RENO/TAHOE - Katie Elliott unfailingly cautions her first-time homebuyers in Reno and Sparks that they're about to enter a highly competitive arena filled with multiple offers, bidding wars and frequent rejection.
They usually don't listen at first, says the Dickson Realty agent. But after an experience or two in the fast-changing residential market, a market where it's not unusual for a seller to get a dozen or more offers within a day or two of listing a property, Elliott's buyers wise up fast.
The residential market clearly has taken a sharp turn for the better.
Still, there's disagreement among realty professionals about the reasons that things have become so much better in the past 10 months, and much depends on which school of thought is proven to be prescient.
A handful of statistics summarize the story: The median price of existing homes sold in Washoe County has risen by nearly 30 percent since the start of this year - from $135,000 in January to $175,000 in August.
From July to August alone, the inventory of homes on the market in Reno and Sparks fell by more than 8 percent, says Theresa Thomson, a Realtor with Prudential Sierra Nevada Properties in Reno.
Craig King, chief operating officer of regional brokerage firm Chase International, notes that the current inventory of existing homes on the market - roughly 800 - is half of the figures that were common during the frenzied days of mid-2005.
Plus, King notes, the number of newly constructed houses on the market is only a shadow of the number built during the boom. The question that divides real estate professionals: Why are inventories so tight?
Nancy Fennell, president of Reno-based Dickson Realty, says a year-old state law - everyone knows it as AB 284 - that dramatically tightens the documentation standards on foreclosures is playing a critical role in tighter inventories.
Lenders are sufficiently spooked by the law, which includes criminal penalties, that they've dramatically reined-in foreclosures. Statewide, notices of default to homeowners fell from 5,000 in September 2011, the last month before the law took effect, to about 600 a month later. That's been good news for people who faced losing their home; it's been bad news for people who want to buy a house and now face higher prices because the supply is so tight, Fennell says.
The Nevada Supreme Court a few days ago validated a part of the disputed process, allowing foreclosure on loans involving the Mortgage Electronic Registration system, a database that tracked loans as they were repeatedly sold and split apart in the secondary market.
AB 284 may get a fresh look from next year's Legislative session. Even if it changes, much depends on how lenders react - moving foreclosures into the market in a measured fashion or moving quickly to clean up their balance sheets while prices decline.
King, however, thinks that the impact of AB 284 has been dramatically overstated.
"It's had a limited effect," he says, noting that the same economic fundamentals that are strengthening the residential market in northern Nevada are at work in once-troubled markets such as Phoenix and Southern California.
Record low interest rates are attracting buyers, he says.
Pent-up demand, particularly among first-time buyers, is driving the market. Young people who've lived in their parents' basements for several years are eager to get into a house of their own.
People who were forced into a short sale during the worst days of the crisis have regained their courage - and their financial resources - and are coming back into the market.
And investors, both individuals and investment funds, are putting money into single-family homes to earn returns better than anything they can get from a bank.
At the same time that those factors are pushing demand, King says a paucity of new-home construction in the region keeps inventories in check. Those market factors, he says, create sustainable growth no matter what the Legislature might do with AB 284.
Whatever the reasons that the market has tightened dramatically since late spring, Thomson says agents are watching new listings minute-by-minute.
"When something comes on the market, you've got to get out there with your buyer," says Thomson. "You don't want to wait a day. Maybe not 12 hours."
It's not unusual, Thomson says, for several real estate agents, their buyers in tow, to be waiting in line outside a newly listed home.
That creates angst among buyers, says Elliott, because they're spooked about the possibility of becoming the victims of a temporary rise in prices at the same time that they worry that they won't be able to get into house.
But so far, she says, buyers generally aren't making ill-considered, panic-driven decisions.
Doing her part to bring more inventory onto the market, Thomson seeks out homeowners who have stopped making payments that they can no longer afford. She tries to convince them to work with their bank on a short sale, rather than hunkering down while they wait for a foreclosure to begin.
And she says more traditional sellers - people who aren't forced to sell - are beginning to put houses on the market as they're convinced they might get an attractive price.
All this is cold comfort to families who are weary of bidding wars and drop-everything-right-now visits to newly listed homes.
"Buyers are stressed," Thomson says. "They just want a house."