Whether it was due to the barrage of political phone calls, rising interest rates or national and world events, it felt as if buyers hit the pause button in October, slowing sales in the Reno real estate market. However, is that correct and, if it is correct, is that bad news? What are the facts?
According to the Reno/Sparks Association of Realtors, Washoe County’s October median price for single family homes of $380,000 was up 1.7 percent from September and up just more than 10 percent from October 2017.
This year, we have seen a smaller increase in the median price each month, which I believe is healthy, considering the affordability factor in the lower price range in the Reno real estate market. This is positive, considering that many millennials are first-time homebuyers, must qualify for mortgages and are faced with rising prices and interest rates.
Other Reno real estate market statistics of note:
- October’s 459 unit sales were up just over 1 percent from September and down 17.3 percent compared to October 2017. I don’t believe this is due to a lack of demand, but a lack of inventory.
- There were 556 new listings in October, which is a decrease of just more than 14 percent compared to September and a slight increase of .5 percent from October 2017.
- Available inventory is down from September, but up 33.5 percent over last year.
- The months of supply of inventory is up to 2.9 months compared to 1.8 months in 2017.
- The price per square foot went up slightly from September and is up 12.6 percent from 2017.
Has the Reno real estate market reached a tipping point?
What do these trends and numbers mean for 2019 and beyond? Lately, it feels as if the only certainty in the Reno real estate market is uncertainty. Opinions from economists and other experts range from a continued great economy to a recession in 2020. Again, let’s look at the facts.
The drivers of the real estate market—job growth, low unemployment, rising wages—remain good. So, I believe the leveling of the median price is favorable.
What happened in the Reno real estate market in the third quarter of 2018 was a healthy, modest attitude adjustment on the part of sellers. I believe this signals the beginning of a normalization of our local market over the next 24 months.
Most people realize we have a shortage of homes for sale due to the lack of building during the recession, from which we have not recovered. At the same time, prices increased by more than 10 percent from the same time last year.
Business development groups, such as EDAWN, at the state and local level, have done a remarkable job of attracting companies and workers to our area. So, we have demand.
The attitude adjustment I referred to earlier comes from sellers who pushed the list price of their properties past the perception and comps that buyers had of market value.
Amy Shocket, a Dickson Realtor in Sparks, calculated that 49 percent of the active inventory in the Reno real estate market was reduced in price in part of the third quarter. I believe this is an important trend because we haven’t seen price reductions for several years.
Reno real estate market forecast for 2019 and beyond
Since everyone has an opinion, I will offer mine. From where I sit, our local 2019 Reno real estate market looks much like 2018. We have demand, we will have a shortage of inventory, and we have a growing population in our area.
The challenges will be rising interest rates and affordability. Sellers need to be realistic in setting the list price of their home by gathering facts from Realtors and other experts about the current market value.
Listing too high can delay a home’s sale and ultimately costs the seller time and money. Delaying a sale may also move a listing into a period when there is more inventory competition.
The 2019 Reno real estate market looks healthy, with many of the same factors that we adapted to in 2018. However, Las Vegas, Los Angeles, Sacramento, San Diego and San Francisco, all feeder markets to our area, are all at risk to have housing crashes in the short future. That will affect our market.
Beyond 2019? We need to watch trends including the state of the economy, new career opportunities, wages and foreign investment in real estate. When the economy is good, people purchase homes.