How high will Reno-Sparks’ median home price reach in 2018?

KOLO TV’s NewsNow Tuesday evening’s broadcast ran a segment on Northern Nevada’s 2018 Housing Outlook. As part of the report, Doug McIntyre, President of Reno/Sparks Association of REALTORS®, was interviewed. During the interview, Mr. McIntyre said he thought that our market’s median sales price would probably reach $400,000 this year.

While everyone that I’ve talked with agrees that home prices will likely continue to climb this year, when it comes to answering to what level, that’s when people are less certain. Some see continued, but slowing growth. Others see the same rate of growth that home prices in our market have been experiencing. And some see accelerating growth.

Home Price Growth

So what has been the increase in home prices in Reno and Sparks, Nevada over recent years? The chart below shows the annual median sales price by year from 2001 to 2017.

The green bars are for houses, the blue bars are for condominiums and town homes. Note that these median numbers are for all home sales during the entire 12-month period. Using the numbers in the chart, we can calculate the rate of growth as follows:

Home Price Appreciation by Year
Year House Price Appreciation Condo Price Appreciation
2011
2012 7.1% 16.7%
2013 29.1% 30.2%
2014 15.0% 15.9%
2015 14.3% 40.0%
2016 8.9% 16.5%
2017 10.5% 9.7%

As can be seen in the table above 2017’s median house price increased 10.5 percent over 2016’s median sales price. If 2018 was to see the same increase, then 2018’s median sales price would be $372,385.

Keep in mind that these annual medians don’t show the monthly fluctuations in median price.

The chart above shows 2017’s monthly medians [green line is four houses; blue line for condos]. Looking at houses [green line], the year began with January sales exhibiting a median sales price of $302,000. Home prices then peaked in July with a median of $355,000; and the year then ended with a December median sales price of $345,000.

But for sales across the entire year, 2017’s median was $337,000. If Mr. McIntyre’s prediction of hitting $400,000 were to happen, it would likely occur in our market’s peak months of June or July.

What kind of appreciation would be required to reach a $400,000 median price? That depends from what number one is referencing. From 2017’s annual median price of $337,000 an 18.7 percent increase would be required. From December’s median of $345,000 a 15.9 percent increase would be needed.

Possible? Unlikely? Probable? Looking back at December 2016, the median sales price that month was $300,000. Over the next seven months the median climbed to reach $355,000 in July 2017. In absolute terms, that was an increase of $55,000. Coincidentally, adding the same increase of $55,000 to December 2017’s median of $345,000 yields the aforementioned $400,000 prediction.

What is your prediction for 2018’s median sales price? Please share your thoughts in the comments below.

Related post: Reno, Nevada’s Housing Shortage — How Bad Is It?

Note: The median home price data reported covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties and Condo/Townhouse properties, as noted. Manufactured/Modular and Shared Ownership properties are excluded. Data courtesy of the Northern Nevada Regional MLS – January 3, 2018. Note: This information is deemed reliable, but not guaranteed.

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Why are people moving to Nevada?

United Van Lines has just released their 2017 National Movers Study. The report shows the ratio of moves to/from Nevada as 61 percent inbound moves vs. 39 percent outbound moves. This makes Nevada one of the highest ranking states in the U.S. for inbound moves.

From the United Van Lines report:

As a region, the Mountain West continues to increase in popularity with 54 percent of moves being inbound. The West is represented on the high-inbound list by Oregon (65 percent), Idaho (63 percent), Nevada (61 percent) Washington (59 percent), and Colorado (56 percent).

Diving deeper into the United Van Lines data reveals additional insight into the people moving to our state. Using the interactive map above, one can see the demographics (e.g. age and income level) of the people moving to Nevada. For example, 40 percent of the people relocating to Nevada have an income of $150,000 or more. And nearly 64 percent of the people moving to the state are age 55 or older.

But I found the “Reason for Move” to be the most interesting. The people moving to Nevada cited the following reasons for their moves…

Reason for Moving to Nevada
Reason Percentage
Job 36.4%
Retirement 34.0%
Lifestyle 17.2%
Family 16.8%
Health 7.7%

This data corresponds with what I have seen with my own clients who have relocated from out of state. Anecdotally, nearly half of my out-of-state clients are moving to the Reno area to retire.

