The Sierra Sun ran an interesting piece on current housing affordability (or lack thereof) in the Northern Nevada market — See Northern NV real estate: Home affordability slipping in Reno-Sparks
The piece reported some very interesting numbers regarding supply and demand. For example, regarding newly built homes, the inventory of finished vacant single-family homes is at its lowest level since Metrostudy began tracking the Reno market in 2006. …And this despite the fact that the number of homes currently under construction is up 40 percent last last year. Talk about high demand. Builders can’t keep them on the shelves.
From the Sierra Sun piece…
Oversupply is still a long way off. The supply of improved lots ready to develop is dwindling. The Reno market has 26-months of supply of finished and vacant single-family lots. Three years ago, there were 14 years of lot supply. Washoe County has only 14-months of supply.
Add resale homes to the mix and the inventory supply gets a little better — but not much.
I took a look at today’s available inventory currently listed on our MLS. The Reno and Sparks market currently has 1,053 listed available for sale. Considering that 563 homes sold in April, that equates to an approximate two-month supply of inventory.
And the supply is even tighter at the lower price points. Currently, of the 1,053 homes available for sale on the MLS only 499 (less than half) are priced below $400,000. Yet, of the 563 homes sold in April, a whopping 451 (80 percent) sold for under $400,000.
So, in actuality, the bulk of home buyers (over 80%) are shopping in a market with only about a one month supply of inventory.
Keep in mind that a balanced market is typically defined as four to six months supply. With the demand far exceeding supply the way it currently is, expect the upward pressure on home prices to continue.[Btw, I took a quick peek at home sales for the month of May, thus far; if the numbers hold for the remainder of the month, May’s median sales price could be quite a large increase from what we’ve seen so far this year.]
Note: The housing market 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 – May 17, 2016. Note: This information is deemed reliable, but not guaranteed.