Much like the rest of the country, the Reno-Sparks residential housing market has experienced record-high home sale prices since the beginning of the year. If you read our Q1 2022 update, you know that inflation In the United States has reached a nearly 40-year high, and mortgage rates have also risen by whole percentage points.
Still, homebuyers have shown resilience despite the rising mortgage rates, which have increased monthly payments by about one-third compared to the previous year. However, in April 2022, active and new inventory levels grew, and prospective buyers had a little more room to breathe.
Keep reading if you want to learn more about the Reno-Sparks residential housing market and what experts are saying about home price growth for the remainder of the year.
Looking At the Big Picture Forecast for The Reno-Sparks Residential Housing Market
With fewer buyers scheduling tours and more homes for sale, many experts believe the housing market is leveling out. Since Q1 2022, the Federal Reserve has put upward pressure on mortgage rates in response to elevated inflation, and it’s working—the pace of home price growth is likely to slow.
But this doesn’t mean a housing crash is coming soon or that housing prices will drop. In Northern Nevada, there are two significant market drivers: strong buyer demand and lower-than-average inventory levels.
Home Values Increase Over Time with Economic Trends
To better understand how the Reno-Sparks residential housing market fluctuates with economic factors, it’s essential to look at historical trends. This graph created by the Center for Regional Studies at the University of Nevada, isolates the volatility that we’ve seen in the last two decades and provides a clear picture of the factors impacting the housing market.
From 1990 to 2001, the price of single-family homes in the Reno-Sparks residential housing market grew about 4% per year. Then, from 2002 to 2021, the average appreciation rate increased to about 6%, when all factors were equalized. This chart, created by Brian Bonnenfant, the Project Manager for the center, shows that if home prices had grown steadily at 6% over the past 20 years, the current median price would sit at $546,000. While that’s about $45,000 less than the current median price, it is in the ballpark.
Northern Nevada Home Prices Kept Climbing
In April 2022, the median price for a home in the Reno-Sparks residential housing market reached $595,000, representing a 3.5% increase month-over-month and a 20.6% increase from the previous year. While this year-over-year percentage has grown significantly since April 2021, home price growth is expected to slow as mortgage rates rise and more homes become available. However, as mentioned above, deceleration doesn’t mean prices will fall sharply. Instead, we’re likely to see slower growth than in previous years.
Active Inventory Continued Rising in Reno-Sparks Residential Housing Market
Since the housing market is constantly changing with an influx of listings, we use active inventory as a more dynamic metric to provide buyers with a better picture of available homes for sale in a given month.
In April 2022, the Reno-Sparks residential housing market had 557 homes actively listed for sale, representing a 43.6% increase month-over-month and a 46.6% increase year-over-year. So, although the Northern Nevada region is still experiencing lower-than-average inventory levels, this number shows that supply has grown significantly in the last year. Typically, active inventory levels range from 600 to 1000.
Buyers Had More Options to Choose From
We can also measure inventory by examining the number of new listings that came to the market in the past month. In April 2022, there were 734 new homes listed for sale in Reno and Sparks, a 22.9% increase from the previous month and a 10.7% increase year-over-year. This number is consistent with seasonal trends and averages about the same compared to previous years. But apart from seasonality, some believe inventory is increasing enough to begin closing the gap between demand and supply.
Buyers Not Yet Deterred by Higher Mortgage Rates
We measure the number of homes that go into contract every month to gauge demand. In April 2022, 531 homes went into contract, which is 10.4% higher than the previous month—a great indicator that the rising mortgage rates haven’t deterred buyers in the Reno-Sparks residential housing market. However, this number also represents a 6.2% decrease year-over-year, down 35 contracts from April 2021.
Less Competition in The Market Affected Asking Prices
Another excellent indicator of the strong demand for homes in the Reno-Sparks residential housing market is the amount buyers will pay for a home compared to the price sellers list. Since March 2020, sellers have received more than their original listing price due to the high demand for housing and buyers offering more than the asking price.
In April 2022, the average sold price for a home was 101.4% of asking price, which worked in the seller’s favor. However, this percentage also represents a slight decrease month-over-month and a 1.5% decrease from the previous year. So, while demand for homes in Northern Nevada remains strong, we can expect fewer over-ask offers as mortgage rates continue to rise and more homes are listed for sale.
Home Sales Slowed Down
In April 2022, 485 homes sold, down 3.2% from the previous month and 17.1% year-over-year. This number is typically higher during the first quarter of the year. In April 2021, 585 homes were sold in the Reno-Sparks residential housing market.
However, homes are still selling at an accelerated pace. To show the speed of the market, we measure how many days it takes for a home to go into contract. In April 2022, it took six days for a home to go into contract. Although this number represents a 20% increase from the previous month and a 0% change year-over-year, the market is showing signs of balancing out as rising mortgage rates put pressure on demand. Before the market turned red-hot in Q1 2020, homes would take 40 to 60 days to go into contract.
How To Find Success in This Market
- Buyers: If you’ve decided that now is the right time to buy a home, you should concentrate on your financial situation by getting preapproved for a mortgage and saving for a down payment. There’s also more inventory available, so you shouldn’t feel like you’re bumping as many shoulders. However, homes in Northern Nevada are leaving the market in less than 10 days, and prices aren’t expected to drop anytime soon.
- Sellers: Although mortgage rates are rising and more homes are available for sale, buyer demand in the Reno-Sparks residential housing market remains strong. But don’t wait too long to sell your home—now is the time to take advantage of the market. One of our neighborhood experts can help you position your home perfectly in the market and make it stand out to interested buyers.
Every month, Dickson Realty shares monthly updates on the Reno-Sparks residential housing market. Connect with one of our neighborhood experts today for more information about living in Northern Nevada.
