Happy Holidays!
Now that we are in full swing for the holiday season, it's time to start up all of the "what's in" - "what's out" lists and forecasts for 2008. This is also the time of year when a lot of real estate agents start up with the old "things are going to pick up in the Spring". This Realtor is here to tell you that "ain't so" for Minden Nevada real estate. The Minden real estate market will continue to meander along deep in "buyer market" territory through all of 2008.
Why?
The current months of inventory for Minden real estate is at 12.7 months. That's up from 12.3 months in December, 2006. Even though there are 11% fewer homes listed for sale, the slower rate of home sales is not able to improve the market dynamic for home sellers. What's worse? Read further to peer onto the 2008 horizon:
- Foreclosures- Even with the new federal legislation for allowing time for individuals to get re-financed onto fixed rate loans, bank foreclosures will continue to pile up in 2008. Remember, the federal program only provides relief for home owners who will have their rate adjust from 1/1/08 through 7/31/10 who meet additional criteria: They have to live in the home, be current in their mortgage and see a rate hike of more than 10 percent after payment reset. Also, they have to have a credit score of less than 660 and that score cannot have risen more than 10 percent since the loan was originated. This is estimated to help between 2% and 7% of the sub-prime borrower population. Also, don't forget about those who have seen rate adjustments already and up to December 31 of 2007. This mess is going to take a long time to sort out - certainly won't happen in 2008. In fact, I am working on a transaction right now with GreenPoint Mortgage and they are so log-jammed that they have done nothing to respond to two offers on a home that had a notice of default filed on 8-7-07 - four months ago and almost 3 months after the owner's cure period has expired. Every time a home sells lower than the recent comps, the markets adjust - works the same way going down as it does going up!
- Investors - Many of the investors who bought homes to flip have retreated to landlords until the real estate market conditions improve. Actually, most residential leases run one year, so we are going to see a lot of "flipper turned landlord" homes coming on the market to "test the waters" in 2008 - especially if the paying tenant moves out. This phenomenon will likely take place in 2008, 2009, and start to taper off in 2010.
- The California Market- The Minden real estate market is heavily influenced by major California metropolitan markets. With the end of the musical chairs game of "trading up with equity" combined with the distressed real estate sales (which will be high due to the number of unfortunate people who have 'stretched' themselves into a home), these markets are not going to produce significantly higher transaction volumes for some time to come. This transaction volume provides the liquidity for many baby boomers to cash out their California home to buy in an area like Minden, NV.
In my view, the Minden real estate market is much more likely to drift deeper into Buyer market territory due to the points mentioned. If you watch nothing other than the "months of inventory" trend, you'll be able to easily follow along month by month. This will be especially pronounced in the price ranges that typically require a chunk of equity coming from California home sales ($500K to $850K).
For more information and charts showing these trends, subscribe to The Greater Reno-Tahoe Real Estate Report- it's free, it's the easiest way to keep track of the Minden real estate market. Of course, you can always search Minden at my site too - no registration required.
Enjoy your holidays!
Mitch Argon
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