If you’ve been following real estate in Reno and Sparks, you’re probably wondering what to expect next. From record low inventory levels to home prices skyrocketing to interest rates rising, it may seem like the housing market has gone from one extreme to another.
Well, that’s because it has. But now we’re breathing a sigh of relief as a sense of normalcy returns to the market. In May 2022, more available homes were listed for sale, meaning buyers had more options, which led to fewer bidding wars. At the same time, home sales remained strong, and sellers received more than their asking price.
However, with less homebuying competition, many homeowners in the U.S. have started dropping their asking price. Although we haven’t seen this trend significantly impact the Northern Nevada region, the housing market is adapting to rising interest rates and inflation.
Edward “Tim” Pick, Co-President of Morgan Stanley, explains what many are experiencing, like this:
“It’s an extraordinary moment. We have our first pandemic in 100 years. We have our first invasion of Europe in 75 years. And we have our first inflation around the world in 40 years. When you look at the combination, the intersection of the pandemic, war, and inflation, it signals a paradigm shift, the end of 15 years of financial repression, and the next era to come.”
So, no matter what side of the market you’re on, don’t be discouraged by its changes. We’re sharing what happened in May 2022 and how you can use this information to your advantage in the upcoming months.
How The Real Estate Market in Reno/Sparks Is Changing
Home Sales Remained Strong
While the real estate market in Reno and Sparks may be cooling off or shifting with the economy, home sales grew to 517 in May 2022. This number represents a 4.5% increase month-over-month and a 5% decrease year-over-year. It also indicates a seasonal trend of more people selling their homes as we head into the summer. And, to only be down by 18 units sold from the previous year—which had significant buyer demand—means that the Northern Nevada market has remained strong.
Median Home Prices Topped The Charts
In May 2022, the median price for a home reached $615,000, representing a 3.4% increase from the previous month and a 23% increase year-over-year. Although this indicates another record high for the region, we expect the growth of median home sales prices to return to the typical rates we see gradually.
There are several reasons for this, including the simple fact that the current prices are not sustainable, and as a result, mortgage rates have started to rise. It is also important to note that this median price includes homes that went into contract in previous months but closed in May 2022. Let’s talk more about some of the other indicators for why the market is balancing out.
More People Listed Their Homes For Sale
For the last two years, since the pandemic started, many of our market updates have covered the high demand and low supply for real estate in Reno and Sparks. But, since the first quarter of 2022, we’re started to see more homes for sale. In May 2022, there were 735 new listings, representing a slight decrease month-over-month but an 18.4% increase from the previous year. Although this percentage represents a slight change from April 2022, we’ve started to reach pre-pandemic numbers, providing buyers in Northern Nevada with more options.
Active Inventory Levels Grew
To get the bigger picture of inventory, we look at the number of available homes listed for sale each month, known as active inventory. In May 2022, the real estate market for Reno and Sparks had 785 homes actively listed for sale, representing a 28.5% increase month-over-month and a 101.8% increase year-over-year.
This percentage for the previous month and year indicates that inventory has made a significant comeback since the housing shortage driven by the pandemic. Typically, active inventory levels range from 600 to 1000. So, as we head into further the warmer months and the market continues to stabilize, we can expect more homes to pop up for sale.
Demand Cooled Slightly
As an indicator of demand for real estate in Reno and Sparks, we measure the number of homes that go into contract every month. In May 2022, 490 homes went into contract, representing a 3.2% decrease from the previous month and an 18.7% decrease year-over-year. This number is significantly lower than the last year when almost three-quarters of home offers faced bidding wars. So, with more available housing options and mortgage rates rising, we’ve started to see buyer demand slow.
Sellers Received High Offers for Their Homes
Another excellent indicator of demand is the amount sellers receive for their homes. In May 2022, the average asking price for a home was 101.4%. This means that homeowners received more than their original listing price. However, this number also represents a slight decrease month-over-month and a 2.6% change from the previous year.
So, while sellers received more for their homes, we’re not seeing over asking prices of 103.5% as we did in the first quarter of 2021. In a more well-balanced market, sellers typically receive 98% to 99% of their original listing price.
Despite More Options, Homes Sold Fast
With all these factors considered, homes are still selling quickly. To show the speed of the market, we measure how many days it takes for a home to go into contract. In May 2022, it took seven days for a home to leave the market, representing a 16.7% increase month-over-month and a 40% change from the previous year. Although this year-over-year number is quite significant, it remains historically low for the Northern Nevada region. Before the pandemic began, it could take, on average, 40 to 60 days for homes to go into contract.
Follow These Quick Tips For Real Estate In Reno And Sparks
Buyers: While mortgage rates are rising, more homes are available, so there could be less competition for the home you want. But don’t wait too long—many experts expect interest rates and home prices to continue rising for the remainder of the year. So, if you’re ready to buy, now is the time to figure out how much you can afford, get preapproved for a mortgage, lock in a rate, and contact one of our neighborhood experts to help you with one of the most important transactions you’ll make.
Sellers: It’s becoming more apparent that the marketing is beginning to stabilize as higher interest rates impact what buyers can afford. However, as a seller, you still have the upper hand. Don’t let homes taking slightly longer to get into scare you from listing—there is still strong demand for real estate in Reno and Sparks. But if you want to boost the value of your home and stand out, you can follow these tips for selling your home right now.
At Dickson Realty, we provide monthly updates for clients and community members to know what’s happening with real estate in Reno/Sparks and what to expect next. For more information on housing opportunities, contact our experienced team of REALTORS today.
