The Reno/Sparks real estate market is still on fire with low inventory available and high demand, but fortunately it is starting to stabilize. Recently Reno was ranked number 42 on Livability.com’s best American cities to live in due to its growing job market, abundance of recreational activities, and it being pet-friendly. However, while it’s still a highly sought-after place to live, historically low interest rates continue to make this a good time to buy.
The RSAR (Reno Sparks Association of REALTORS) reports that there were 516 active listings in the Reno/Sparks area at the end of October, a 4.6 percent decrease from last month. However, in comparing it to October 2020, there was nearly 50 percent more inventory available in October of 2021. Strong demand has caused properties to go into contract more quickly, oftentimes with multiple offers.
“We have been in kind of an overactive, crazy market. We thought that COVID-19 would slow things down, but it did the opposite and speeded things up,” says RSAR President Gary MacDonald. It seems that at the height of the pandemic when people didn’t have to go into the office, they started thinking about relocating into more remote, tax-friendly areas like Northern Nevada.
“We still have short inventory, and it’s a strong sellers’ market now,” MacDonald says, “but we’re approaching the one-month supply in inventory in homes under $400,000 rather than the seven-day inventory we’ve been seeing.
“The thing everyone wants to know is if the market is going to back up at all, and my answer is ‘no’. A normal supply is a six-month inventory that doesn’t favor the buyer or seller. However, right now there’s high demand and low inventory, which still makes it a sellers’ market,” he adds, explaining that sellers have greater negotiation power when inventory is low.
Once again, the Reno/Sparks area set a record monthly median single-family home sold price at $540,000 in October of this year; an 18.5 percent increase from October 2020. The RSAR recognizes though that this market’s rapid pace of increase is unusual and not expected to last long term.
For people looking to purchase a home right now, MacDonald recommends that cash buyers should be prepared to easily produce proof of funds in their account to close on the deal, and those in the financing realm should have a professional realtor by their side as they navigate the transfer of ownership.
“It’s a complicated market so it’s best to work with your chosen lender and go through the process of the appraisal, home price, and underwriting as early on as you can. Get the financing further along early in the process so you’re ready to go with the letter when you make an offer,” MacDonald says.
While the local real estate market is still somewhat hot, it is showing signs of slowing down as we go into winter. The RSAR reports seeing some stabilization as demand is satisfied.
When observing that it seemed that homes under $200,000 in the Reno/Sparks area appeared to be on the market for seven days in the summer and then fell out of escrow, MacDonald believes that it could be attributed to people making offers sight unseen (which seems to have slowed a bit), unrecognized contingencies in condominium developments, and perhaps issues with passing inspection. The RSAR measures inventory in months or days, referring the amount of time it would take to sell all existing homes when no new homes are listed within that period. Using this model, the RSAR observes that there has been 5.9 days of standing inventory for homes priced below $400,000 and 25 days of inventory in the $400,000-$700,000 range. In October 2021, the RSAR announced that there was still a 1.9 percent increase in home prices from the previous month.
“I think it’s slowing down a bit but as long as the demand stays high there’s continued upward pressure on pricing as long as there’s low inventory for sale. Right now, we’re seeing shortages in aluminum, glass, construction materials, and that affects the real estate market and is pushing up pricing in homes, too,” says MacDonald.
He does believe that now is still the best time to buy a home, though.
“We’re at historically low interest rates making this an excellent time to enter the market or move up to a home that better meets the needs of your lifestyle. And everyone is talking about inflation…with inflation normally comes pressure on interest rates. If interest rates go up, then a year from now you’re going to end up buying less house for the same cost,” he adds.
MacDonald also believes that during the holidays when the weather is a little sketchy, people motivated to buy a home have another advantage…
“In the stormy windy days, you may be the only one out there looking at homes,” MacDonald says. If you really want to seal the deal, though, he reiterates that it helps to have a professional realtor helping you negotiate to get into your dream home.
“Right now, the real estate market is complicated, it’s not easily navigated. That’s why having someone by your side that has your best interest in mind is key,” MacDonald adds.
