Reno median home price breaks $350K, inventory down to little over a month
After going through the toughest recession in its history, Northern Nevada has seen its fair share of economic development victories. Here's a list of some of the major developments for the region in recent years.
May unit sales second-highest recorded in Reno-Sparks
Reno housing prices broke the $350,000 mark for the first time since the recession as low housing supply continues to send home values surging upward in the Biggest Little City.
The median price for an existing single-family home in Reno hit $355,500 in May, up 5 percent from the previous month and 8 percent from the same period last year, according to the Reno/Sparks Association of Realtors. The data is limited to existing stick-built, single-family dwellings and does not include townhouses, condominiums and new homes.
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Reno’s rising house prices in May helped bump up the Reno-Sparks median to $335,575 for the month. That’s up more than 10 percent from January when Reno-Sparks posted a median price of $304,000 for existing homes. The all-time record for Reno-Sparks was $365,000, which was set during the tail end of the housing bubble in January 2006.
Existing home sales also hit a near-record in May at 652 units. Only June 2005 posted a higher total with 679 units sold. The sizzling sales also dropped housing supply in Reno-Sparks to just 1.4 months, which is great for sellers but bad news for buyers in the midst of a housing crunch. Average days on market also dropped from nearly four months at the beginning of the year to three months in May.
The rising home prices are fueling concerns among a community that still remembers the last housing collapse.
“With real estate’s appreciating prices, many are saying it’s another real estate bubble,” said John Graham, RSAR president. “But from what we’ve observed our current situation is different from what we saw 10 years ago.”
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Historically, new listing inventory has outpaced home sales, Graham said. This year, is different, however, with new listings and sales tracking at the same place as new inventory is quickly absorbed upon entering the market.
“This trend is putting additional pressure on pricing and creates additional challenges for buyers,” Graham said.
Reno’s situation mirrors the supply-driven price surges seen in other parts of the country, said Elliot Eisenberg, chief economist for economic consulting firm GraphsandLaughs and former senior economist for the National Association of Home Builders.
Eisenberg pointed to several reasons why the U.S. housing market is in a better position now than it was during the leadup to the housing bubble’s collapse about a decade ago.
Mortgage debt, for example, used to be 75 percent of GDP and has since fallen to 65 percent, Eisenberg said. Americans’ FICO or credit scores are also at their highest level in 13 years. Real home prices, meanwhile, are still 13 percent to 15 percent below the peak when adjusted for inflation, according to Eisenberg.
“Even with the rapid rates of appreciation we’re experiencing, we’re still years away from getting back to where we were,” Eisenberg said.
Supply continues to be the main culprit for the spike in home prices, Eisenberg said. Nationwide, the housing market is about 4 million to 5 million homes below where it should be right now, he added.
Eisenberg and Graham both agreed that the market is not seeing a repeat of 10 years ago.
“It’s not a real estate bubble,” Graham said. “As supply increases and demand decreases, the market will adjust.”
By the numbers
- Reno-Sparks: $335,575, up 4 percent from April and 8 percent from May 2016.
- Reno: $355,500, up 5 percent from April and 8 percent from May 2016.
- Sparks: $309,750, up 3 percent from April and 9 percent from May 2016.
- Fernley: $224,875, up 4 percent from April and 25 percent from May 2016.
- Reno-Sparks: 652, up 27 percent from April and 9 percent from May 2016.
- Reno: 438, up 30 percent from April and 9 percent from May 2016.
- Sparks: 214, up 20 percent from April and 8 percent from May 2016.
- Fernley: 42, down 30 percent from April and 14 percent from May 2016.