Luxury home sales surge in Reno, NV

While luxury home sales weakened across much of the U.S. in 2017 (See Move.com’s Demand for Luxury Home Weakened in 2017 — High-end inventory glut contributes to slow down), the luxury market in Reno, Nev. saw the opposite trend. In fact, Reno’s luxury market can be described as booming.

Before I get into the numbers, let’s define luxury. The afore-linked-to Move.com piece above defines luxury as “…the top 5 percent of transactions based on sales price.”

There were 6,818 houses sold in the Reno-Sparks metro area in 2017. The top 5 percent of those sales numbered 341 units sold, and those ranged in sold price from $769,000 to $3.5M. Using $769,000 as a cut-off price and applying to 2016, we find that 217 houses sold for $769,000 and above in 2016. Resulting in 2017 seeing a greater than 57 percent increase in the number of such high-end sales.

$769,000 is but one price point. Many local realtors (myself included) typically define luxury properties as those homes priced at $1 million and above. And it seems that the $1M minimum price point is not unique to Reno and Sparks, Nevada. A recent U.S. News & World Report piece had this to say regarding the luxury price point, “In many large U.S. cities and metro areas, the typical luxury price point is $1 million and above”. [See U.S. News & World Report‘s How to Define Luxury Real Estate in Today’s Market]

Using $1 million as the cut-off price and performing the same comparison between 2016 and 2017 as above, we find a similar increase. 94 $1M-plus homes were sold in 2016. 2017 saw a whopping 143 $1M-plus sales. Yielding a more than 52 percent increase in 2017 luxury home sales over 2016 luxury sales.

The table below shows the rate of growth of luxury homes sales in Reno-Sparks. Note the surge in 2017 relative to prior years’ growth. If 2018 sees a similar increase as seen in 2017, sales of $1M-plus homes may number well above 200 unit sales.

$1M-Plus House Sales – Reno-Sparks, NV
Year Number of $1M+ Sales Year-over-Year Increase Percent of Total Unit Sales
2017 143 52.1% 2.1%
2016 94 2.2% 1.4%
2015 92 19.5% 1.5%
2014 77 14.9% 1.3%
2013 67 1.1%

As the number of such sales increase, they also begin to comprise a larger share of our market. [See the last column in the table above.]

Fun fact: although the number of $1M-plus sales accounted for just 2.1 percent of unit sales in 2017, these $1M-plus sales accounted for 7.8 percent of total sales volume in 2017. [or $208,206,154 of $2,667,849,842]

If one prefers to define luxury sales using the first definition presented above — the top 5 percent of transactions based on sales price — the table below shows how the 5% cut-off price has trended upward over the past few years.

Top 5% Price Point – Reno-Sparks, NV
Year Top 5% Price Point Year-over-Year Increase Percent of Total Sales Volume
2017 769000 15.8% 14.2%
2016 664000 3.8% 13.7%
2015 640000 5.3% 16.1%
2014 608000 8.6% 16.4%
2013 560000 16.6%

In the table above, the “Top 5% Price Point” column shows the minimum price of the top 5 percent of transactions based on sales price. That minimum price has increased greatly over the past few years.

The last column shows what proportion of total sales volume for the year does the top 5 percent highest priced sales comprise. For example, in 2017 the top 5 percent of transactions, based on sales price accounted for 14.2 percent of total sales volume that year. [or $378,392,425 of $2,667,849,842]

Regardless how one defines the luxury home market, Reno’s is booming.

Note: The home price and other data reported above covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – January 15, 2018. Note: This information is deemed reliable, but not guaranteed.

Related Post: Million dollar (and above) home sales double in 2013 [published November 13, 2013]

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This week’s real estate headlines

Here are a few national real estate-related stories and news pieces that came across my screen this week…

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2017 Reno Housing Market Recap

If I had to use one word to describe the 2017 housing market for Reno and Sparks, Nev. it would be “record-breaking”. Many of the housing metrics we cover saw records in 2017 – both high and low.

Let’s take a look at the year’s numbers for the Reno-Sparks housing market.

Home Prices

Residential home prices ended the year up 15 percent year-over-year. In 2017 the Reno-Sparks’ monthly median home price ranged from a low of $301,950 in January to the year’s high of $355,000 set in July. The 2nd-half of the year saw the median sales price bounce around a bit and finally end the year at $345,000 in December. [See chart below.]

The median sales price for the entire 12 months of 2017 was $337,000 – an increase of 10.5 percent over 2016’s 12-month median of $305,000. [See chart below.]

2017 home prices continued their upward trend since bottoming in 2011. [See chart below.]

[Note: The exact bottom, post-housing crash, occurred in January 2012 when the median sales price hit $135,000.]

What does 2018 hold in store for home prices? Most agree that continued increasing homes prices is likely. One estimate is that our market may hit a median sales price of $400,000 sometime in 2018.

Price Per Square Foot

2017 begin with a median sold price per square foot of $179/sq.ft. in January and ended the year with $200/sq.ft. in December. [See chart below.]

