Economic and Market Watch Report 2nd Quarter, 2008 *Click on a County to view economic and real estate information at the county and zip code level © 2008 The Northern Nevada Regional MLS and NATIONAL ASSOCIATION OF REALTORS® Reproduction, reprinting, or retransmission in any form is prohibited without written permission. The Northern Nevada Regional MLS Economic and Market Watch Report The Northern Nevada Regional MLS provides services to almost 3,000 real estate professionals throughout eight counties in the Northern Nevada and Lake Tahoe areas. Over 2.3 billion dollars in residential real estate sales transactions were reported through the MLS in 2003. The NNRMLS system hosts content on over 160,000 property listings and public records information from five local counties. Properties for sale can be found on-line at realtor.com, rgj.com and on countless broker websites throughout the region. We are committed to providing real estate professionals with superior real estate market information services and technology. NNRMLS is pleased to expand services to our members by providing the Economic and Market Watch Report, designed to help identify current and future economic and real estate trends that affect our market and our industry. Index Local Report Nevada Churchill County ......................................................................................................... Douglas County ............................................................................................................ Lyon County ................................................................................................................. Storey County .............................................................................................................. Washoe County ............................................................................................................ Carson City .................................................................................................................. Others ........................................................................................................................... 1 2 3 4 5 7 8 Trends ............................................................................................................................................... Chief Economist's Commentary* ................................................................................................... Local Forecast .................................................................................................................................. Economic Monitor* ......................................................................................................................... 9 10 11 12 *Reprinted from Real Estate Outlook: Market Trends and Insights. ©2008 NATIONAL ASSOCIATION OF REALTORS ®. Used with permission. Reproduction, reprinting, or retransmission of this article in any form (electronic media included) is prohibited without permission. For subscription information please call 1-800-874-6500. Local Report Churchill County, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 225 jobs were added to the payrolls of Churchill County. As a result of these new jobs, the average monthly unemployment rate fell from 6.1% during the fourth quarter to 5.4% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $181,300 273 46 29 150 *** (Forecast) Q3' 08 $191,200 255 56 12 138 Data by Zip Codes for Q2 2008 Zip Code 89406 Average Price $181,300 Price Change *** -16.03% Total # Homes Sold (Quarter) 46 % Change in # Homes Sold *** -26.98% Average Days on Market 150 % of Asking Price (Sold/ List Price) 90.1% *** % Change of current quarter compared to the same quarter to year ago. 1 Local Report Douglas County, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 375 jobs were added to the payrolls of Douglas County. As a result of these new jobs, the average monthly unemployment rate fell from 7.1% during the fourth quarter to 6.6% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $356,200 885 173 19 121 *** (Forecast) Q3' 08 $485,300 822 130 10 148 Data by Zip Codes for Q2 2008 Zip Code 89410 89411 89423 89448 89449 89460 89705 OTHER Average Price $300,400 $678,100 $340,800 $783,300 $485,900 $300,300 $231,400 $241,600 Price