Though the first question is always easily answered, the second question presents more of a challenge. There are so many factors to consider (e.g. the economy, job growth, mortgage rates, housing inventory, buyer demand, seller demand, and many more) in formulating an answer that it becomes difficult to predict.
When answering, I utilize a trusted source’s prediction for the nation’s housing market and then apply it to the Reno-Sparks housing market in order to derive a forecast for 2020.
Yesterday, I read CoreLogic’s latest Home Price Index (HPI®) Report. In their report, CoreLogic stated, “National home prices increased 3.7% year over year in November 2019 and are forecast to increase 5.3% from November 2019 to November 2020.” This statement provided me a starting point for my analysis.
From CoreLogic’s website, the firm has national property data spanning 50+ years, and they tout a 99.5% accuracy standard (see the screenshot below). Frequent readers of this blog know that I often link to CoreLogic’s reports.
Deriving a 2020 forecast Reno, NV
My methodology for applying CoreLogic’s 2020 prediction to the Reno real estate market is to first look at our market’s median home price year-over-year gain during the same period reported on in the CoreLogic report – specifically, from November 2018 to November 2019. So, let’s begin…
November 2018’s median closed sales price for the Reno-Sparks’ market was $377,250. One year later, November’s median home price has risen to $400,000 — representing an annual increase of 6.0 percent.
Comparing that increase to the nation’s average home price appreciation (3.7%) for the same time period shows that Reno’s increase was 63 percent greater than the national average. That’s remarkable!
For 2020, CoreLogic predicts national home prices to spike 5.3% from November 2019 to November 2020. If we make the assumption that Reno home prices will again outpace the national average by the same degree that they did in 2019, we can then increase CoreLogic’s prediction by 63 percent when applying theirs to the Reno housing market. Doing so yields an 8.64 percent (5.3% X 1.63) appreciation.
As stated previously, November 2019’s median sales price for Reno-Sparks was $400,000. Applying a projected price appreciation of 8.64 percent to that median price yields $434,556.
So, if this methodology is correct, then Reno-Sparks median sales price should increase to $434,556 by November 2020.
What do you think? Is a $434,000 median sales price in 2020 realistic?
I would love to hear your thoughts on what you think the median sales price will be at the end of this year. Please leave your comments below.
Thank you for reading the blog. Much appreciated!