Reno-Sparks real estate: Have we reached the tipping point? (opinion)
Special to the NNBV
RENO, Nev. — Whether distracted by the barrage of political phone calls, rising interest rates or national and world events, it felt as if buyers hit the pause button, slowing home sales in our area. But is that correct and, if correct, is that bad news? What are the facts?
According to the Reno/Sparks Association of Realtors, the October median price at $380,000 for Washoe County was up 1.7 percent from September and up just over 10 percent from a year ago.
This year, we have seen a smaller increase each month, which I believe is a healthy leveling considering the affordability factor in the lower price range in our market. This is positive considering many millennials are first-time homebuyers, have to qualify for mortgages and are faced with not only rising prices, but rising interest rates. Other statistics of note:
October unit sales at 459 were up just over 1 percent from September and down 17.3 percent compared to October 2017. I don’t believe this is due to a lack of demand, but a lack of inventory.
October new listings were down just over 14 percent at 556 compared to September and up .5 percent from October 2017.
Available inventory is down from September, but up 33.5 percent over last year.
Months supply of inventory is up to 2.9 months compared to 1.8 months in 2017.
The price per square foot went up slightly from September and is 12.6 percent up from 2017.
What do these trends and numbers mean for 2019 and beyond? Lately, it feels as if the only certainty in the housing market is uncertainty. Opinions from economists and other experts range from a continued great economy to a recession in 2020. Again, let’s look at the facts.
In reviewing the drivers of the real estate market, they remain good — job growth, low unemployment, rising wages — so I believe the leveling of the median price is a good thing.
What we saw happening locally in the third quarter was a healthy, modest attitude adjustment on the part of sellers that I believe signals the beginning of normalization of our local market over the next 24 months.
Most realize we have a shortage of homes for sale, due to the lack of building during the last downtown, which we have not recovered from, and with prices growing more than 10 percent from the same time last year.
Business development groups at the state and local level such as EDAWN have done a remarkable job of attracting companies and workers to our area, so we have demand.
The attitude adjustment I referred to earlier comes from sellers who pushed the list price of their properties past the perception (and comps) that buyers had of market value.
Amy Shocket, Dickson Realtor in Sparks, calculated 49 percent of our active inventory was reduced in price in part of the third quarter. I believe this is an important trend because we haven’t seen price reductions for several years.
Since everyone has an opinion, I will offer mine. From where I sit, our local 2019 housing market looks much like 2018. We have demand — we will have a shortage of inventory — and we have a growing population in our area.
The challenges will be rising interest rates and affordability. Sellers need to be realistic in setting the list price of their home gathering facts from Realtors and other experts about the current market value.
Listing too high will delay your sale and ultimately costs you money. Delaying your sale may mean your listing time moves into a period when there is more inventory competing with yours.
Our 2019 real estate market looks healthy, with many of the same factors that we adapted to in 2018. However, Las Vegas, Los Angeles, Sacramento, San Diego and San Francisco, all feeder markets to our area, have made the top 54 cities predicted to have housing crashes in the short future.
That will affect our market. Beyond 2019? We need to watch trends — the state of the economy, new career opportunities, wages and foreign investment in real estate. When the economy is good, people purchase homes.
Nancy Fennell is president of Dickson Realty. Visit dicksonrealty.com to learn more.
Reno-based design firm MBA Architecture and Design is assisting on the $47 million Caesars Entertainment project in downtown Reno.