The Reno/Sparks Association of REALTORS® has released its real estate market report for September 2014. The report can be accessed by clicking on the chart below.
September’s market report debuts two new charts on housing affordability (see Charts 27 and 28).
The Housing Affordability Index shown in these new charts is derived by examining many metrics, including:
- median home sales price
- Washoe County median income
- a 5% down payment
- the applicable interest rate for a 30 year fixed mortgage
- and a debt to income ratio of 28%
A value of 100 on the index means that a buyer with the Washoe County median income has adequate income to qualify for a mortgage on a median priced home. From the Housing Affordability Index chart (Chart 27) we can see that in January 2012 the market was at its most affordable; coinciding when the median home price hit a low. With the recent increases in median price and interest rates, the median priced home is less affordable for the Washoe County median income earner.
The 13-month detail chart (Chart 28) applies the same factors identified above to the past thirteen months. An area with a factor of over 100 would be considered most affordable to the median income earner.
As can be seen in Chart 28 the Housing Affordability Index shows at today’s median price the most affordable areas are North Valleys, Old Southeast and Sparks.
Summary from the September report…
- Sales are down for the month. It’s not unusual to see a drop in sales in the Fall and Winter months.
- It appears the market is following the seasonal trends that were typical before the real estate boom and bust.
- The sales to listing price ratio is down to 98.4% compared to September 2013 when it was at 99.4%. This is an indication that even though it’s a seller market, sellers are accepting less than listing price.
- Available inventory is up 4.2%, but there is no real improvement in the “affordable range.” There is less than 3 Month’s Supply of Inventory in the $150,000 to $250,000 price ranges.
- September pending sales are level with August at 395. Pending sales are a leading indicator of future closed transactions.
- Interest rates are predicted to increase in 2015 which will reduce purchasing power. Buyers who are sitting on the fence should look at their options while interest rates remain at historic lows and down payment assistance programs are available.
related post: RSAR Monthly Market Report – August 2014
RSAR Monthly Market Report – October 2014 | Reno Real Estate Blog
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