The real estate trend in firming home prices solidified in the second quarter with more metropolitan areas showing increases from a year ago, aided by a surge in home sales driven by the home buyer tax credit, according to the latest survey by the National Association of Realtors. In the second quarter, 100 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year, 91 areas had higher prices, while only 26 MSAs experienced annual price gains in the second quarter of 2009.

The national median existing single-family price was $176,900 in the second quarter, up 1.5% from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32% of second quarter sales, down from 36% a year ago.

Lawrence Yun, NAR chief economist, said the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market, we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes will also help to support home values.”

Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he said. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

Total state existing-home sales, including single-family and condo, rose 9.1% to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3% above the 4.78 million-unit pace in the second quarter of 2009.

Sales increased from the first quarter in 44 states and the District of Columbia; 47 states and D.C. had increases over year-ago sales levels.

NAR President Vicki Cox Golder, owner of a Tucson, Ariz.-based firm, said record low mortgage interest rates will help cushion a summer slowdown. “As expected, sales are slowing down now that the home buyer tax credit has expired, but record-low mortgage interest rates, along with stable and affordable home prices in most areas, provide opportunities for buyers who weren’t able to take advantage of the credit,” she said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.91% in the second quarter, down from 5.00% in the first quarter; it was 5.03% in the second quarter of 2009.

“Job creation will give home buyers more confidence, but the market over the next few months is likely to be below what we would expect for the size of our growing population,” Golder said. “With improving bank balance sheets, credit restrictions should gradually improve—Realtors are a great resource for consumer information on loan availability as well as neighborhood market conditions, which vary widely.”

In the condo sector, metro area condominium and cooperative prices—covering changes in 55 metro areas—showed the national median existing-condo price was relatively flat at $175,700 in the second quarter, down 0.5% from the second quarter of 2009. Twenty-six metros showed increases in the median condo price from a year ago; the first quarter of 2010 showed 24 metros up, while only four metros saw annual price gains in the second quarter of 2009.

Regionally, the median existing single-family home price in the Northeast declined 3.2% to $238,000 in the second quarter from a year earlier. Existing-home sales in the Northeast jumped 14.9% in the second quarter to a level of 980,000 and are 23.6% above the second quarter of 2009.

In the Midwest, the median existing single-family home price increased 1.4% to $148,500 in the second quarter from the second quarter of last year. Existing-home sales in the Midwest rose 14.5% in the second quarter to a pace of 1.30 million and are 20.9% above the same period in 2009.

In the South, the median existing single-family home price slipped 2.0% to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9% in the second quarter to an annual rate of 2.10 million and are 18.8% above a year ago.

The median existing single-family home price in the West rose 2.6% to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6% in the second quarter to an annual rate of 1.23 million but are 7.6% higher than the second quarter of 2009.

Here are three great reasons why it’s still a great time to buy real estate and make smart investments in a down market.

Low Home Prices
Although there is widespread agreement in the industry that the housing market has reached the bottom, home prices aren’t expected to spike upward. Instead, they’re likely to skip along the bottom into 2011. They will continue to decline in some markets and creep up in others. As long as buyers remain diligent in the home search over the coming months, possible pricing fluctuations won’t have a dramatic effect on their property options.

Low Interest Rates
Interest rates on 30-year, fixed-rate mortgages hit a five-month low of 4.93% in May, and as of early June the rates were holding steady below 5%. Financial concerns over the growing debt crisis in Europe have stemmed discussions in the U.S. of raising rates. The historically low rates will save home buyers thousands and thousands of dollars over the life of a loan, which arguably is reason enough to enter the market.

Other Tax Benefits
The U.S. Home Buyer Tax Credit was temporary, but there are other tax benefits that buyers can continue to count on for the foreseeable future. Property taxes, mortgage interest payments and mortgage insurance premiums are qualified deductions that can help reduce many homeowners’ tax liability. For eco-conscious homeowners, purchasing energy-efficient appliances and making other green upgrades can mean a tax credit up to $1,500. For more information, be sure to visit www.irs.gov or consult a tax professional.

Don’t miss your opportunity to take advantage of the best buying conditions the market has seen in decades. There are plenty of deals to be had in our local Reno/Sparks market. We are the experts that can help you find the right deal for you!

-DMG

Click here for the Reno March 2010 Monthly Market Report

In short, things are looking up! The median home price is $175,500, which is an increase over both January and February of this year. The number of homes sold also had a big spike in March of this year which is a great indicator to help determine the absorption rate of properties and if the available inventory is headed back to a healthy level, which it is.

Possibly one of the most interesting statistics is the Sold-to-Asking Price-Ratio. This ratio shows how much of the original list price was achieved in the final sale. Even as far back as March of 2009, this ratio has not been lower than 96%. As of March 2010 this ratio jumped up to 97.9%, meaning sellers are getting near, at or over their asking price at closing.

This is critical for buyers to understand that the days of “wiggle room” are over. It’s time for buyers to write serious offers and be prepared to pay asking price for a home they really love. From my perspective, this can be attributed to the large number of short sales being purchased. Short sale banks are not accepting low offers and more often than not are countering at a higher price based on the value they receive through an appraisal.

I am an optimist. If these numbers continue on this path, we could see some great progress this year in our local market place. We still have a ways to go before we are really out of the woods, but the light at the end of the will get brighter every month.

As we move from 2009 into 2010 banks want homes sold using the short sale method if possble.  They still get their insurance and they get their write-offs but do not have to take possession of the property and all attendent costs.  As short sales have moved to the forefront of market activity the question is raised: what will a buyer be willing to pay to buy a home that can actually close escrow in less than 45 days? Homes with good certainy that the escrow will close, versus 180 days filled with uncertainty all the way?

To answer that question I have taken the time to break down our market by traditional sales, short sales and by foreclosed sales.

By March of 2010 in the greater Reno/Sparks market, 710 homes had closed escrow:

The average price was $212,878

Traditional: 180 sold with an average sales price of $283,923

Short sales: 246 sold with an average sales price of $190,363

Foreclosed: 224 sold with an average sales price of $189,419

We are seeing an area-wide, whopping 30% difference from a traditional sale to a distressed sale. Now taking a look at a specific neighborhood, such as Sommersett, we can see a more specfic example:

Traditional: 11 homes sold for an average price of $308,384

Short sale: 11 homes sold for an average price of $279,841

Foreclosed: 7 homes sold for an average price of $259,821

Therefore, to buy a home that will close, the market paid about a 10% premium.

What about pending sales?

Northwest Reno today has 100 pending sales, 8 traditional, 80 short and 9 foreclosed.

Traditional sales in escrow are averaging $244,616

Short sales in escrow are averaging $208,000

Foreclosed sales in escrow are averaging $183,938

That means that the market is adjusting about 15% for the ability to buy a home that will close escrow.

From these three examples it can be seen that sellers that will sell as a traditional sale can, in fact, sell at higher prices.  Conversely, the banks practice of short sales is costing the markets at least 15% in equities than a more sensible approach to the short sale process would result in.

Our markets have been rocked by the storm of the incredibly badly managed financial markets but without question, if leadership existed that was forward thinking, our markets could already be leveling out and even begining to move forward, but alas that has not happened and does not appear to be on the horizon.

On April 5th new guidelines will be released that may affect some of the above numbers, the question is going to be, in which way?

In 2009, Washoe County had 5,231 sales of existing single family homes; an increase of 45 percent from 2008. The median sales price for existing single family homes in Washoe County in 2009 was $185,000; a decrease of 26 percent from the previous year. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Washoe County in 2009 was $78,950; down 47 percent from 2008.

During the fourth quarter of 2009, Washoe County experienced 1,436 sales of existing single family homes; an increase of 57 percent from the fourth quarter of 2008 and a 5 percent decrease from the third quarter of 2009. The median sales price of existing single family homes in Washoe County in the fourth quarter of 2009 was $180,000; a decrease of 19 percent from the fourth quarter of the previous year and a slight 2 percent decrease from the third quarter of 2009. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Washoe County during the fourth quarter of 2009 was $65,000; down 38 percent from the previous year.

During December 2009, the report showed Washoe County had 416 sales of existing single-family homes; an increase of 41 percent from December 2008 and an 8 percent decrease from November 2009. The report listed the median sales price for an existing single family residence in Washoe County in December 2009 at $179,500; an 18 percent decrease from last year and a 3 percent increase from the previous month. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Washoe County in December 2009 was $50,950; down 50 percent from December 2008.

The report showed Reno (including North Valleys) had 3,515 sales of existing single family homes in 2009; an increase of 42 percent from the previous year. The median sales price for existing single family homes in Reno during 2009 was 189,900; a decrease of 27 percent from 2008. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Reno in 2009 was $72,250; down 51 percent from the previous year.

In Reno (including North Valleys), there were 979 sales of existing single family homes during the fourth quarter of 2009; an increase of 61 percent from the fourth quarter of 2008 and a 6 percent decrease from the previous quarter. The median sales price of existing single family homes in Reno during the fourth quarter of 2009 was 185,000; a decrease of 21 percent from the fourth quarter of 2008 and a slight 3 percent decrease from the third quarter of 2009. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Reno during the fourth quarter of 2009 was $61,000; down 37 percent from the fourth quarter of 2008.

The report indicated that Reno (including North Valleys) had 265 sales of existing single family homes during December 2009; an increase of 43 percent from last year and a 12 percent decrease from November 2009. The median sales price in Reno for an existing single family residence in December 2009 was $180,000; a decrease of 22 percent from December 2008 and a slight 2 percent decrease from the previous month. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The existing condominium/townhome median sales price for December 2009 in Reno was $43,400; down 51 percent from last year.

Sparks (including Spanish Springs) experienced 1,638 sales of existing single family homes in 2009; an increase of 53 percent from 2008. The median sales price for existing single family homes in Sparks during 2009 was 175,000; a decrease of 26 percent from 2008. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Sparks in 2009 was $75,000; down 45 percent from 2008.

During the fourth quarter of 2009, Sparks (including Spanish Springs) experienced 441 sales of existing single family homes; an increase of 48 percent from the fourth quarter of 2008 and a slight 2 percent decrease from the third quarter of 2009. The median sales price of existing single family homes in Sparks in the fourth quarter of 2009 was 170,000; a decrease of 21 percent from the fourth quarter of the previous year and no change from the third quarter of 2009. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The median sales price of existing condominium/townhomes in Sparks during the fourth quarter of 2009 was $70,000; down 33 percent from the previous year.

Sparks (including Spanish Springs) experienced 144 sales of existing single family homes in December 2009; an increase of 41 percent from December 2008 and less than a 1 percent decrease from the previous month. The Sparks’ median sales price for an existing single family residence in December 2009 was $175,000; a 17 percent drop from last year and an increase of 3 percent from November 2009. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales. The existing condominium/townhome median sales price for December 2009 in Sparks was $65,000; down 45 percent from last year.

In Fernley, there was 579 sales of existing single family homes in 2009; an increase of 69 percent from the previous year. The median sales price for existing single family homes in Fernley during 2009 was 109,900; a decrease of 34 percent from 2008. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales.

Fernley experienced 167 sales of existing single family homes during the fourth quarter of 2009; an increase of 78 percent from the fourth quarter of 2008 and a 10 percent increase from the previous quarter. The median sales price of existing single family homes in Fernley during the fourth quarter of 2009 was 104,000; a decrease of 29 percent from the fourth quarter of 2008 and less than a 1 percent decrease from the third quarter of 2009. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales.

The December 2009 report showed Fernley had 54 sales of existing single family homes; an increase of 69 percent from last year and a 10 percent increase from November 2009. The median sales price in Fernley for an existing single family residence in December 2009 was $100,500; a decrease of 28 percent from December 2008 and a 12 percent increase from last month. All sales numbers are for existing “stick built single family dwellings” only and do not include condominium, townhome, manufactured, modular or new home sales.

“Turning the corner on the new year calls for a cautious celebration,” said Ken Amundson, 2010 president of Reno/Sparks Association of REALTORS and managing broker of Coldwell Banker Select Real Estate’s Sparks office. “There were many positive signs that we can point to including the fact that more people purchased homes in 2009 in every quarter than the previous year and median home prices have remained stable for the past seven months. As we move into 2010, we can optimistically look at the fact that the supply of homes is at a five year low, government incentives for first time buyers and move up buyers are available through April, and low interest rates remain in effect.”

The Reno/Sparks Association of REALTORS® is an organization providing services to its members to ensure their success as real estate professionals, as well as protecting and promoting the consumer’s dream of homeownership. For more information visit www.rsar.net.