Change *** -27.51% 12.77% -27.47% -29.15% -29.68% -34.09% -30.97% -7.22% Total # Homes Sold (Quarter) 31 5 43 11 14 41 22 6 % Change in # Homes Sold *** -18.42% 25.00% 16.22% -15.38% 7.69% 5.13% 83.33% 20.00% Average Days on Market 120 143 121 181 166 92 94 211 % of Asking Price (Sold/ List Price) 88.0% 91.1% 89.5% 86.6% 88.3% 90.8% 90.0% 81.3% *** % Change of current quarter compared to the same quarter to year ago. 2 Local Report Lyon County, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 602 jobs were added to the payrolls of Lyon County. As a result of these new jobs, the average monthly unemployment rate fell from 9.4% during the fourth quarter to 8.4% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $195,400 955 173 13 111 *** (Forecast) Q3' 08 $196,300 857 128 23 132 Data by Zip Codes for Q2 2008 Zip Code 89403 89408 89428 89429 89430 89444 89447 OTHER Average Price $236,100 $176,200 $89,000 $171,200 $255,000 $256,300 $155,900 $236,600 Price Change *** -21.17% -26.46% N/A 5.68% N/A -44.83% -28.81% 37.16% Total # Homes Sold (Quarter) 54 83 1 17 1 2 11 4 % Change in # Homes Sold *** 25.58% -14.43% N/A -37.04% N/A -60.00% -47.62% -55.56% Average Days on Market 96 119 318 148 8 77 73 98 % of Asking Price (Sold/ List Price) 89.8% 85.9% 67.9% 88.8% 101.3% 90.1% 91.8% 91.5% *** % Change of current quarter compared to the same quarter to year ago. 3 Local Report Storey County, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 20 jobs were added to the payrolls of Storey County. As a result of these new jobs, the average monthly unemployment rate fell from 7.5% during the fourth quarter to 6.1% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $224,600 100 10 2 205 *** (Forecast) Q3' 08 $355,700 77 8 2 171 Data by Zip Codes for Q2 2008 Zip Code 89440 OTHER Average Price $235,000 $221,900 Price Change *** -17.98% -35.74% Total # Homes Sold (Quarter) 2 8 % Change in # Homes Sold *** -50.00% -57.89% Average Days on Market 154 218 % of Asking Price (Sold/ List Price) 77.1% 86.5% *** % Change of current quarter compared to the same quarter to year ago. 4 Local Report Washoe County, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 1,854 jobs were added to the payrolls of Washoe County. As a result of these new jobs, the average monthly unemployment rate fell from 6.3% during the fourth quarter to 6.1% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $318,600 4,250 1,131 202 105 *** (Forecast) Q3' 08 $325,300 3,788 701 261 106 Data by Zip Codes for Q2 2008 Zip Code 89402 89431 89433 89434 89436 89439 89451 89501 89502 Average Price $885,000 $187,300 $169,300 $234,200 $283,900 $325,000 $832,200 $324,400 $240,500 Price Change *** N/A -17.05% -21.22% -18.28% -16.70% -50.88% -49.05% 25.49% -9.79% Total # Homes Sold (Quarter) 1 62 34 66 166 1 9 14 56 % Change in # Homes Sold *** N/A -15.07% -29.17% -8.33% 9.21% -66.67% 200.00% 250.00% -30.00% Average Days on Market 119 101 80 87 81 174 153 186 113 % of Asking Price (Sold/ List Price) 95.2% 31.4% 5.7% 88.2% 89.6% 83.5% 88.0% 82.2% 35.3% *** % Change of current quarter compared to the same quarter to year ago. 5 Local Report Washoe County, NV Data by Zip Codes for Q2 2008 Zip Code 89503 89504 89506 89509 89510 89511 89512 89521 89523 89704 OTHER Average Price $225,900 $282,500 $204,400 $327,400 $157,500 $657,800 $167,400 $323,000 $355,800 $422,000 $422,700 Price Change *** -15.61% N/A -18.37% -29.52% -68.40% -19.86% -12.22% -11.46% -9.30% -24.18% -17.04% Total # Homes Sold (Quarter) 49 1 145 99 2 101 31 88 108 9 89 % Change in # Homes Sold *** -38.75% N/A -15.70% -21.43% -71.43% -0.98% -16.22% -3.30% 2.86% 12.50% 128.21% Average Days on Market 112 64 90 133 15 174 98 88 108 107 87 % of Asking Price (Sold/ List Price) 86.4% 95.8% 87.9% 85.3% 90.3% 85.6% 85.2% 89.4% 89.3% 85.0% 89.8% *** % Change of current quarter compared to the same quarter to year ago. 6 Local Report Carson City, NV Buyer's Market 1 2 3 4 5 Seller's Market Labor Market : In the first two months of the first quarter, 546 jobs were added to the payrolls of Carson City. As a result of these new jobs, the average monthly unemployment rate fell from 7.1% during the fourth quarter to 6.4% for January and February. The strong employment climate may help to create demand for home purchases. Favorable mortgage rates should