Buying a home in Reno?

Two factors go into successfully buying a home: Research and Intuition. One feeds off the other. Research is essential, but the human factor is also important.

“Three out of four stocks follow the general market when it’s going down,” said Bill O’Neil, one of the greatest investors of all time. When mama bear catches a flu, the cubs are bound to catch it. If the real estate market is falling over a cliff, maybe 25% of the homes keep its value. The same is true in reverse. Homes go up in value when the general market is hot. So you have to know if the market is going up or down.

Knowing the market is not as easy as it sounds. Misinformation takes up a bigger swath than what meets the eye. Journalists keep on the lookout for stories, and in their drive to get an inside scoop, they can print misleading information.

Supply & demand is the fastest way to get to know the pulse of the market. I’ve been following it since December 2005, and it never fails to give me a clear picture of what’s happening in the Reno-Sparks real estate market.

Your next step is checking the market condition of the specific area you desire. Suppose you looking at the $500,000 listing at 160 Mule Deer Reno, NV 89523. From that address you will be able to find specifics on the area. What I usually do with my buyers is dig deeper in that area to give us a clearer picture of what’s happening in that side of town.

What is selling in this area is between $180,000 and $245,000. The last home sold at $245,000. The biggest sale in the past two years was $315,000 (Sept. 2008).

Even though this area only sells 1-3 homes per month, It has low inventory of homes (7-15 homes). So the average house sells within a few months after being listed...

MSI is based on how long it would take for the supply of homes to be consumed by the current pace of demand. In this example, the current supply of inventory is 6 months -- Just under the National average of 7-8 months. This area has healthy supply and demand.

You can get a 10 year history of the real estate market of any area. This gives you an idea how the prices of homes have increased / decreased in the last 10 years.

Here’s another good history chart: Home appreciation –- Ten Year Chart -- A crystal clear view of how much this area has appreciated/depreciated the last 10 years.

Property Taxes (esp. in New Homes), which translate to a higher monthly payment than expected.

(New homes usually have higher taxes compare to older homes which translates to a higher monthly payment than what the buyer expected.)

Buyers tend to overlook the possible negatives of buying a home in a home owners association. Before buying take time to read and understand home owners association conditions and restrictions. Pet ownership, for example, may be regulated or restricted. If you default on your HOA dues, the company can and will foreclose on the house. HOAs are not regulated by the government and may increase dues inordinately.

Power Bill the larger and the older the home, the higher the cost to run it.

Over Budget Shopping: You may get excited and buy all new furniture. “Zero interest and no payments until 2012!” Really? You just added $40-$50 per month to your expenses. Some buyers even spring for a new car to keep up with the Jones.

Interest is at a 40-year low. Monthly payments are affordable for most buyers. The loan restrictions have gotten so strict that a buyer these days will not be over stretched with their payments from their income.

Buy wisely. Hire a knowledgeable agent. And always remember, at the end of the day only you know what’s best for you.

If you want a more detailed market overview of an area you like, you can contact me.. (jsalcedo@chaseinternational.com / 775-338-7653)