December’s median sold price per square foot was up 11.5 percent year-over-year.

Unit Sales

2017 was another record year for number of homes sold. A total of 6,818 houses (excluding condos) were sold in 2017. This represents an increase of 3.6 percent over the 6,583 houses sold in 2016.

Sales by month exhibited the typical seasonality our market experiences. Sales numbered 364 for the month of January, and climbed throughout the first half of the year peaking at 763 units sold in June. The 2nd half of 2017 saw sales receding to end the year with 489 sales in December. [See chart below.]

2017 sales by price range breakout as follows…

Half of the homes sold in 2017 sold for more than $337,000, and half sold for less than $337,000.

Volume

With both sales price and units sold being up in 2017, not surprisingly, total volume was also higher than 2016’s. 2017’s sales volume of $2,667,849,842 was up 17.0 percent over 2016’s volume. Additionally, 2017’s sales volume sets a new record for the Reno-Sparks market — surpassing the previous sales volume record of $2,478,390,159 set in 2005 at the height of the housing bubble.

Total Sales Volume
Year Total Volume
2017 $2,667,849,842
2016 $2,280,746,234
2015 $2,087,751,150

New Listings and Inventory

Another of the big stories in 2017 was inventory — or, should I say, lack of inventory. 7,209 houses were listed for sale during 2017. Compare that number to 2016 when 8,074 houses hit the market. That’s a 12.0 percent reduction in new listings in 2017 from 2016.

The chart below shows the seasonal active inventory by month over the past five years. Notice that 2017 is missing the spring and summer bump in inventory that is typically observed. That was due to drastic reduction in the number listings coming to market.

June saw the most number of new listings when 842 houses hit the market. [See chart below.] Then the number of new listings per month began trending downward after that and finished the year with only 292 new listings hitting the market in December.

With home sales being as strong as they were in 2017 [See Unit Sales above] and new listings diminishing to such low levels, available inventory was going to have to take a hit. And a hit it took.

Look at the dramatic drop in available inventory by month during 2017. [See chart above.]

Inventory levels held steady for the first half of 2017 around the 1,100 available homes each month, January through June. But after June inventory levels fell off the chart.

Which brings us to…

Months Supply Inventory (MSI)

With falling inventory levels, yet sustained strong home buyer demand, one of our favorite metrics, months supply inventory, experienced a similar decline throughout 2017.

Months supply inventory is defined as the time it would take to exhaust the active inventory at the current rate of sales. In the chart above, we see that in January there was a 3-month supply of inventory. By December, that number fell to a 1.3-month supply of inventory.

To lend some perspective to how low these levels are take a look at the 5-year MSI graph below. Our market’s current inventory is at a low level never seen before.

Inventory, or lack of it will be the biggest challenge facing the Reno-Sparks housing market in 2018.

Note, for a deeper dive into the inventory issues currently facing Reno and Sparks, Nevada check out these recent blog posts:

How Purchased?

Conventional mortgages were used to purchase the majority, nearly 55 percent, of houses in 2017. Cash sales made up 18.2 percent of 2017 house purchases. The means used to purchase in 2017 breaks out as follows…

How Purchased?
Purchase Method Percentage
conventional mortgage 54.8%
cash 18.2%
FHA loan 16.9%
VA loan 8.9%
Other1 1.2%

1Other includes: assumption of existing mortgage; contract of sale; owner carry financing; etc.

Note: for a closer look at cash sales in Reno and Sparks market, see Cash sales in Reno and Sparks, Nevada [published January 10, 2018].

Comparing 2017 and 2016 house sales…

Home Sales – 2017 and 2016
Metric 2017 2016
median year built 1998 1998
average year built 1991 1990
median size 1,864 sq.ft. 1,821 sq.ft.
average size 2,060 sq.ft. 1,992 sq.ft.
median lot size 0.18 acre 0.17 acre
average lot size 0.65 acre 0.52 acre
median sold PPSF $187.27/sq.ft. $170.69/sq.ft.
average sold PPSF $191.49/sq.ft $174.65/sq.ft
median sales price $336,746 $305,000
average sales price $391,295 $346,460

Other Metrics?

What other housing metrics would you like to see? I have the means to report on a variety of data provided by our local MLS. Let me know what you’d like to see, and I will be happy to report on it.

For example, interested in Reno’s luxury market? Check out this recent blog post: Luxury home sales surge in Reno, NV [published January 15, 2018].

And, as always, thank you for reading the Reno Realty Blog.

Note: The home price and other data reported above covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – January 10, 2018. Note: This information is deemed reliable, but not guaranteed.

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Cash sales in Reno and Sparks

According to the National Association of REALTORS® 2017 REALTORS® Confidence Index, cash sales made up 22 percent of home sales nationally in 2017 (this number was up compared to the 21 percent in 2016).

How does our local market compare? I pulled all home sales from 2017 and found that of the 6,818 houses (excluding condos) purchased in Reno-Sparks, 1,239 were cash sales (as opposed to financed) — or 18.2 percent.

