The Reno/Sparks housing market is all over the place as inflation, interest rates, and an influx of new people moving to Northern Nevada affects real estate sales and lease agreements. This could be a good thing for the area, though, as supply slowly starts to catch up with demand
Realtor.com recently listed Reno as the number one city in the United States that is slashing home prices the most likely due to higher mortgage rates and rising home prices. Fears of a recession, a volatile stock market, and a large fluctuation in real estate has people tightening the reins on their finances.
“With buyers pulling back, homes linger for a longer time on the market and more homeowners have to slash prices to get a deal done,” says Realtor.com Senior Economist George Ratiu.
The steepest price cuts have been in areas that have attracted out-of-state buyers the most (like those coming into Nevada from California). Gone (for now) are the days when sellers are receiving a dozen lucrative offers coming within hours for their Northern Nevada home as the supply starts to catch up with demand.
According to the Reno/Sparks Association of REALTORS (RSAR) June 2022 market report, in the Reno/Sparks area there were 867 new listings (up 31 percent from June 2021) and there were 1,232 properties in its active inventory, up 214 percent than June of last year. There was an average of 21 days until a home went into contract, a 180 percent increase from last summer, and fewer closed sales.
“This time last year we had less than a half-month’s supply on the market and it was five days to contract,” says RSAR President Sarah Scattini. “This year, we’re seeing it shift with interest rates going up…it takes a little bit of the buying power away from sellers,” she adds.
Scattini explains that currently there is a 2.5-month supply of inventory that will probably go up to three as the weather gets cooler, a sign that the market is starting to calm down. A stable real estate market is generally six months of active inventory.
In Sparks and Spanish Springs, the median sales price for a home is $550,000 (up 14 percent than last June), there are more new listings, a bigger inventory available, and a longer average of days before going into contract.
Rents Remain High
All stats show that the housing market is cooling, but the price of properties and rents are still high. According to Zumper, the average monthly rental price for a one-bedroom apartment in Sparks as of August 1 is $1,455- a ten percent jump from last year. The median rental rate for a 4-bedroom housing unit is $2,848, a 13 percent increase from last year.
The good news is that the rental price for studio and two-bedroom apartments is starting to go down and get more affordable. A two-bedroom apartment is on average $85 less than what it was last year, and a studio apartment is $267 less than last summer, the median rent being $1,100. However, there aren’t many of those available in Sparks.
What does it all mean?
“Sellers will have to come down on their price and be realistic in their expectations,” Scattini says. “Sellers are not getting 20-25 percent over asking price like they were last year, and it takes longer to go under contract,” she adds.
This gives buyers an advantage, as now they can look at a property, go home, and talk about their needs rather than having the pressure of putting an offer in on the spot.
“Before, it was ‘take it or leave it’, but now it’s back to sellers giving concessions to the buyers (helping with closing costs, repair credits, buying down rates),” Scattini says, in an effort to close the deal.
“FHA [First-Time Homebuyer] buyers with a budget under $400k could not even compete in the last two years. But we’re number one in the nation for home price slash because we could not sustain it at the level we were going,” she adds. And Scattini emphasizes that although interest rates are higher than they were in the last two years, they are still at pre-covid levels and not crazy high like they were in the eighties. Scattini believes that the supply is on the way to catching up with the demand, but we’re not there yet.
“Interest rates change all the time, and even if you can get into a home today but are concerned about the rate, you can always refinance down the road,” she says.
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