With the Federal Reserve raising interest rates for the third consecutive time to tame inflation, and continued economic uncertainty around a potential recession, those who are buying a home in Reno and Sparks are facing a very different housing market.
Yet, different doesn’t mean disaster for first-time homeowners looking to enter the market or existing homeowners thinking about selling.
Here are a few considerations for Northern Nevadans to navigate today’s housing market.
How To Navigate Selling Or Buying A Home In Reno-Sparks During A Potential Recession
First, a recession doesn’t equal a housing crisis. Whether we’re in a recession or teetering on one, this housing market isn’t a bubble that’s about to burst.
What we’re experiencing in Reno/Sparks tells us it’s not a bad market, it’s a different market. We’re not facing the same crisis witnessed in 2007-2009 due to high-risk mortgages and extinct lending practices.
Historically, there’s proof that when the economy slows down, it doesn’t mean home values will depreciate. What we’re seeing now is an increase in residential housing inventory, more moderate buyer demand, fewer bidding wars, homes selling below asking price and buyers having more leverage to negotiate. With increased inventory, buyers have more options and time to find what suits them, rather than compromising. Now is the time for sellers to price appropriately and consider concessions to incentivize buyers’ interest.
But there’s no doubt we’re all anticipating the Federal Reserve’s next moves. Jerome H. Powell, chair of the Federal Reserve, has signaled that interest rates are likely to continue increasing for the purpose of curbing inflation.
Higher interest rates and larger mortgage payments aren’t ideal, but as uncertainty around the future increases, it may serve some consumers to lock in the “devil that you know,” now.
Clearly, there’s no “housing market crystal ball” and no guarantee for what the Reno/Sparks housing market will look like months or years out and whether buyer demand and housing prices will increase. Consumers must assess current market conditions and how best to meet their needs.
If a recession hits (if we aren’t there already), the Feds best bet to fight it is to bring the rates down. For a homeowner, that means embarking on the path of refinancing. What a homebuyer will make back can create a cash opportunity from a home’s value to use toward other costs.
In contrast, if you’re renting, you’re at the behest of market volatility, rising monthly rental rates, a landlord’s business decisions, and lease terms. The option of refinancing a rental payment during a period of reduced interest rates is not an option. Not to mention, the economic cool-down effects that interest rate hikes are intended to accomplish won’t be felt within the rental community for at least a year. Some renters are considering buying a home in Reno-Sparks, moving to a locked mortgage payment as one way to save money in the long run.
Homeownership grants a few other perks, too— namely stability, tax write-offs, and investment. For those who don’t have retirement plans, real estate is a great investment and the earlier you invest, the better off you’ll be due to appreciation. If not retained for retirement, that appreciation could even allow you to upgrade into a better property.
Those unsure if they have enough for a down payment on a home purchase can consider the many down payment assistance programs available.
Navigating the housing market during today’s uncertain times is not for the faint of heart. Whether you decide to buy, or sell, consider your options and what’s best for you now and in the future.
This article was originally posted by the Reno Gazette Journal. Published on September 21, 2022. Fearing a recession-fuel housing crisis? Don’t. Here’s Why.
At Dickson Realty, we are proud to share up-to-date information about the Northern Nevada economy and how it relates to selling or buying a home in Reno-Sparks. For more information, visit our contact one of our experienced REALTORS today.