Volume-wise those cash sales accounted for 20.9 percent of 2017’s sales volume.

But looking back over the past few years (since the market bottomed in 2012), the proportion of cash sales has been trending downward.

2017 Home Sales – How Purchased?
Year Cash Conventional FHA VA Other Total Houses Sold
2017 18.2% 54.8% 16.9% 8.9% 1.2% 6,818
2016 18.6% 49.9% 21.3% 8.4% 1.9% 6,583
2015 19.0% 49.4% 21.5% 8.3% 1.8% 6,326
2014 23.0% 46.2% 20.7% 8.5% 1.6% 5,972
2013 29.7% 41.7% 20.2% 6.3% 2.1% 6,084
2012 27.8% 37.4% 26.4% 6.1% 2.3% 6,099

The table above shows the proportions of home purchases made by cash, and those purchases that were financed (either by conventional, FHA or VA mortgages), by year.

Notice that while cash purchases have been on the decline, conventional mortgage purchases have been on the rise.

This is a continuation of a trend I reported on back in 2014 (See Cash sales trending down – August 25, 2014)

Good news for lenders.

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RSAR Monthly Market Report for Fernley, Nevada – December 2017

The Reno/Sparks Association of REALTORS® (RSAR) has released its Fernley Market Report for the month of December 2017.

From December’s report…

  • The median price was $227,900, down 7% from November and up 19% from December 2016.
  • Fernley’s unit sales at 43 are down 4% from November and down 2% from December 2016.
  • December new listings at 25 are down 56% from November and up 25% from December 2016.
  • The Fernley market has 3 months supply of inventory, a seller’s market.

Click on the graph below to see the entire RSAR market report for December.

Related post: RSAR Monthly Market Report for Fernley, NV – November 2017

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RSAR Monthly Market Report for Reno-Sparks, Nevada – December 2017

The Reno/Sparks Association of REALTORS® (RSAR) has released its Market Report for Reno-Sparks the month of December 2017.

From December’s report…

  • The December median price at $345,000 is down 2% from November and up 15% from a year ago.
  • December unit sales at 482 are down 9% from November and down 9% compared to December 2016.
  • December new listings are down 24% at 292 compared to November and down 14% from one year ago.
  • The Reno market is a seller’s market, at 1.3 months supply of inventory. Months supply of inventory is the time it would take to exhaust the active inventory at the current rate of sales.

Click on the graph below to see the entire RSAR market report for December…

Related post: RSAR Monthly Market Report for Reno-Sparks, Nev. – November 2017

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This week’s real estate headlines

Here are a few national real estate-related stories and news pieces that came across my screen this week…

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Nevada – Definitely a top ‘inbound’ state

Did you know that 14% of the U.S. population (or roughly 40 million people) move each year? Me either.

Where do they move to? To answer that question, we can look at studies such as North American Moving Services’ recently released 2017 US Migration Report.

This link will take you to North American Moving Services’ interactive map where you can hover over any of the 48 contiguous states to see the ratio of the number of people moving to that state (inbound) compared to the number of people moving from (outbound) the state.

Looking at the state of Nevada for example, the map shows that in 2017 the ratio was 56 percent inbound moves vs. 44 percent outbound moves.

These results are consistent with the results from United Van Lines’ 2017 National Movers Study on which I reported last week [See Why are people moving to Nevada?]. That study reported the ratio of moves to/from Nevada as 61 percent inbound moves vs. 39 percent outbound moves — making Nevada one of the highest ranking states in the U.S. for inbound moves.

And Atlas Van Lines reports an even higher percentage of inbound moves to Nevada. In their 2017 Moving Migration Patterns Report Atlas Van Lines reports that Nevada’s inbound moves came in at 62.4 percent for the year (compared to 37.6 percent for outbound moves). These numbers ranked Nevada 3rd on Atlas Van Lines’ Top-10 Inbound States list.

None of these findings should be surprising in light of the U.S. Census Bureau’s recent Population Change Report showing that Nevada is the 2nd-fastest growing state in the nation.

According to the U.S. Census Bureau’s report, from July 1, 2016, to July 1, 2017 Nevada’s population grew from 2,939,254 to 2,998,039, or 2.0 percent – second only to the state of Idaho, which grew 2.2 percent during the same period.

Idaho in Nation's Fastest-Growing State[Source: U.S. Census Bureau]

From the Bureau’s Population Change Report:

Domestic migration drove change in the two fastest-growing states, Idaho and Nevada, while an excess of births over deaths played a major part in the growth of the third fastest-growing state, Utah,” said Luke Rogers, Chief of the Population Estimates Branch.

How big was this migration? According to the U.S. Census Bureau’s populations numbers, between July 1, 2016, to July 1, 2017 Nevada had a net incoming migration of 46,184 persons. [For comparison, during the same time frame, California had a net incoming migration of 26,672 persons.]

With no signs of Nevada’s growth slowing perhaps the state will top next year’s Census Bureau’s list of fastest-growing states. What do you think? Share your thoughts in the comments below.

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