Personally, I relocated my family to Reno (in 2006) for lifestyle reasons. And we love it here!

Did you relocate to Reno from out of state? If so, what brought you here? Leave a comment below.

Related post: Nevada ranks 4th as a top moving destination [published January 10, 2017]

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December median sales price and other market metrics

December’s median sales price pulled back from November’s to end the year at $345,000. December’s median sales price for homes sold in Reno and Sparks, Nevada fell 2.7 percent from November’s median of $353,000. Year-over-year however, December’s median is up a whopping 15.0 percent over December 2016’s median sales price of $300,000.

On a price-per-square foot basis the median sales price ended the year at $194.83/sq.ft. That number is a 0.9 percent decrease from November’s median sold price per square foot of $196.60/sq.ft., but is an 11.8 percent increase year-over-year.

Lack of available inventory continues to be the major issue plaguing the Reno-Sparks housing market. Presently there are only 605 homes available for purchase in the Reno-Sparks market. Not only is that number down 21.1 percent from the 767 homes available for sale this time last month, but even more telling, year-over-year, available inventory is off a staggering 41.4 percent. Yes, last year at this time 1,032 homes were available for sale, presently there are 605. For a more detailed analysis of the inventory problem our market is experiencing, see Reno, Nevada’s Housing Shortage — How Bad Is It?

Pending home sales are also down substantially. Presently there are 578 homes pending sale in the Reno-Sparks Market. That number is down 18.9 percent from the 713 homes pending sale this time last month. As is typically the case, expect January unit sales to be quite low. Year-over-year, current pending sales are down 14.4 percent.

Speaking of the number of houses sold, for December sales dropped for the month. December’s 459 houses sold was 13.4 percent fewer than the 530 houses sold in November; and 13.9 percent fewer year-over-year.

December’s median days on market (DOM) came in at 70 days — adding nine days to November’s median DOM.

December sales by type, break out as follows:

  • REO sales: 1% – unchanged from November’s 1%
  • Short sales: <1% – unchanged from November’s <1%
  • Equity sales: 97% – unchanged from November’s 97%

December sales by price band, break out as follows in the table below…

Sales by Price Segment
sales price ($000’s) units sold cumulative % of sales
0 – 99 0 0.0%
100 – 199 14 3.1%
200 – 299 140 33.6%
300 – 399 153 66.9%
400 – 499 89 86.3%
500 – 599 21 90.8%
600 – 699 18 94.8%
700 – 799 6 96.1%
800 – 899 5 97.2%
900 – 999 4 98.0%
1M+ 9 100%
total 459

Nine homes sold for over $1,000,000 in December — bringing the year-to-date total to 143 $1M+ sales, and greatly surpassing the 94 $1M+ sales that occurred in 2016. In fact, the number of $1M and above home sales in 2017 was 52.1 percent higher than 2016.

December’s median sold price for houses and condos combined was $325,011 — a 3.0 percent one-month decrease from November’s median sold price of $334,950 for combined sales of houses and condos.

The table below contains the past 13 months of data…

Happy New Year!

Past 13 Months of Home Sales Data
Month Year # Sold Median Sold Price Sold Price per Sq Ft Median DOM # of Actives # of Pendings
Dec 2017 459 $345,000 $194.83 70 605 578
Nov 2017 530 $353,000 $196.60 61 767 713
Oct 2017 554 $345,000 $191.54 64 851 843
Sep 2017 613 $336,900 $194.62 59 925 889
Aug 2017 721 $347,900 $190.53 61 952 1,032
Jul 2017 641 $355,000 $192.15 57 1,002 1,034
Jun 2017 763 $340,000 $188.82 56 963 1,127
May 2017 680 $334,950 $182.46 60 903 1,240
Apr 2017 518 $324,287 $183.03 60 896 1,149
Mar 2017 558 $319,000 $178.04 71 840 1,009
Feb 2017 387 $319,950 $173.78 90 857 896
Jan 2017 364 $301,975 $174.53 89 872 810
Dec 2016 533 $300,000 $174.30 83 1,032 675

Note: The medians table above is updated on a monthly basis. The median home price data reported 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 1, 2018. Note: This information is deemed reliable, but not guaranteed.

Related post: November median sales price and other market metrics

Click here for historical data back to 1998.

