Has spring sprung for the housing market?
The Reno/Sparks Association of REALTORS® is optimistic about the outlook for the spring real estate market. Typically, we see a resurgence of interest in both listing and sales beginning in spring and continuing through August.
While prices have recovered from the bottom of the market in January 2012, they seemed to have reached a leveling point. The median sales price has remained in the $290,000-$292,000 price range since July 2015. We see this adjustment as just a rebalancing point in median price. We expect prices will continue to increase in 2016, but we don’t anticipate it will be at the rate experienced during that prior 4½-year recovery period.
Sellers with homes priced between $200,000-$300,000 are in the sweet spot of the market. This segment of the market is seeing the highest volume of activity because of affordability. The down side is that there is less than 3.4 month’s supply of inventory in this price range. Month’s supply of inventory is defined as the amount of time it would take to exhaust the current inventory at the current rate of sales.
It’s still a strong seller’s market, but it has progressed away from the market we were experiencing in the spring of 2013. At that time, sellers were able to keep pushing the pricing envelope upward and were receiving in excess of 101 percent of asking price. Since then, sellers have begun to hit some resistance and buyers have regained some power in the bargaining process. Not much, but it’s measurable. In today’s market, sellers are receiving approximately 98 percent of the asking price.
For buyers, there can be many hiccups on the way to buying the right home or property. Repeat buyers often need to sell their existing home first, finances can be an issue, and someone looking to buy might be skittish because of their job stability. But one of the biggest hurdles REALTORS® report their clients are facing is simply finding the right place. According to the 2015 National Association of REALTORS® Member Profile, the most important factor limiting potential clients in finishing a real estate transaction is difficulty in finding the right property (33 percent), pointing to the low level of inventory Realtors have to work with. Realtors, for the second year in a row, ranked this above the difficulty in their clients getting a mortgage (26 percent). This can be frustrating for buyers particularly when they are seeing pressure from the other side with increasing rental rates. In the Reno area, the rental rate for a 3 bedroom unit was up 9 percent from January 2015.
If a resale home is not an option, we are now seeing new home construction throughout the area. According to newhomesource.com, representing eight area builders, there are currently 229 new homes available in 27 communities in the Reno, Sparks, and Washoe County areas. As of yet, we have not seen an uptick in recorded new homes sales. According to Ticor Title, 89 new homes closed in January and 107 closed in February. The delay in getting new home construction closed may be attributable to winter weather conditions slowing down construction progress, and builders are continuing to struggle with the lack of skilled tradesmen in the workforce to meet the new construction demands.
When buyers do find their dream home, it’s positive news that the federal government has held off on an increase in interest rates. Interest rates remain at historical lows and have been holding fairly steady. They are currently at 3.5 percent to 3.75 percent for borrowers with good credit. The historic low interest rate gives buyers greater power and borrowing capacity.
We are in the period of seasonal lows for new listings, closings and inventories, but there are too many positives occurring in the community to see reasons for alarm. Many of the markers we are seeing are seasonal trends experienced in past years.
For more information about what’s going on the local real estate market, contact a Realtor, a member of the Reno/Sparks Association of REALTORS® or visit our website at http://www.rsar.realtor.
William Process is the 2016 Reno/Sparks Association of REALTORS® president and a Realtor with HomeGate Realty of Nevada.
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.