The 2019 year end report is quite revealing this year, read on if you'd like to learn more.
Median Price: In the first quarter Reno & Sparks saw a decline in median price and a drop in available inventory at the same moment in time. Also, there were only 253 closed residential sales in February of 2019 which is just over 50% of what we normally see that time of year. These indicators had many predicting the beginning-of-the-end of our real estate appreciation boom. As it turned out, our market came raging back in April ending the year with a 7.7%, year-over-year appreciation rate which exceeded many expert forecasts.
Affordability: Sadly, this remains a big challenge for our market and the cause of the problem is not difficult to diagnose. According to the US Census Bureau, Washoe County’s median household income has increased by 1.4%, to $63,310, over the past five years. In that same period-of-time, the median sales price for single family homes in our area has risen by 60%. There’s not a lot of good news to share on this topic but sources are reporting an increase in residential building permits and a softening of building regulations in zoning (lot size) in some cases.
Inventory: This is a hot topic among local brokers and agents. As of this moment, our active inventory is down 33% compared to last year while the demand for single family homes only seems to be growing. Any agent that’s worked an open house or builder’s sales office recently will report meeting a lot of Californians fleeing rolling power brownouts and state income taxes. Over the past five years we’ve learned that low inventory coupled with high demand often leads to big spikes in prices, particularly when we’re dealing with a high volume of cash buyers, many unconcerned about appraisals.
Rental Rates: I don’t have any up to the minute stats to report but it’s clear to anyone involved in property management that demand seems to be waning just a bit. Rental rates and low vacancy remain steady but anecdotally, properties that were renting in 3 – 4 hours last year now require 3 – 4 days. We feel this is mainly due to the unprecedented apartment construction we’re seeing in the area. The recent Johnson/Perkins/Griffin Apartment Survey reports that there are over 9.000 additional units in the planning and construction phase now.
New Homes: Hard data is difficult to come by but clearly there are more new homes to choose from now than there have been over the past several years. In fact, you’ll currently find more than a dozen new projects in South Meadows alone. The big challenge for our local builders is the current labor shortage. The State of Nevada is reporting that over 10,000 new jobs were created in Reno & Sparks last year while unemployment hovers around 3%. Coupled with our current shortage of “work-force” housing, it’s not likely that we’ll solve this problem anytime soon.
Luxury Homes: This part of our market has absolutely turned around over the past couple of years. In 2014, MLS reported 165 closed sales of $1,000,000 or more. Last year we closed 360 $1,000,000+ transactions and the lower end of that segment spent most of the year with less than six month’s supply of inventory (MSI) on the market at any given time. While a six-month MSI might sound like a big number, we were working with 26 months back in 2016.
See back for 2020 predictions
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2020 Predictions
* Barring any geo-political catastrophe and in consideration of the looming election, I feel that our market is likely to appreciate between 5 – 10% in 2020. Driven by relocating Californians of course, single level homes with an “in-town” location will lead the way.
* Low inventory will continue to drive our market. At certain times and price points we will find ourselves in the midst of very high demand and multiple offers.
* Apartment construction will continue on its’ historical trend further relieving the affordable housing shortage but not creating new homeowners.
* We will see more luxury custom “spec” homes enter the market in places like Somersett, Arrowcreek and Wingfield Springs.
* It’s likely that we’ll see more government intervention to address the affordability crisis.
* If you’re considering a “new” home in Northern Nevada this year, plan on construction delays.
Well, that’s it for now. I hope you found this informative and as always, please don’t hesitate to call or write, no matter how trivial your real estate question might seem. dan@nvhomeconnections.com