** Data in the November 2022 Market Report reflect market activity from October 2022 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 (www.nnrmls.com). Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.
- The Median Sales Price (MSP) in Reno-Sparks combined ticked up 1.8% from $530,320 to $540,000 months-over-month. The MSP is exactly the same as October last year!
- The Median Sales Price (MSP) in Reno and Sparks both inched up month-over-month, up 3.7% in Reno and up 0.5% in Sparks.
- Closed Sales dropped 21.7% compared to September 2022 and are down 34.7% compared to October last year.
- The graph above illustrates the breakdown of Closed Sales by Price Point.
- Median Sold Price per Square Foot also ticked up 1% to $304/SF, and is 1.3% lower compared to one year ago.
- The Months Supply of Inventory (MSI) is the number of months it would take to sell through the available inventory at the current rate of sales. The MSI in October 2022 was 3.4 MSI, meaning that if the rate of sales continued at the same rate as it did in September, the entire housing inventory would be depleted in 3.4 months. The MSI in October 2022 was 15.5% slower compared to September 2022 and is 212.6% slower than the same time last year. Note; a “balanced market” is approximately 5-7 months supply.
- Over the last few months, the Months Supply of Inventory in the luxury market has exceeded the threshold for a balanced market (see light blue range for Balanced Market), pushing the $1.5M+ properties into an official “Buyer’s Market.”
- Median Days to Contract has remained fairly constant now at 36 days from listing to contract, a 323.5% increase year-over-year. While the market feels very slow compared to the rapid moving COVID-19 years (2020-2021) our Median Days to Contract are still WELL below the peaks of 2012, 2016, 2018, & 2019.
- The side-by-side graphs above show the changes across all price points for the Median Days to Contract. All homes priced under $1.5M were on the market less than 40 days
- New Pending Sales dipped 2.4%% from September to October 2022. There are also about 40% fewer New Pending Sales compared to last year. Again, look back over the last several years to realize that our market is now for pending sales is behaving fairly normally.
- 23% fewer New Listings hit the market in October 2022 compared to September 2022. We also saw a 32% decline in New Listings compared to last year.
OTHER INTERESTING STATS TO KEEP AN EYE ON:
- 22.6% of all sales in Reno-Sparks were cash transactions. The % of Cash Purchases increased 22.3% month-over-month for all single family sales in Reno-Sparks and are is relatively unchanged compared to October 2021.
- Sellers continue to show signs of frustration as homes have not been selling as quickly as they have over the last couple of years. Consequently, they many have been pulling their homes from the market and/or allowing their listings to expire at the end of their listing period. We have seen a 185% increase in Unsold Listings compared to the same time last year.
- The number of Active Listings at the end of the month dropped 9.5% from September to October 2022. The number of Active Listings at the end of the month is 104% higher than in October 2021 when inventory was near an all-time low.
- 14% of all sales during October 2022 resulted in closing with prices above list price. This stat is relatively unchanged compared to September 2022 and about 64% lower compared to October last year but is in line with normal activity compared to “pre-COVID” market conditions.
- As we head into the winter months, Buyers and Sellers are contemplating moves in a real estate market riddled with the fear of God repeatedly thrown at them from the media with low-inventory in a high interest rate climate, price reductions, potential for further drops in prices… How are Buyers are Sellers to move forward with greater confidence in the coming months and years?
- Compared to the last couple of years, the market is not as bleak as the media would have us believe. Looking back at the charts over the last several years, the real estate market in Reno-Sparks NOW looks remarkably similar to past years’ activities and trends.
- Go back to basics… It’s about supply and demand. Inventory has NOT skyrocketed during this very interesting time, and Buyers are STILL making moves to pick up properties here, especially in markets priced under $1.5M. When priced competitively, homes on the market now in Reno-Sparks ARE SELLING.
- Sellers… The winter months are not necessarily a bad time to list your home. Historically, Buyers and Sellers are more willing to get the deal done because the parties are highly motivated during this season. During winter you’ll enjoy less competition from competing Sellers in your neighborhood.
