In-The-Know Real Estate Blog August 15, 2021

Are Houses Less Affordable Than They Were in Past Decades?

There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a home today than it was a year ago. However, it’s important to give this trend context. Is it less expensive to buy a house today than it was in 2005? What about 1995? What happens if we go all the way back to 1985? Or even 1975?

Obviously, the price of a home has appreciated dramatically over the last 45 years. So have the prices of milk, bread, and just about every other consumable. Prices rise over time – we know it as inflation.

However, when we look at housing, price is just one component that makes up the monthly cost of the home. Another key factor is the mortgage rate at the time of purchase.

Let’s look back at the cost of a home over the last five decades and adjust it for inflation by converting that cost to 2021 dollars. Here’s the methodology for each data point of the table below:

  • Mortgage Amount: Take the median sales price at the end of the second quarter of each year as reported by the Fed and assume that the buyer made a 10% down payment.
  • Mortgage Rate: Look at the monthly 30-year fixed rate for June of that year as reported by Freddie Mac.
  • P&I: Use a mortgage calculator to determine the monthly principal and interest on the loan.
  • In 2021 Dollars: Use an inflation calculator to determine what each payment would be when adjusted for inflation. Green means the homes were less expensive than today. Red means they were more expensive.

As the chart shows, when adjusted for inflation, there were only two times in the last 45 years that it was less expensive to own a home than it is today.

  1. Last year: Prices saw strong appreciation over the last year and mortgage rates have remained relatively flat. Therefore, affordability weakened.
  2. 2010: Home values plummeted after the housing crash 15 years ago. One-third of all sales were distressed properties (foreclosures or short sales). They sold at major discounts and negatively impacted the value of surrounding homes – of coursehomes were more affordable then.

At every other point, even in 1975, it was more expensive to buy a home than it is today.

Bottom Line

If you want to buy a home, don’t let the headlines about affordability discourage you. You can’t get the deal your friend got last year, but you will get a better deal than your parents did 20 years ago and your grandparents did 40 years ago.

In-The-Know Real Estate Blog June 9, 2021

Home Price Appreciation Is as Simple as Supply and Demand

Home price appreciation continues to accelerate. Today, prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.

Let’s use three maps to show how this theory continues to affect the residential real estate market.

Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020:

As the above map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.

Map #2 – The change in state-by-state inventory levels year-over-year reported by

Comparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.

The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.

Is Relief Around the Corner?

The report by also shows the monthly change in inventory for each state.

Map #3 – State-by-state changes in inventory levels month-over-month reported by

As the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.

We’ll know for certain as we move through the rest of the year.

Bottom Line

Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.

Reno-Sparks Market Report February 25, 2021

February 2021 Market Report

** Data in this report reflect market activity from JANUARY 2021 compared to the previous month and year.  Information is gathered from the Reno-Sparks Association of Realtors® (RSAR) for the Greater Reno-Sparks region via Northern Nevada Regional Multiple Listing Service (  Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.

  • In the Reno-Sparks market, the Median Sales Price has been lingering near $450K for the last several months.  But don’t let that statistic fool you.  Remember, the median sales price represents the very middle of a data set, with exactly half of the houses priced for less and half priced for more.  A higher number of homes sold in one end of the data set can make it appear that the market is cooling, but other aspects of the market say otherwise.

  • With only 370 single family homes selling in Reno AND Sparks during Jan 2021, the “non-movement” of the median sales price could largely be a factor of more homes selling in the lower price-range.  As seen in the chart below, the circled portion (homes under $500k) represents 62% of the sold inventory in January 2021. This explains why we did not see an increase this month in the Median Sales Price.

  • The graph above represents the distribution of sold properties by price-point.  62% of the units sold were under $500k.  This distribution of sold properties is a large reason why the Median Sales Price is still hovering around $450k.

  • Overall, the Average Sold Price per Square Foot has leaped again, up 18.4% compared to the beginning of 2020, and has inched up .6% month-over-month.  This average represents properties sold over ALL price ranges.

  • Refer to the chart above for a breakdown of the Average Sold Price per Square Foot by Price Range,

  • You’ve been hearing about our region’s housing shortage, right?  The graph above illustrates what has been happening with the rate and supply of sales in Reno and Sparks over the last year.  The Months Supply of Inventory is  down a staggering 73% compared to January 2020.  It held steady at 2 weeks of supply over all price points. MSI absorption rate represents the time it would take to completely “sell out” of the Reno-Sparks inventory at the current rate of sale if no new listings were added to the market.  A balanced market is around 5-6 months of supply, therefore, we are still very much in a “Seller’s Market.”

  • Once again, the Absorption Rate across all all price-points is well-below a balanced market.  The rate of sales in the high end luxury market over $1.5M is 2.6 months supply, also quick-moving in today’s fast-moving real estate market.  In the past, several years, the high-end market would typically over 7 months supply.

  • Single family residential properties are going into contract even more rapidly than the already hot market we have been experiencing over the last several months.  Since the pandemic began truly shaking the wold, the real estate market has been fast-moving.  In January 2021, it took only an average of 26 days to receive an accepted offer.  This accounts for ALL price points in the Reno-Sparks market and is 61% quicker than January 2020.

  • The Average Days to Contract for homes priced under $600k was only 18 days.  The $1-1.5M price range saw homes on the market for an average of 116 days before going into contract.  Perhaps initial overpricing played a part in this particular set of homes?

  • The market saw 20% fewer contracts in January 2021 compared to January 2020, yet rose 10% from the previous month.  This is the time of the year when we start seeing a turn upwards in general activity.
  • As seen in the last two graphs, the count for New Listings has been a near mirror of the New Contracts count.  January 2021 saw 22% more new listings year-over-year and 19% more New Listings month-over-month.


  • These days, when “dialed-in” and “move-in-ready” homes come to market, they are often snatched up in about 1 to 3 days, with back-to-back showing appointments during those only days on the market.  Multiple competing offers flood the inboxes of listing agents, allowing Sellers to capitalize on the hot market, and resulting in the highest possible net to those Sellers.
  • While the average 30-year fixed rate mortgage was sub-3% in January, as of February 24, 2021, reports, “The average rate for a 30-year fixed-rate mortgage is 3.13 percent, an increase of 19 basis points over the last week.” Though on the surface, this appears to be bad news, 3.13% is still very low.  In addition, projects, “As the US continues to face the economic fallout of the COVID-19 pandemic, mortgage rates will likely stay low. ”  This is good news for buyers who are struggling to get their offers accepted today in this fiercely competitive market.  Buyers need all the help they can get right now, and more inventory in the spring months would help too.
  • The market is absorbing new listings at an extremely fast rate, with only an average 2-weeks supply of inventory in Jan 2021.
  • The Median Sales Price, the mid sales-point for sold homes of all price-ranges, is 10% higher than last year.
  • The Average Sold Price per Square Foot continues to steadily rise and is now $261/square feet in Reno-Sparks.
  • Single-family residences continue to move very quickly at an average of 26 days from listing to contract, 61% faster than this same month last year.
  • Today’s fast paced sales beg for Realtors who think on their feet and have the experience and skills to handle the demands of this hot market.  Buyers and Sellers benefit from choosing a professional to handle every detail to navigate them through a successful purchase or sale.  If you need me, I’m there. Email direct or reach me by cell at 775-233-0682.  Thank you, ~Denise Hallerbach, Broker-Owner, INTERO Reno