After 15 years of career success in Silicon Valley, Diane and her husband packed up and moved to Truckee. But investment opportunities in real estate soon lured them to Reno.

More than anything else, Diane loves spending time at home with her husband and two daughters. The girls attend school in Northwest Reno, where Diane also volunteers as Vice President of the PTO.

In her free time, Diane enjoys figure skating, backpacking, hiking, snowboarding, horseback riding, gardening and home decorating. She loves movies, especially action-adventure, and she is passionate about good coffee.

Source:

http://realtytimes.com/rtmcrcond/Nevada~Reno~dianecohn