- Now more than ever, maintenance and proper preparation & staging are critical for successful sales. So if you are waiting until spring to hit the market, take advantage of the winter months to get your house great shape.
- And Buyers… You may likely have more negotiating power than during the last couple of years. As mentioned in last month’s report, now is the time to exercise the option for Sellers to provide incentives that leverage your home-buying power and actually LOWER your monthly payment. Contact me today so I can explain how to accomplish this!
Do you need expert guidance for your next real estate purchase or sale? I am here for you, whatever your real estate needs are. Email me at firstname.lastname@example.org or reach by cell at 775-233-0682 so we can discuss the best plan for YOU!
~Denise Hallerbach, Broker-Owner, INTERO RENO.
With all the headlines and talk in the media about the shift in the housing market, you might be thinking this is a housing bubble. It’s only natural for those thoughts to creep in that make you think it could be a repeat of what took place in 2008. But the good news is, there’s concrete data to show why this is nothing like the last time.
There’s Still a Shortage of Homes on the Market Today, Not a Surplus
For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to almost 15 years of under-building homes.
The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 3.2-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.
Mortgage Standards Were Much More Relaxed Back Then
During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home.
Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.
The graph below uses Mortgage Credit Availability Index (MCAI) data from the Mortgage Bankers Association (MBA) to help tell this story. In that index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is. In the latest report, the index fell by 5.4%, indicating standards are tightening.
This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards over the past 14 years have helped prevent a scenario that would lead to a wave of foreclosures like the last time.
The Foreclosure Volume Is Nothing Like It Was During the Crash
Another difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help paint the picture of how different things are this time:
Not to mention, homeowners today have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Today, many homeowners are equity rich. That equity comes, in large part, from the way home prices have appreciated over time. According to CoreLogic:
“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”
Rick Sharga, Executive VP of Market Intelligence at ATTOM Data, explains the impact this has:
“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . . We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”
This goes to show homeowners are in a completely different position this time. For those facing challenges today, many have the option to use their equity to sell their house and avoid the foreclosure process.
If you’re concerned we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your fears. Concrete data and expert insights clearly show why this is nothing like the last time.
Over the past two years, the substantial imbalance of low housing supply and high buyer demand pushed home sales and buyer competition to new heights. But this year, things are shifting as supply and demand reach an inflection point.
The graph below helps tell the story of just how different things are today.
This year, buyer demand has eased as higher mortgage rates and mounting economic uncertainty moderated the market. This slowdown in demand is clear when you look at the red bar on the graph. It uses the latest data from ShowingTime to illustrate how showings (an indicator of buyer demand) have softened by just over 12% compared to the same time last year.
Now for a look at how housing supply has changed, turn to the green bar. It uses data from realtor.com to show active listings are up nearly 27% compared to last year. That’s because the moderation of demand allowed housing inventory to increase in 2022.
What Does This Inflection Point Mean for Buyers?
If you’re thinking of buying a home, you’ll have less competition and more options than you would have had last year. Enjoy having more homes to choose from in your home search and lean on a trusted real estate professional to understand how the increase in supply has also increased your negotiation power. That professional can talk you through the opportunities and challenges buyers face in today’s shifting market. You may be surprised to find they’re different than they were a year ago.
What Does This Inflection Point Mean for Sellers?
If you’re looking to sell your house, know that inventory is still low overall. That means, if you work with an agent to price your house based on current market value, it will still sell despite the inventory gains and moderating buyer demand this year. That’s because there are still buyers out there who want to move, and your house may be exactly what they’re looking for.
If you’re thinking of buying or selling a home, the best place to turn to for information on today’s supply and demand is a trusted real estate professional. Let’s connect so you know what’s happening in our local market and what that means for you.
Owning a home is a major financial milestone and an achievement to take pride in. One major reason: the equity you build as a homeowner gives your net worth a big boost. And with high inflation right now, the link between owning your home and building your wealth is especially important.
