Is the Reno real estate market ready for a turnaround?
Maybe. And then, maybe not. Many have the opinion that we have hit the bottom and are already on the way to recovery. Others, however, have a very different view.
In normal economic times I might agree with those that favor recovery. But I don’t see these as normal times. The ruling political class seems hell bent on slapping the US down to size.
There are 80 million baby boomers retiring at the rate of 10,000 a day. Assuming that they downsize over time from an average 2,500 sq ft. home to a 1,000 sq. ft. condo, and eventually to a 100 sq. ft. assisted living facility, the total shrinkage in demand is 4.3 billion sq.ft. per year, or 1.7 million average sized homes. That amounts to a shrinkage of aggregate demand for a city the size of San Francisco, every year.
You can argue that the following Gen-Xer’s are going to take up the slack, but there are only 65 million of them with a much lower standard of living than their parents. Throw in the disappearance of state and federal first time buyer tax credit. You can count on a jump in long term capital gains taxes and state and local property taxes, further diminishing property’s appeal. If you are looking for a final stick to break the camel’s back, how about eliminating, or substantially reducing the home mortgage interest deduction?
Also, mortgage delinquencies increased, according to the Mortgage Bankers Association, suggesting that home prices could slip further.