It seems I get the question daily, “how’s the Reno Sparks
market doing?” Many believe the market is poised for a recovery others feel we
will see a flat line for a couple years. I still have to wait and see. While
there are many positive signs, we still have work to do. The market in Reno and around the country is being propped up
my government “help.” Interest rates are being kept artificially low via
government intervention and the $8000 home buyer tax credit, to name a few. The
Fed outlined their plan to “slowly” scale back their infusion of “support.”
Once the Fed infusions are gone, interest rates will go up. The $8000 tax
credit is due to expire December 1. Many groups are lobbying for the credit to
be extending for at least 6 months. The opposition to the extension claims the
vast majority of buyers would have purchased a home regardless of the tax credit.
I have to agree. So the question is, what impact have these programs had on the
market? No doubt lower interest rates have had a positive impact. My opinion is the sooner the gov. gets out of the
housing stimulation business, the better for all of us in the long run. The
biggest factor in the market returning to a more “normal” state is simple, affordability.
Lower home price coupled with record low interest rates have stabilized many
markets, Reno Sparks included. This has brought home affordability rates to
their best levels in decades.
Let’s take a look at some numbers.
Below is a chart outlining the number of sales by price since Oct. 08. As you can see, the
majority of activity is in the $250k or less price range.
This chart show median home price trends for the Reno Sparks
area. As you can see the median price has held steady the last few months at
around $180k. What’s interesting to note is median prices are well below market
trend lines.
The next chart is median price compare to number of sales. As you can see sales are up and prices are down. Sales are up 51% year over year and median price is down 28% year over year.
So what does all this mean?
On the upside, prices have stabilized, affordability is
great, sales are up, and supply has normalized.
On the downside, there are still a large number of “distressed”
homed that need to be purged from the market. Prices are down for the
year, and unemployment remains high.
I believe we are going to see a stable market, in terms of price
and sales numbers, over the next 1-3 years. The coming rise in interest rates
will most likely slow down price appreciation. As the economy slowly recovers
and unemployment numbers drop, we will see prices start to creep up.
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