The Bureau of Labor Statistics (BLS) released their latest Employment Situation Summary last Thursday, and it again beat analysts’ expectations in a big way. The consensus was for 3,074,000 jobs to be added in June. The report revealed that 4,800,000 jobs were added. The unemployment rate fell to 11.1% from 13.3% last month. Again, excellent news as the unemployment rate fell for the second consecutive month. However, there’s still a long way to go before the economy fully recovers as 17.8 million Americans remain unemployed.
Here are two interesting insights on the report:
What about a supposed misclassification?
The BLS addressed this at length in a blog post last week, and concluded by saying:
“Regardless of the assumptions we might make about misclassification, the trend in the unemployment rate over the period in question is the same; the rate increased in March & April and eased in May.”
They specifically noted the issue in the latest report by explaining that if they adjusted the rate for the potential miscalculation, it would increase from 11.1% to 12.1% (which is lower than the adjusted rate of 16.4% last month). They went on to say:
“However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”
Does the shutdown of parts of the economy skew the unemployment numbers?
Because the uniqueness of 2020 impacts the employment situation in so many ways, each jobs report is now examined with a microscope to make sure the headlines generated by the report accurately convey what’s happening in the job market.
One such analysis is done by Jed Kolko, Chief Economist at Indeed. He believes the extraordinary number of people in the “temporary” unemployed category confuses the broader issue of how many people have permanently lost their job. He adjusts for this when calculating his “core unemployment rate” (which subtracts temporary layoffs and adds unemployed who didn’t search for a job recently).
The bad news is that his analysis reveals that the number of permanently unemployed is still rising (from 4.6% in April to 5.9% last month). The good news, however, is when you use his methodology to look back at the Great Recession, today’s “core unemployment rate” is significantly lower (5.9% versus 10.5% in April 2010).
Last week’s jobs report was much better than most expected. However, we should remain cautious in our optimism. As the Wall Street Journal explained in their analysis of the jobs report:
“U.S. job growth surged last month, underscoring the economy’s capacity for a quick rebound if businesses continue to reopen and consumers regain confidence. A recent coronavirus spike, however, could undermine trends captured in the latest jobs report.”
** Data in this report reflect market activity from JUNE 2020 compared to the previous month and year. Information is gathered from the Reno-Sparks Association of Realtors® (RSAR) for the Greater Reno-Sparks region via Northern Nevada Regional Multiple Listing Service (www.nnrmls.com). Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.
Here is the market overview:
And here are a more detailed look at the stats for June 2020 compared to the previous month and year:
- In May 2020, the Median Sales Price for single-family re-sale properties in Reno-Sparks combined was $407,000, a 1.8% increase from both May 2020 and June 2019. The median sales price over the last year has hovered around the $400k mark and appears to remain steady at this time largely due to high buyer demand and low inventory.
- # of Units Sold leaped 32%, month-over-month from 396 to 537. The sales volume in the month of June, was down just 6% compared to June 2019. This statistic represents properties that most likely went into contract in May this year. As a side-note, 37.6% of the sold inventory closed with a sales price between $300,000 and $399,000. Only 1 single family residence sold under $199,999.
Months Supply of Inventory (MSI) is down 41% from May 2020 and plummeted 48% from the same time last year. MSI absorption rate accounts for the time it would take to “sell out” of the Reno-Sparks inventory at the current rate of sale if no new listings were to come to market. A balanced market is around 5-6 months of supply. The 1.3 months supply, is very much in a “Seller’s Market” as it is well below the balanced level.
As observed in the graph above, the Months Supply of Inventory is extremely low for properties selling under $750,000. The inventory supply increases to a more balanced level for properties selling over $750,000 with a slight edge for the buyer in this price range.
The Average # of Days from Listing to Contract in June 2020 inched up a couple of days to 40 days. Single family residences are taking about 7% longer to sell this year than in June 2019, and 5.5% longer than May 2020. These averages account for all price ranges.
Above is the breakdown of the Average Days to Contract by Price Range in June 2020. Note that only 1 single family residence sold under $200k in June 2020 and it took 2 days to obtain an acceptable offer.
Sellers continue to receive an average of 98.9% of asking in June 2020. This statistic has held fairly consistently over the last few years. Please note that price reductions may have occurred prior the acceptance of an offer.
