- Reno Home Buyers: "Once you get to know the market--its ups and downs via median price, supply & demand you will be able to anticipate the direction of the market."
By: Farmer, Gentleman With Brains, Inc. 775-561-4000
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.
I divide this article in two parts:
Research: What to Study
“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:
[note: data seen in graph below was taken from Federal Housing Finance Agency (FHFA.gov) government website which hasn't made an update on Reno's housing numbers. Hoping they'll make an update soon. But since 2012, prices have gone up significantly -- up 12% from 2013 alone. ]
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.This is painfully illustrated in the 'boom or bust' years of Reno real estate. A front page headline in 2007 printed a quote from the president of the biggest real estate brokerage in Reno, saying that the market was on track to reach bottom in 2008—about a year too late to help anyone.
In January 29, 2012 -- when the Reno housing market was hitting a market bottom and was on its way up -- this was the front page article from RGJ: "Shadow Inventory will slow Washoe County housing market in coming years".
Don't mean to sound mean, but the fact is the timing of that article couldn't have been more wrong. From 2012 to 2014, was a golden time to invest in Reno real estate -- once in a lifetime opportunity.
Knowing what's happening in the market is vital. You don't have to readily accept what "professionals" are saying about the housing market, as they are often off in their pronouncements.
(scroll below: to read about supply and demand, etc.,)
Buying or Selling a home?
Benefits of working with our company:
*Note: This is just a small part of our marketing plan for sellers. For complete list, call us at 775-561-4000
"Only first class business, and that in a first class way."
“We like people who are honest. Honest in argument, honest with clients, honest with suppliers, honest with the company — and above all, honest with consumers.”
So where to start? Supply and Demand:
(note: click any image to enlarge)
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.
Reno Real Estate: Supply
Reno Real Estate: Demand
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.
In this example, this home is at MLS area 123, Reno-West Suburban
From there we can find out the following:
Median Price (SOLD):
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).
Aug 2010: $245,000 (1 sold)
July 2010: $190,000 (1)
June 2010: $180,000 (3)
Supply & Demand in the Reno–West area:
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 (Months Supply of Inventory):
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.
Reno-West Area: Median Home Value - Ten Year Chart
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.
Home statistics near 160 Mule Deer Dr. Reno NV 89523
Average rental cost in this area
Finally, study the neighborhood report: Schools, crime, etc.
Mcqueen High School
Billinghurst Middle School
Melton Elementary school
Unpleasant Surprises: Things Buyers May Take for Granted
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.)
Home owner’s association fees, conditions and restrictions
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.
Take advantage of the present opportunities
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.
God BlessQuick links to help buyers in Reno:
|Office Address:||985 Damonte Ranch Pkwy. Ste.110|
Disclaimer: All information in this Blog are deemed reliable but not guaranteed. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions."