Steep decline in Douglas housing market

by Susie Vasquez

Staff Writer

The seller's market in Douglas County is over.

The average price of a home in Douglas County dropped significantly in recent months, from a high of $675,000 during the last quarter of 2005 to $544,600 during the first quarter of 2006.

That's a drop of about $130,000, according to a quarterly report compiled by the Northern Nevada Regional Multiple Listing Service.

The organization provides information to real estate professionals in eight Northern Nevada counties and according to their figures, the number of homes on the market has risen from 584 to 719, while the number of homes sold has dropped, from 229 to 171 during the same period.

The amount of time homes are on the market in Douglas County also increased during that period, from 61 to 90 days.

Steve Bohler, a broker/owner with Pinon Pines Realty in Minden, said home selling prices in Douglas County are significantly lower than the asking prices, which indicates to him that they're overpriced.

"We still have plenty of buyers calling on ads, but once they've looked, they're shopping somewhere else," he said. "Buyers are checking out Elko, Winnemucca and Lovelock, or going up to Idaho, Oregon, Washington or Montana."

About four or five years ago the people moving here from California had never refinanced their homes, but that isn't the case now, he said.

"Instead of coming here with $700,000, they now have $300,000 to $400,000 cash," he said. "They want to buy a home for a couple hundred thousand and still have enough equity to retire.

"I hear that from a lot of people," he said.

The average asking price for a home in Douglas County had increased to $582,000 this week, but the actual sale price is around $484,000, according to information from Multiple Listing.

That's a discrepancy of about $100,000 and average home prices in neighboring counties are significantly lower. The market is flat in Washoe County where the average price of a home is $376,000. In Carson City where the median price of a home is $310,000, costs have dipped about $18,000 from the last quarter of 2005 to the first quarter of 2006.

Affordability is an issue in "hot" markets across the nation. The recent real estate boom seems to have bypassed cities like Denver, Colo. and Albuquerque, N.M, but those markets are now raising some eyebrows, according to David Lereah, chief economist for the National Association of Realtors.

"What these metros have in common is a healthy local economy and affordable housing prices," he said. "It is becoming increasingly clear that in the aftermath of the boom, households are now seeking affordable property to purchase and live in."

Bohler doesn't think mortgage interest rates, now at 6.75 percent, are having a major impact and that will continue until those rates rise to between 7 or 8 percent.

A report from the National Association of Realtors indicate that nationally, higher interest rates are cutting into existing home sales, particularly in high-priced markets.

New home sales have seen a 10.5 percent decrease in recent months, housing starts have declined and developers are seeing a huge rise in unsold inventory across the country.

In the face of this market adjustment some developers could be in deep trouble locally, Bohler said.

"I know of a development in Yerington that took his homes off the market. They've rented them because the developer can't get the asking price," he said. "Developers will have to get realistic quickly, or they're going to end up sitting on a lot of houses."

Despite the downturn, this is still a great market to make money for the astute investor, Bohler said.

"A lot of people are in way over their heads and eventually, they're going to have to sell," he said. "There will be deals that can be picked up and turned around. For buyers who know what they're doing, there's money to be made."

Lereah said the boom is over and most of the nation's hot housing markets are cooling, but most hot markets still have a healthy local economy and that should shore up the housing market.

"With job creation and income growth, households will continue to have the wherewithal to purchase property even in cooling local markets," he said. "That is the perfect recipe for a soft landing."

Despite the deflation of real estate prices, Bohler does not think the trend will help first-buyers in Douglas County.

"Average kids that grow up in Douglas County haven't been able to afford to live here for a long time," he said. "It's always been a lot cheaper to live in Carson City."

Susie Vasquez can be reached at svasquez@recordcourier.com or 782-5121, ext. 211.