What is a distressed sale? It is a sale caused by economic hardship. A short sale occurs when a homeowner defaults on his/her mortgage payment and is unable bring payments to the lender current, and is therefore forced to sell the property for less than the balanced owed. A Foreclosure occurs when a lender repossesses real property after the borrower defaults on the loan and does not successfully sell it prior to this event. The percentage of distressed sales on the market declined 7.3% month over month, and is 27.5% lower than in June 2019. Only 1.4% of homes sold in June 2020 were considered “distressed.”
Since the April 2020, the # of New Contracts has doubled (during May and June 2020). June 2020 saw 27.5% more New Contracts (779) than the same month last year.
# of New Listings to hit the market in June 2020 increased by 8% month-over-month. Our # of New Listings in June 2020 are down 17% from the same period of time last year.
- The absorption rate at 1.3 Months Supply of Inventory is the lowest it has been since April 2018. On average, at the current rate of sale, the active inventory would be completely absorbed in 1.3 if no new properties were brought to market. Inventory, in general, is extremely low and moving very quickly (particularly homes priced under $750k).
- The Median Sales Price at $407,000 is slightly higher month-over-month and year-over-year (+1.8%), continuing to hold steady through the economic recession due to COVID-19.
- Distressed sales still comprise a very small percentage of the active inventory… only 1.4% of all single family residence sales in June 2020.
- The # of New Listings for June 2020 inched closer to more typical levels for this time of year.
- The continued increase in the # of New Contracts for June at 779 indicates an increasing level of purchasing activity in our area.
- If this the right time for you to make YOUR move? Whether you are buying, selling or doing both, I would be happy to assist you in coordinating your efforts for smooth transactions and transitions. Email me at firstname.lastname@example.org or reach me directly at 775-233-0682.
The pandemic has caused consumers to re-examine the components that make up the “perfect home.” Many families are no longer comfortable with the locations and layouts of their existing homes. The allure of city life (more congested) seems to be giving way to either suburban or rural life (less congested). The fascination with an open floor plan seems to be fading as people are finding a need for more privacy while working from home.
Recently, news.com released a report that revealed how buyers’ views of listings are leaning heavily to more suburban and rural properties. Here are the year-over-year percentage increases in views per property type:
- Urban – 7%
- Suburban – 13%
- Rural – 16%
In the report, Javier Vivas, Director of Economic Research for realtor.com, gives these numbers some context:
“This migration to the suburbs is not a new trend, but it has become more pronounced. After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”
Realtor Magazine also just reported that the desire to move is strongest in our city markets:
“Nearly 30% of respondents living in a high-density urban area say that the pandemic is prompting them to want to move by the end of the year…This is more than double the rate of those living in rural parts of the country, where residents are much more likely to stay put rather than to relocate.”
New Construction Also Seeing a Surge in Views
Since the pandemic has altered how consumers think about floor plans, builders are anticipating how future homes will change. In a recent press release by Zillow, it was explained that:
- Builders believe as people spend more time at home during the pandemic, buyers are realizing which features of their homes are working and not working.
- Homebuilders predict open-concept floor plans will be a thing of the past, as people now value more walls, doors, and overall privacy.
- New construction, which offers the chance to personalize home features, saw its listing page views grow by 73% over last May.
The Virus is Even Impacting the Luxury Second-Home Market
“Stay at home orders and social distancing have put a new value on the extra space. We’re seeing this in the luxury market as well, which could mean there is renewed interest from high-end buyers to find a second-home that is within driving distance from their primary residence.
Much like the suburbs are gaining favor with home shoppers, second home markets are seeing increased interest from luxury buyers…Views of luxury properties accelerated 56% in The Hamptons, 28% in Palm Springs and 24% in Greenwich compared to January trends.”
It appears that a percentage of people are preparing to leave many American cities. Some of these moves will be permanent, while others will be temporary (such as a getaway to a second home). In either case, many consumers are on the move. Real estate professionals are ready and willing to help in any way they can.
THE WEEKEND WARRIOR
The Weekend Warrior is your guide for the best events happening around the Reno/Sparks/Lake Tahoe region brought to you by Intero Real Estate Services Reno! The action around Northern Nevada is picking up, both virtually and in-person. Check out the happenings this weekend!