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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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How Accurate is Zillow’s Zestimate?


Of the more than 108 million homes currently listed on Zillow, nearly 97 million of them have Zillow Zestimates® calculated. But how accurate are these zestimates?

I get this question a lot from clients. Fortunately, there’s an easy answer as Zillow posts the accuracy rates for its zestimates by state, county and city. But first, what is a Zestimate®?

From Zillow’s site:

The Zestimate® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions.

How Accurate?

Zillow continuously calculates its Zestimate accuracy by comparing the final sale price of a home to its Zestimate on or before the sale date.

Across the U.S. as a whole Zillow’s zestimate accuracy currently has a median error rate of 4.3%. This means half of the estimated home values are within 4.3% of the selling price, and half are off by more than 4.3%.

Drilling down to the state level, for Nevada for example, we find the zestimate’s accuracy improves with a median error rate of 3.0%. Again, this means half of the home values are within 3.0% of the selling price, and half are off by more than 3.0%.

Drilling down even further, to the Washoe County level, we find the zestimate’s median error rate also to be 3.0%. We also see that two-thirds (66.6%) of the time the Zestimate for a home in Washoe County was within 5% of the selling price. And 83.3% of the time the Zestimate was within 10% of the selling price.

Have you recently sold a home in the area? If so, share how accurate Zillow’s zestimate was in the comments below.

More Information

Regardless of the accuracy of the Zillow Zestimate®, keep in mind a zestimate is simply one source (Zillow) of data. In fact, on the Zillow Zestimate Accuracy page, Zillow states: “We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as: Getting a comparative market analysis (CMA) from a real estate agent.”

If you would like to learn more about the your home’s worth, contact me; I’m here to help. I can be reached at 775-722-4011. Or, if you prefer, simply fill out this form.

Thank you and make it a great day!

related post: How accurate are Zillow’s Zestimates? (February 23, 2015)

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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 past week…

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Want to Buy a House in Reno-Sparks Built in the Last Ten Years? You’ll Need Half a Million

I recently posted an analysis of the extremely tight housing inventory that Reno, Nevada and Sparks, Nevada is facing. See: Reno, Nevada’s Housing Shortage — How Bad Is It? As an eleven-year local REALTOR® serving the Reno-Sparks area, the numbers I uncovered surprised even me.

During the course of my analysis some other findings came to light. With inventory being so tight and demand being so great, it was not surprising the see the average DOM (days on market) to be low. As I touched on in the aforementioned piece, many home sellers today are receiving multiple offers out of the gate. But with new listings practically “flying off the shelves”, I wondered why there were any available listings left at all.

Well one obvious reason that comes to mind is price point. The vast majority of the current listings are simply unaffordable to the average buyer shopping in the Reno-Sparks area. Let’s take a look.

Household Income and Affordability

Depending on who you ask, the median household income in Washoe County ranges from $52,910 to $56,382. Without going into debt-to-income ratios, credit scores, size of down payment, and other factors that affect loan amounts, at today’s interest rates a buyer with the median Washoe County income could afford about a $200,000 home. That being said the homes currently being purchased in Sparks and Reno, Nev. exhibit a median sales price of $355,000.

This chart above shows the distribution of homes sales for November 2017. Connecting the tops of the bars produces a bell curve with the peak number of homes sold in the $300,000 to $399,999 range — which makes sense, as November’s median sales price was $355,000.

When the sales distribution chart above is viewed against the current inventory distribution chart below an obvious mismatch comes to light.


In the chart above we see the current inventory mix skews heavily to the higher price points. In fact, at the moment, a whopping 77 percent of the Active available listings in our MLS are priced above November’s median sales price of $355,000. And, if you are a buyer with the median Washoe County household income, and are looking for a $200,000 home, there are presently only 12 listings priced at or below $200,000 — less than 2 percent of our market’s available inventory.

Homes Priced Below the Median Price

Another thing that came to light when diving into the current inventory was the correlation between list price and the age of the house. It should not be surprising that newer homes command a relatively higher price than older homes, but when I looked at the inventory distribution across price points the difference was striking. The median age (year built) of a home listed at or below the median sales price of $355,000 is 1977; whereas the median age (year built) of a home listed above the median sales price is 2002.

