Reno house prices see relief in August but record sales squeeze supply
The rising cost of housing in the last few years is making home ownership a tough proposition for Reno home buyers. We look at what’s fueling the Biggest Little City’s housing crisis and potential options for people looking for a new place to call home Jason Hidalgo/RGJ
The Biggest Little City saw some relief in August from its ongoing housing crunch as Reno’s median home price pulled back from its July record.
Inventory, however, remained tight as the pace of new listings continues to fall from the previous year, keeping the area entrenched in a seller’s market.
The median price for a single-family home in Reno fell to $362,000 in August, up 11 percent from the previous year but down 7 percent from July’s all-time high of $387,250. The latest Reno/Sparks Association of Realtors numbers are limited to existing, stick-built single-family homes and do not include condominiums, townhomes and modular housing.
The decline was enough to bring down the median for all Reno-Sparks, despite Sparks posting an increase in price from the previous month. The median house price in August for Sparks, including Spanish Springs, was $329,000. The number is up 22 percent from the same period last year and 6 percent higher than last month.
Overall, the greater Reno-Sparks area reported an August median price of $349,500, which is up 13 percent from last year but down 2 percent from July. The record for Reno-Sparks is $365,000, which was reached in January 2006.
Reno-Sparks posted 678 unit sales — a record for August. The all-time record for the area is 736, which was set in June this year.
The supply of existing homes in Reno-Sparks is now down to 1.5 months, compared to three months in October. A balanced market typically has a six-month supply of existing homes. Average days to contract are also down to 38 days, down 19 percent from the same period last year.
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“Reno is in a seller’s market,” said John Graham, RSAR president. “ We’ll continue to watch new inventory and … new construction in the coming months for any signs of a change.”
Inventory in Reno hit a tipping point in December when new listings started failing to keep pace on an annual basis. Prior to December, new listings continued to outpace the previous year’s numbers, according to the RSAR. New listing inventory is down 12 percent from last year.
The RSAR cited a couple of reasons for the decline in existing inventory that is entering the market.
Although some existing homeowners are starting to get equity in their properties, they do not have much reason to move up to a pricier house. Investors also do not have a lot of incentive to sell due to the tight Reno-Sparks rental market, which is seeing record-high rents and record-low vacancies. With investor owners are enjoying excellent returns on their properties due to the strong rental market, there is no compelling reason for them to sell. Strong rental demand is also fueling new apartment projects. The former Kmart and Great Western Marketplace parking lot, for example, will be turned into apartments, with a planned focus on more affordable workforce housing.
One potential concern for the area is a national trend that involves a weakening of pending sales as well as new home sales.
Given the strength in the job market and overall economy, however, the trend is not as big a concern, said Elliot Eisenberg, chief economist for economic consulting firm GraphsandLaughs and former senior economist for the National Association of Home Builders.
“Under normal conditions when the economy goes south, which is preceded by a decline in housing sales, (you see) increased supply by builders and decreased demand, so we’ve got just the opposite,” Eisenberg said.
“The key we should be looking at going forward is inventory levels. Hopefully, they’ll rise and starts will also hopefully rise.”
By the numbers
- Reno-Sparks: $349,500, down 2 percent from July and up 13 percent from August 2016.
- Reno: $362,000 down 7 percent from July and up percent from August 2016.
- Sparks: $329,000, up 6 percent from July and 22 percent from August 2016.
- Fernley: $233,350, up 2 percent from July and 19 percent from August 2016.
- Reno-Sparks: 678, up 6 percent from July and 14 percent from August 2016.
- Reno: 469, up 8 percent from July and 16 percent from August 2016.
- Sparks: 209, up 4 percent from July and 9 percent from August 2016.
- Fernley: 50, up 16 percent from July and no change from August 2016.