ONLINE AND VARIOUS LOCATIONS AROUND NORTHERN NEVADAArtown… The entire month of July is historically THE MONTH when Reno’s art and culture scene explodes. Daily during non-pandemic times, the parks, plaza, galleries and theaters overflow with locals and visitors here to embrace the beauty and intrigue of creativity in every form. This year, Artown performers take most of their performances to the virtual world where we can login and enjoy their works. For those who need to get out of the house, masks and social distancing practices will be exercised at events that are taking place live. Discover all events and classes offered at Artown.org.
JULY 2 (7-9 pm)
POTENTIALIST WORKSHOP (836 E. Second St., Reno)Are you a blossoming comedian? A funny-man or woman in the making? Test your skills for live entertainment at The Curtain Calls Improv/Sketch Comedy Game Show Thursday night, July 2. Should you have the itch to take part, you’re invited to emerge from the audience to indulge in a creative & imaginative fantasy on-stage. This is a donation based admission, and food/beverages are served. For more info about the event and COVID-19 guidelines, visit Artown.org.
FRIDAY, JULY 3 (9-11 pm)
WEST WIND EL RANCHO DRIVE-IN, SPARKS, NVArtown and Cordillera International Film Festival‘s “Movies in the Park” has changed residency this year in an effort to keep event-goers safe. Rather than kicking it on a blanket or beach chair at Wingfield Park, you can snuggle with your loved ones in the comfort of your car at the West Wind El Rancho Drive-In and enjoy the 1997 movie Con Air. Con Air is an action-packed film about a newly paroled ex-con and former U.S. Ranger, Cameron Poe (Nicolas Cage) who finds himself trapped in a prisoner transport plane when the passengers seize control. As an added bonus the showing of the movie is followed by a Q&A session with the film’s Director, Simon West. Free popcorn will be served! Entry is limited, so visit ciffNV.org.
SATURDAY, JULY 4 (10 am-12 pm)
DOWNTOWN RENO, NEVADATake a docent-led tour and learn about the more than 40 murals painted by local, national and internationally-recognized artists. This two-hour walk around downtown Reno gives insights into the area and our eclectic public art. You’ll see a wide range of styles — from graffiti lettering, illustration, landscape and realism portraits. Meet up with the mask-donned, socially-distanced group at the BELIEVE statue in City Plaza (10 N. Virginia St., Reno). A donation of $10 is greatly appreciated. For more information about the mural tour and other public art tours around Downtown and Midtown Reno, visit ArtspotReno.org. Note that the photo above was taken in Midtown and that is my daughter whispering sweet nothings into the ear of the subject.
ANYWHERE ON THE TRUCKEE RIVER YOU WANT TO GET IN & OUTOMG… For those of you looking for a little adventure, you can rent or buy a raft or rafting tube, and make your way down the Truckee River. I just did this last weekend, and it was a blast! Yes, there are some mini rapids depending on where you begin and end your float, so if you are at all uncomfortable with water, don’t do it. Our mini voyage started at Tom Cooke Trail and finished at Doroskar Park. It was only about a 1 mile ride, so a good warmup to test my comfort level for our next longer expedition. Go with a friend and self-guide, or take a tour with a WildSierra.com. Enjoy!
MT. ROSE SUMMIT TRAIL, RENO, NV Are you in need of some post-quarantine exercise? Get your blood pumping and taking in the beauty of the Sierras on a hike of Mt. Rose. Enjoy a 7 mile loop or forge ahead to the summit, 10 miles total. Along the way, you’ll enjoy the serenity of wilderness amidst flowers and grasses, Galena creek, waterfalls, the forest, an ultimately the splendor of Lake Tahoe and the views of the entire Tahoe Basin at the summit. For more detailed information about this gorgeous outing, visit HikingProject.com.
SATURDAY, JULY 4 (12 pm-5 pm)
NATIONAL BOWLING STADIUMRarely is the public invited to make use of the lanes at Reno’s National Bowling Stadium. This 4th of July, the doors are open to all bowing fans, young and old! Space is limited due to COVID-19 restrictions, so pre-registration is paramount. Groups of 2 to 5 who are within the same household may sign up in advance for the family-fun Red, White and Bowl event. Model your masks and your American flag colored outfits and enjoy a bowling session in what National Bowling Stadium that is also known as the “Taj Mahal of Tenpins.” For more information and to register now, visit RenoEvents.com.
