How does the 2017 home market compare to 2016?
The real estate market this year has been anything but dull. With so many new companies relocating to the area bringing new jobs and strong demand on inventory, finding the right home has been a challenge for many buyers.
What’s interesting is that despite the lack of inventory, sales have been strong. August year-to-date sales at 4,583 were up 5 percent compared to the same period 2016. The same year-over-year trend continued through the summer selling season.
This begs the question — where is the inventory and what are people buying?
A look at new pending sales compared to new listings shows that in past years, new listing inventory typically exceeded the volume of pending sales.
This year, that trend has changed. New listings are tracking closely or being absorbed as quickly as they come on the market. At the current absorption rate, the listing inventory is not keeping up with the demand. New listing inventory year-to-date is down 12 percent from the prior period, or 636 units. In an area that’s stretched as tight as a drum for inventory, this number is significant.
Another way we can demonstrate what is happening in today’s market is to look at the days contract. That is the number of days it took to obtain a purchase contract on a property on the market.
Homes that are priced in the “sweet spot” between $150,000 and $400,000 are being absorbed as quickly as they come on the market. Homes priced under $150,000, something that is nearly non-existent, move even more quickly. Homes priced over $400,000 are incrementally staying longer on the market.
We cannot finish the story without talking about median sales price. As we talked about, the supply of home inventory is small, causing home prices to be on the rise since 2011. The question on everyone’s mind is will home prices go down?
I don’t have a crystal ball, but with the growth projected for the Reno/Sparks area, I don’t see prices going down in the immediate future. As long as there is continued need for housing and the current lack of supply, I think things will continue on the current trend.
This begs the question, is it a good time to buy? I would say yes. If you have good credit, a stable job and desire to be a homeowner, it is a good time to buy or at least investigate if homeownership is an option for you. Will it be difficult and challenging? Yes, in this market it will.
However, there are many misconceptions about the home buying process in this market. The graphic above debunks many of these “scary” misunderstood questions. I would encourage prospective home buyers to talk to their Realtor about the real possibilities of owning a new or move up home.
John Graham is the president of Reno/Sparks Association of Realtors.