And using our previous $200,000 house example, the 12 current listings priced at or below $200,000 exhibit a median year built of 1956.

The charts below show the available inventory distribution across various price points. Each chart is for inventory of a the specified age range (year built).

2010 and Newer Inventory (no. of units by price range)

2000 – 2009 Inventory (no. of units by price range)

1990 – 1999 Inventory (no. of units by price range)

1989 and Earlier Inventory (no. of units by price range)

As can be seen in the charts above, more affordable inventory exists with the older homes.

When I am asking clients for their housing criteria (e.g. number of bedrooms, size of house, area of town, etc.) oftentimes they’ll say they want a newer home. When I ask what they mean by newer, typically they’re respond with, “something within the last ten years.”

I filtered the current available inventory on “homes built in 2008 or newer”. Currently listed homes in Reno and Sparks, built between 2008 and present, exhibit a median sales price of $499,950, and an average sales price of $721,059.

Does one really need half a million dollars to purchase a newer (built in the last ten years) resale home in Reno-Sparks? Not really, but the pickings are slim below that price. Refer to the “2010 and Newer Inventory” chart above. At the moment there are only 62 such houses priced below $500,000.

Note: The data presented 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 and charts courtesy of the Northern Nevada Regional MLS – December 21, 2017. Note: This information is deemed reliable, but not guaranteed.

Related post: Reno, Nevada’s Housing Shortage — How Bad Is It?

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Reno, Nevada’s Housing Shortage — How Bad Is It?

Each month the Reno-Sparks Association of REALTORS® releases its Housing Market Report for the greater Reno/Sparks area. And each month it’s reported that “The Reno market is a seller’s market, at [insert very low number here] months supply of inventory.” For much of the year, that low number has been below 2 months supply. (See table below.)

Months Supply of Inventory
Month MSI
April 2017 1.9
May 2017 1.4
June 2017 1.4
July 2017 1.6
August 2017 1.5
September 2017 1.7
October 2017 1.7
November 2017 2.0

These numbers, while striking, are big picture numbers for the entire Reno and Sparks housing market. Alone they don’t tell the whole story. Today, we’re going to dive deeper into Reno-Sparks’ “months supply of inventory” to see just how tight inventory really is. But first let’s explain the metric.

Months Supply of Inventory

Simply put, months supply of inventory, or MSI, is the time it would take to exhaust the active inventory at the current rate of sales. In other words, in the absence of any other new inventory entering the market, how long would the current supply of houses available for sale last?

For example, if there are 50 houses for sale, and houses are selling at 5 per month, it would take 10 months to exhaust the supply. So, this market scenario would be described as having a 10 months supply of inventory. …And would be described as a “buyer’s market”.

Buyer’s market vs. Seller’s market

Local real estate markets are typically described as Buyer’s, Seller’s, or Balanced markets. A buyer’s market is one in which the supply of houses substanitally exceeds the demand for those houses. Such a scenario gives home buyers some leverage over sellers in price negotiations.

A seller’s market, on the other hand, is one in which the supply of houses is substantially less than homebuyer demand for homes. This scenario gives the home sellers leverage over the buyers in price negotiations.

A “balanced market” (also known as a neutral market) is one where buyer demand and seller inventory are at an equilibrium — neither side has substantial leverage over the other. The wide consensus among real estate practitioners and economists is that a balanced market is established when the months supply of inventory falls in the range of 4 – 6 MSI.

So, to recap…

  • > 6 MSI is a buyers market
  • 4 – 6 MSI is a balanced
  • < 4 MSI is a sellers market

Reno’s Seller’s Market

In calculating MSI, only Active (non-Pending) listings are counted for inventory. That’s because listings that are already under contract and pending are realistically unavailable for purchase. Referring to the table at the top, the Reno-Sparks’ MSI numbers clearly indicate a seller’s market — in fact, an extreme seller’s market.

This low MSI level is the major factor driving increases in home prices. In my November market analysis I reported that “November’s median sales price [of $355,000] for homes sold in Reno and Sparks, Nevada increased 2.7 percent over October’s median of $345,500; and is now up a whopping 14.5 percent year-over-year.”

Below is a chart showing the last 12 months of median sales prices for Reno and Sparks, Nevada.