SATURDAY, JULY 4 (12-1 pm)
HISTORIC DOWNTOWN VIRGINIA CITY, NVIn place of the traditional Virginia City Independence Day parade that decorates C Street, the historic Northern Nevada mining town hosts a spectacular 4th of July Cruise this year! No registration is necessary to participate. Just start lining up your cruiser at 11 am at Fourth Ward School, located at the junction of State Route 342 and 341 at C Street, at 11 a.m. and creatively adorn your vehicle with your best patriotic-spirited decorations. Business are open at reduced capacity with use of protective measures. Click here to check out an entertaining video of what the annual parade looks like on a normal year. And go to VisitVirginiaCityNV.com for more about the cruise. Please note that the fireworks spectacular has been cancelled.
EVERY WEDNESDAY (Begins at 5 pm)
McKINLEY PARK (925 Riverside Dr, Reno)At Feed the Camel, you and your loved ones are invited to “come hungry with your face covered.” The only trick is how to get the food through the mask… Joke. The beloved weekly food truck event brings in some of the best restaurants on wheels under the Keystone bridge and just across the street from the Truckee River. McKinley Park is your place to establish your own eating space on a blanket or beach chairs, and savor the delicious cuisine our local food trucks have to offer. Learn more at the Feed the Camel Facebook Page.
Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?
According to NAR, the Pending Home Sales Index (PHS) is:
“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”
In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.
Why is this rebound important?
With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph here):
This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:
“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.
If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.
THE WEEKEND WARRIOR
Great news! With the re-opening of businesses and some “altered” events in Reno-Sparks, I am pleased to bring back THE WEEKEND WARRIOR. While it was interesting to look at real estate market statistics and news over the last few months in THE WEEKLY WATCH, I will now provide the market update once per month. And naturally, as events and activities pick up in Northern Nevada, my content will grow over the coming months. Stay positive, stay healthy, and enjoy life everyone!
Actually… it’s not just in Reno anymore! Reno Restaurant Week is a fabulous 10-day (Thru June 24) culinary exploration that will fancy your taste buds from Sparks, to Reno, to Carson City. 69 of Northern Nevada’s finest eating establishments open their doors and welcome you in for a wonderful meal out. Then for added fun, do the following:
- Follow @RenoFoodWeek on Instagram
- Follow the establishment you have chosen to visit on Instagram
- Take a photo (or photos) of your food/drinks and/or a photo with the owner/chef/server
- Post photos on Instagram, tag the establishment and @RenoFoodWeek and use the hashtag #RenoFoodWeek in your caption
- Winners will be notified via Instagram direct message the last week of June, 2020.
Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.
For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:
“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”
This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:
The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today.
** Data in this report reflect market activity from MAY 2020 compared to the previous month and year. Information is gathered from the Reno-Sparks Association of Realtors® (RSAR) for the Greater Reno-Sparks region via Northern Nevada Regional Multiple Listing Service (www.nnrmls.com). Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.
Here is the market overview:
And here are a more detailed look at the stats for May 2020 compared to the previous month and year:
- In May 2020, the Median Sales Price for single-family re-sale properties in Reno-Sparks combined was $399,900, a 3.6% decrease from April 2020, and a 2.5% increase from May 2019. As seen in the graph above, the median sales price has hugged the $400k price point over the last year and appears to be steady at this time.
- # of Units Sold inched up 387 to 396 from April to May 2020. The sales volume is down 42% compared to the same month last year. This volume is representative of properties that likely went under contract for sale in April and were in escrow for about 30 days.
Months Supply of Inventory (MSI) decreased 11.8% month over month from 2.4 to 2.1 months supply. This measure of inventory is also about 5% higher than last year. MSI accounts for the time it would take to “sell out” of the Reno-Sparks inventory at the current rate of sale if no new listings came to market. A balanced market is around 5-6 months of supply. Therefore, with a low 2.1 months supply, we are still very much considered to be in a “Seller’s Market.”
The Average # of Days from Listing to Contract in May 2020 was 39 days. Single family residences are taking 20% longer to sell this year than in May 2019, and only 1.6% longer than the previous month. These averages account for all price ranges.
As seen in the graph above, homes that sold in the $200k to $700k range during May 2020 received acceptable offers significantly more quickly than the rest of the market. The $1M to $1.5M range went into contract fairly quickly (66 days) compared to the $750k to $1M range and the $1.5M+ range (108 days).
With Seller’s receiving an average of 99% of asking in May 2020, we continued to see no significant change for this statistic overall. Please note that price reductions may have occurred prior to receiving 99% of asking.