If you’re looking to increase your financial security, here’s why now could be a good time to start on your journey toward homeownership.
Owning a Home Is a Key Ingredient for Financial Success
A report from the National Association of Realtors (NAR) details several homeownership trends, including a significant gap in net worth between homeowners and renters. It finds:
“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”
To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter’s. This difference shows owning a home is a key step in achieving financial success.
Equity Gains Can Substantially Boost a Homeowner’s Net Worth
The net worth gap between owners and renters exists in large part because homeowners build equity. When you own a home, your equity grows as your home appreciates in value and you make your mortgage payments each month. As a renter, you don’t have that same opportunity. A recent article from CNET explains:
“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home . . . When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”
“Building home equity can help you increase your wealth over time, . . . A home is one of the only assets that have the potential to appreciate in value as you pay it down.”
In other words, when you own your home, you have the advantage of your mortgage payment acting as a contribution to a forced savings account that grows in value as your home does. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.
Owning a home is an important part of building your net worth. If you’re ready to start on your journey to homeownership, let’s connect today.
** Data in this the August Market Report reflect market activity from JULY 2022 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 (www.nnrmls.com). Data accounts for single-family resale residences only, and excludes townhouses/condos, manufactured/modular and new construction.
- The Median Sales Price (MSP) in Reno-Sparks dipped for the second consecutive month, down 4.2% from $600,000 to $574,510. However, the MSP is still 9.4% higher than in July 2021.
- While the Median Sales Price (MSP) in Reno dropped 6.3% month-over-month, the MSP in Sparks inched down 0.5% to $547,480 compared to last month. The MSI is still 8.2% and 9.5% higher respectively compared to July last year.
- Closed Sales are down 7.2% compared to June 2022 and down 34% compared to July 2021.
- Month-over-month, the Sold Price per Square Foot in July 2022 dropped 2.1% month-over-month and is 11.1% higher than July last year.
- Not surprisingly, the $1.5M+ priced homes led the pack with a Sold Price per Square Foot of $535, while the Median Price per Square Foot all price-points in July 2022 was $320.
- One of the biggest changes Sellers have been facing in today’s shifting market is the “Months Supply of Inventory (MSI).” Over the last few months, MSI shifted from 0.8 MSI to 3.2 MSI. Month-over-month, the MSI increase by 17.6% and year-over-year it increased 291%. A true “balanced market” is approximately 5-7 months supply.
- Properties priced in the $1M to $1.5M range have inched into the balanced market while $200k-$300k and $1.5M+ priced properties were officially in the Buyer’s Market range in July 2022.
- Naturally, with the rate of sales declining (as seen in the MSI numbers), the median Days to Contract is a contributing factor of that slow-down we are experiencing. The median number of days to contract for sale has increased from 14 to 25, a 78.6% increase month-over-month, and a 316.7% leap year-over-year. However… take a look over the last several years… the Median Days to Contract is still WELL below the peaks of 2013, 2016, 2018, & 2019.
- The graph above illustrates the breakdown of median Days to Contract by price range.
- New Pending Sales increased 11.3% from June to July 2022. There are 24.4% fewer New Pending Sales compared to last year.
- We saw 20.7% fewer New Listings month-over-month and 7.9% fewer New Listings compared to last year.
OTHER INTERESTING STATS TO KEEP AN EYE ON:
- Keeping an eye on the distressed sale market, at this point, we are still NOT seeing that recent market activity is causing more properties to be sold as foreclosures. Short-sales are few and far between due to the great amount of equity many home owners currently have in their properties.
- The % of Cash Purchases has declined 7.8% month-over-month for all single family sales in Reno-Sparks and are 11.1% higher than last year. 25.2% of all sales in July 2022 were cash.
- Expired and Withdrawn Listings are on the rise! We saw a 235% increase in these occurrences compared to last year.
- The Median Sales Price (MSP) in July 2022 was $574,510 in Reno-Sparks, NV, a decreased 4.2% month-over-month. The MSP is 9.4% higher than July last year. While the Sparks market did not realize a significant drop in its MSP, Reno’s MSP dropped 8.3% month-over-month.