Our market’s current median sales price of $355,000 is only off 2.7 percent from the all-time record high of $365,000 set at the peak of the housing bubble in January 2006.

Diving Deeper

As I mentioned above, the monthly MSI number reported is an overall number for the entire Reno-Sparks housing market. The number encompasses available inventory and monthly sales at all price points. An interesting picture emerges when we drill down a bit deeper.

As of November there were 783 active listings (houses available for purchase) in Reno and Sparks. (See chart below.)

If we breakout these listings by various price points, we see how the available inventory is distributed by price range. (See chart below.)

For example, in the chart above we see that there is only one house available that is priced under $150,000. There are five houses priced between $150,000 and $199,999; 28 listings priced between $200,000 and $249,999; and so on.

As the chart above also shows, the vast majority of the housing inventory is priced at the higher price points.

But the majority of homebuyers in Sparks and Reno, Nev. are looking to purchase homes in the lower price ranges. There were 519 homes sold in November. The chart below shows how these November sales were distributed across price points.

The chart above depicts a bell curve with the $300,000 – $399,999 price range as having the greatest number of home sales — at 176 units sold. This is not surprising, as our market’s current median sales price is $355,000.

Recalculating MSI using the inventory and sales numbers across the price points shown in the charts above yields a more telling picture of the housing inventory in Reno and Sparks.

The chart above shows the current months supply of inventory (MSI) by price range. The red line marks 5 MSI, or a balanced market. Those price ranges exhibiting MSIs that fall below the read line are in the seller’s market territory. The farther below the red line, the more extreme the seller’s market.

As can be seen, at the price points below $300,000, inventory supply can be measured in days rather than months. At the $300K – $399K range only 1 MSI exists. At the $400K – $499K range only 1.8 MSI is currently available. Even the $500K – $749K range is a seller’s market — with only 2 MSI.

It’s not until we reach the $750,000 and above price range that a balanced market emerges. But only 7 percent of buyers are shopping in that range (refer to the Numbers Sold by Price Range chart above). That means that roughly 93 percent of buyers are dealing with extreme seller market conditions.

These conditions create a very challenging environment for home buyers. Commonly seen scenarios include: encountering multiple offers situations; bidding wars; properties selling for above asking price; contingent offers being less desirable; sellers concessions occurring less frequently; and more.

I saw a sign at a sales office last week which read, “The house you saw today and want to think about tonight will sell today to the people who saw it yesterday and thought about it last night.” So true right now.

These conditions also impact home sellers. Homeowners who would like to list and sell their homes are holding back because they do not want to become a buyer in today’s challenging market. And with this source of potential new inventory not coming to market, the inventory problem worsens.

What lies ahead?

Unfortunately, I see more of the same market conditions for the foreseeable future — that is, low inventory and increasing prices. In fact, with buyer demand projected to only increase, the issues discussed above will only worsen. Simply perform a web search on “reno housing shortage” and take a look at the dozens of stories that come up. [Seriously, do it. You’ll be amazed.]

A local News4 piece last week quoted Mike Kazmierski, President of the Economic Development Authority of Western Nevada (EDAWN), as saying:

The region needs 6,000 new housing units per year to keep up with demand and get itself out of its current housing hole. That goal is not being met.
Since the recession, the most new housing construction the region has seen in a single year is nearly 3,600 units. This year could the best year at about 4,500.

Even with the optimistic projection of 4,500 new units annually, that still leaves a annual shortage of 1,500 homes in the region. And that’s not even taking into consideration the question of new home affordability. In other words, will new homes be priced at a price point that first-time home buyers and median income households can afford?

To answer that question, I hope to gather some information at next month’s “Forecast 2018 and Beyond” event presented by The Builders Association of Northern Nevada. This annual event will forecast the local residential and commercial real estate markets for the coming year. On the residential side, both resale and new home projections will be presented. I will be listening intently. I’ll let you know, what I learn. [Btw, If you would like to attend, tickets can be found here.]

As always, thank you for reading and comments are welcome.

Note: The data presented 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 and charts courtesy of the Northern Nevada Regional MLS – December 21, 2017. Note: This information is deemed reliable, but not guaranteed.

Follow-up post: Want to Buy a House in Reno-Sparks Built in the Last Ten Years? You’ll Need Half a Million

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