Is the economic impact of COVID-19 pandemic causing foreclosures and short sales in Reno-Sparks at this time? So far, homeowners appear to be hanging in through the highest unemployment rate most of us have ever seen. The percentage of distressed sales on the market did increase 7% month over month, but is still down 30% from May 2019. Only 1.7% of homes listed on multiple listing service were considered “distressed,” meaning a bank-owned/foreclosure or short sale.
The last several weeks of real estate activity have brought a significant increase in the # of New Contracts. Month over month, we saw a 635 New Contracts for sale, a 63.7% leap from April 2020 and a 3.9% increase from last year.
# of New Listings to hit the market the week ending in May 2020 increased slightly by 3.8% compared to April 2020. Our # of New Listings are still down nearly 40% from the same period of time last year.
- Inventory is still low, but what IS on the market is moving, as indicated by the significant increase in New Contracts, which should lead to an increase in sales volume in the coming months.
- The Median Sales Price at $399,900 appears to be fairly steady at this time. Over the last year, the $400k Median has been a benchmark the market has hovered around during the last 13 months.
- The consensus among many real estate professionals is that “summer is the new spring.” The typical influx of activity that happens in March, April and May is beginning happening now. My colleagues and I have been extremely active over the last couple of months.
- With low inventory, however, we’ll need to see if buyer demand for fewer homes listed will continue, and ultimately put more upward pressure on prices again. Will the Median Sales Price start moving up again in the near future? We shall see…
- Buyer activity in Reno-Sparks comes largely from out-of-state, particularly California. While many of our relocation clients are looking to escape the crowds, traffic and high taxes of California during COVID-19 uncertainty, they are finding more reasons now than ever to make that move. We call them “California Refugees,” and we are here to help. Email me at email@example.com to learn more about the many benefits of moving to Reno-Sparks.
Last Friday, the U.S. Bureau of Labor Statistics released their May Employment Situation Summary. Leading up to the release, most experts predicted the unemployment rate would jump up to approximately 20% from the 14.7% rate announced last month.
The experts were shocked.
The Wall Street Journal put it this way:
“The May U.S. jobless rate fell to 13.3% and employers added 2.5 million jobs, blowing Wall Street expectations out of the water: Economists had forecast a loss of 8.3 million jobs and a 19.5% unemployment rate.”
In addition, CNBC revealed:
“The May gain was by far the biggest one-month jobs surge in U.S. history since at least 1939.”
Here are some of the job gains by sector:
- Food Service and Bartenders – 1,400,000
- Construction – 464,000
- Education and Health Services – 424,000
- Retail – 368,000
- Other Services – 272,000
- Manufacturing – 225,000
- Professional Services – 127,000
There’s still a long way to go before the economy fully recovers, as 21 million Americans remain unemployed. That number is down, however, from 23 million just last month. And, of the 21 million in the current report, 73% feel their layoff is temporary. This aligns with a recent Federal Reserve Bank report that showed employers felt 75% of the job losses are temporary layoffs and furloughs.
The Employment Situation Summary was definitely a pleasant surprise, and evidence that the country’s economic turnaround is underway. The data also offers a labor-market snapshot from mid-May, when the government conducted its monthly survey of households and businesses. Many states did not open for business until the second half of May. This bodes well for next month’s jobs report.
We cannot rejoice over a report that reveals millions of American families are still without work. We can, however, feel relieved that we are headed in the right direction, and much more quickly than most anticipated.
The # of New Listings brought to market (116 listings) dropped again, with 18.3% fewer homes being listed the week ending May 30 compared to the week ending May 23. There were nearly 31.4% fewer homes listed this week than during the same week in 2019.
Summing It Up…
- Overall, the Sales Volume and # of New Listings on the market remains low, especially this time of year.
- With New Contracts on the rise over the last several weeks, we should start seeing a subsequent increase in number of Units Sold in the weeks to come as well.
- Sellers are receiving a high percentage of their list price and the Median Sales Price has ticked up to $420k again, likely due to the low-inventory market and steady buyer demand.
- Mortgage interest rates are still extremely low, and many Buyers are taking advantage. Email me today for a highly skilled and knowledgable lender recommendation.
- For more information about the ins and outs of buying &/or selling real estate in today’s market, please do not hesitate to call me at 775-233-0682 or email firstname.lastname@example.org.