BANN Forecast: Experts say short sales mean fewer buyers
BY BOB BRUNDAGE • BBRUNDAG@RGJ.COM • JANUARY 27, 2011

There are fewer buyers in the market because distressed property sellers aren’t buying new homes, one expert said Wednesday at the Builders Association of Northern Nevada’s annual Forecast 2011 and Beyond at Atlantis Casino Resort Spa

Ken Amundson, immediate past president of Reno Sparks Association of Realtors and managing broker for First Choice Realty 500, pointed out a third of the sellers are banks that are unloading bank-owned properties and one-third are short sales in which the seller comes out with bad credit.

One group isn’t willing to buy and the other isn’t able.

“That’s a major change in our society,” Amundson said.

But, we might finally be nearing the bottom of the market, Amundson and the other speakers at Forecast 2011 and Beyond said.

“All aspects of the market appear to be leveling off,” he said. “Our goal for 2011 is to maintain. We’re looking to 2012.”

One advantage for 2011 is that building a new home will be a more profitable venture, mostly because land prices are drastically lower than they were five years ago during the boom.

Mark Kruger of Grubb and Ellis provided an example.

“A property that sold for $37 million in 2005 was resold for $3.8 million in 2010,” he said. “That’s approximately 10 percent of it’s original value. Land prices are bottoming out. I see them staying flat in 2011, and hopefully headed the other way in 2012.”

“We certainly have a ways to go before we recover, but I think recovery is more of a general roller-coaster ride like a carnival at the local shopping center, and not an up escalator at a mall,” Amundson said. “It’s not smooth and easy like that, or predictable. We have some bumps, but I don’t think we have a thrill ride coming like we did before.”

A ‘healthy economy’

Dr. Elliot Eisenberg, a senior economist for housing policy for National Association of Home Builders, gave a well-received speech to the nearly-packed house on the economic impact of home building.

Eisenberg cited a NAHB study that shows the home-building industry not only pays for itself, but its economic impact results in new income and jobs.

“Our national economy requires housing to be healthy to have an overall healthy economy, just as the country needs California to be healthy,” he said. “It’s too big of a sector to be ignored as a state. Housing is the same way. In every recession in the past, getting out required housing to get undone. Housing in those recessions got undone very quickly and pulled us out.”

For every 587 single-family homes built during the 12 months ending June 30, $69.6 million in revenue will be generated. That’s compared to $46.9 million in costs over the next 15 years. Collectively, new single-family housing produces a net income to local governments of $11.2 million in the first year and $829,100 each year thereafter.

“These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new-home construction here in the Reno-Sparks metro area,” Eisenberg said,

“Now we need housing to get better,” Eisenberg said. “There are things we can do to make housing better in terms of fees and land situations — zoning rules, impact-fee requirements and planning and all of those things — lets do it to help housing and to help ourselves and grow jobs. It’s much too large a sector of the economy to ignore or to say it will get better by itself.”

Tim Ruffin of Colliers International and Mike Hix of First Independent Bank also spoke at the breakfast.