- And while New Pending Sales increased in July 2022, New Listings declined.
- Days to Contract continue to rise, and are now 25 Median days from listing to accepted offer.
- While the market feels significantly slower that it has been over the last couple of years, looking at graphs over past years of sales, it is clear that we are swinging the pendulum back to what is more “normal” activity. The effects that COVID-Times and historically low interest rates had on real estate were most definitely abnormal and could not be sustained. This correction is exactly what the market was bound to do and SHOULD do.
- News for Sellers!! Though the market is slower, it is not dead. Buyers are out there, you just need to professionally present your well-maintained property, price it well and possibly get a little creative with potential incentives for your Buyer.
- Good news for Buyers!! According to Forbes.com, today (Aug 16, 2022), the average rate on a 30-year fixed mortgage is 5.50%, according to Bankrate.com. On a 15-year fixed mortgage, the average rate is 4.94%. This does not seem out of control. Multiple offer scenarios, though not completely eliminated for extremely desirable and well-priced homes, are not as common as they have been during our recent 2-year boom.
Do you need expert guidance for your next real estate purchase or sale? As a Buyer, you have more negotiating power than you have in many years, so this may be the time to leverage your next purchase. Sellers… Let’s meet to strategize about how to price your property strategically in our marketplace and present it professionally. I am here for you, whatever your real estate needs are. Email me at email@example.com or reach by cell at 775-233-0682 so we can discuss the best plan for YOU!
~Denise Hallerbach, Broker-Owner, INTERO RENO.
If you’re following the news, chances are you’ve seen or heard some headlines about the housing market that don’t give the full picture. The real estate market is shifting, and when that happens, it can be hard to separate fact from fiction. That’s where a trusted real estate professional comes in. They can help debunk the headlines so you can really understand today’s market and what it means for you.
Here are three common housing market myths you might be hearing, along with the expert analysis that provides better context.
Myth 1: Home Prices Are Going To Fall
One piece of fiction many buyers may have seen or heard is that home prices are going to crash. That’s because headlines often use similar, but different, terms to describe what’s happening with prices. A few you might be seeing right now include:
- Appreciation, or an increase in home prices.
- Depreciation, or a decrease in home prices.
- And deceleration, which is an increase in home prices, but at a slower pace.
The fact is, experts aren’t calling for a decrease in prices. Instead, they forecast appreciation will continue, just at a decelerated pace. That means home prices will continue rising and won’t fall. Selma Hepp, Deputy Chief Economist at CoreLogic, explains:
“. . . higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
Myth 2: The Housing Market Is in a Correction
Another common myth is that the housing market is in a correction. Again, that’s not the case. Here’s why. According to Forbes:
“A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak.”
As mentioned above, home prices are still appreciating, and experts project that will continue, just at a slower pace. That means the housing market isn’t in a correction because prices aren’t falling. It’s just moderating compared to the last two years, which were record-breaking in nearly every way.
Myth 3: The Housing Market Is Going To Crash
Some headlines are generating worry that the housing market is a bubble ready to burst. But experts say today is nothing like 2008. One of the reasons why is because lending standards are very different today. Logan Mohtashami, Lead Analyst for HousingWire, explains:
“As recession talk becomes more prevalent, some people are concerned that mortgage credit lending will get much tighter. This typically happens in a recession, however, the notion that credit lending in America will collapse as it did from 2005 to 2008 couldn’t be more incorrect, as we haven’t had a credit boom in the period between 2008-2022.”
During the last housing bubble, it was much easier to get a mortgage than it is today. Since then, lending standards have tightened significantly, and purchasers who acquired a mortgage over the last decade are much more qualified than they were in the years leading up to the crash.
No matter what you’re hearing about the housing market, let’s connect. That way, you’ll have a knowledgeable authority on your side that knows the ins and outs of the market, including current trends, historical context, and so much more.