For decades the Reno/Sparks housing market appreciated 3% – 3.5% annually. That is until early 2003. At that time we began to notice big upward spikes in our local median price and that continued to be the case through the end of 2005. During that period it was not uncommon to see our median price rise by 10% in any given quarter peeking at over $365,000 in January of 2006.
There are many theories on “why & how” this all happened, I have my own but that’s not the point of this post. I’d like to pose this question, “What would our market look like had we not gone through our BOOM”? Well, I think you’d need to start by looking at our median price back in early 2003. In January of ’03 the median price in Reno/Sparks was around $185,000. If I take that number and annualize it at a 3.25% appreciation rate up through today our theoretical median price should be around $224,000. Ironically, that was almost exactly what our median price fell to at the end of November, 2008. In short, at this moment in time it’s as if the “Boom” never happened in relationship to our median price.
I won’t get caught saying the market can’t get softer. I do believe our median price is likely to drop this coming year. No doubt that Short Sales & Bank Owned homes will dominate many facets of our market. However, I can say a further drop in median values makes no sense when measured against the past 30 years. If you believe in historical trends in Real Estate, we’ve just crossed an important threshold.