augment this trend. Housing Market : Q1' 08 Average Price # Homes on the Market * # Homes Sold ** # New Homes Built *** Avg # of Days on Market **** * Available as of Jun. 30, 2008. ** May not add to total of zip codes. *** During the first two months of 2nd quarter. **** Days on market is defined as the difference between the list date and contract date. Q2' 08 $279,300 453 106 1 113 *** (Forecast) Q3' 08 $293,700 396 89 7 108 Data by Zip Codes for Q2 2008 Zip Code 89701 89703 89706 OTHER Average Price $233,100 $400,000 $225,200 $272,200 Price Change *** -22.71% -12.74% -13.05% -21.22% Total # Homes Sold (Quarter) 44 30 29 3 % Change in # Homes Sold *** -15.38% -23.08% -29.27% 50.00% Average Days on Market 97 136 124 38 % of Asking Price (Sold/ List Price) 90.7% 87.3% 89.9% 97.0% *** % Change of current quarter compared to the same quarter to year ago. 7 Local Report Others Data by Zip Codes for Q2 2008 Zip Code 89408 89415 89419 89429 89509 96120 96150 OTHER Average Price $150,000 $101,400 $115,000 $103,000 $240,000 $401,700 $365,000 $600,000 Price Change *** N/A 9.15% 17.35% N/A N/A -6.04% -58.04% N/A Total # Homes Sold (Quarter) 1 8 2 1 1 3 1 1 % Change in # Homes Sold *** N/A -52.94% 100.00% N/A N/A 50.00% -91.67% N/A Average Days on Market 13 114 37 41 67 210 132 1 % of Asking Price (Sold/ List Price) 103.5% 90.0% 86.8% 83.7% 51.1% 92.5% 84.9% 97.4% *** % Change of current quarter compared to the same quarter to year ago. 8 Trends Improvement or Flash-in-the-Pan? By Ken Fears Manager, Regional Economics Now that we can review the second quarter of 2008, sales rose with the seasonal upswing in demand and prices. But many factors such as moderating prices and historically low mortgage rates suggest that affordability is better today than it’s been in years. With strong current conditions and the potential for rising mortgage rates, many periodicals and news figure-heads, even CNBC’s once pessimist Jim Kramer has advised that now is the time to be looking to purchase. But are potential buyers following suit? Home sales rose 2.0% nationally between April and May. This increase came even as mortgage rates rose from their January lows around 5.5% to nearly 6.4% in late June. Historically, sales and prices have tended to rise every spring and summer and decline during the fall and winter. This pattern is driven by the school year: families tend to move when the children are out of school. Since this extra demand is added to core demand during the warm months, sales volume increases. Also, as families require larger homes, the median price tends to rise as well. Give this seasonal pattern, can it be asserted that the recent increase in sales is due to seasonal buying patterns or an actually improvement in buyer sentiments? Here in the market covered by the Northern Nevada Regional MLS, sales fell 11.3% compared to the same period in 2007, while the average price has decreased 17.6% d over this same period. But simply looking at sales and prices on a year over year basis may not be enough. Since the national market slowdown has been in motion for nearly 2 years, there could be a year-over-year difference that does not account for an improvement in buyers sentiments during the intervening three quarters. In short, this market may be slower than a year ago, but it could have picked up in last three to six months. Changes to days on market and the concessions that sellers make might shed some light on this issue. 37.5 37 36.5 36 35.5 35 34.5 34 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 Days on Market Concession (right) 94% 93% 92% 91% 90% 89% 88% 87% 86% 85% As can be seen from the graph above, average days on market rose over the 15-month period ending in June. Over this same period, the average concession fell. These patterns suggest that it is still unclear if there has been an improvement in consumers’ perception of the market and willingness to participate actively. This housing market is one of the most difficult in memory. The buyers that enter the market are finding their way to working out deals with sellers. But getting buyers to enter the market is the big problem. As the market moves away stalemate and to another, lower equilibrium, buyers are likely to come back to the market seeking deals. Potential buyers need to