Earlier this week I published Reno-Sparks’ monthly housing market numbers for December 2019. In that blog post, I noted that December’s median sales price of $394,000 was up a healthy 7.95 percent year over year (YOY). I described the YOY price appreciation as “healthy” because that number was higher than the annual increase observed a year ago. [For context, December 2018’s YOY price growth was 5.79 percent. Therefore 2019’s home price appreciation was more than 37 precent higher than 2018’s. That’s remarkable.]
Reno’s appreciation compared to the nation
Providing additional context, from the latest CoreLogic Home Price Index (HPI®) Report: “National home prices increased 3.7% year over year in November 2019…” So, Reno-Sparks’ median home price annual gain of 7.9% in 2019 was more than double the rate of home prices nationally. Wow!
In fact, after ranking all fifty states in order of home price appreciation, only two states had annual increases in home prices greater than that of the Reno-Sparks market. Idaho had a 10.2 percent annual increase and Maine had an 8.6 percent annual increase. [Incidentally, as a whole, the state of Nevada saw home prices increase by 3.2 percent year over year in November — less than the national average.]
What market segments are seeing the biggest gains?
We know the Reno-Sparks’ market as a whole is doing well, but are these gains uniform across all price segments? The short answer is No.
If we drill down a bit deeper, some interesting observations are made.
I began the analysis by splitting December 2019 sales into quartiles (four equal parts) based off of closed sold price — with quartile 1 being the lowest prices sales and then progressing to quartile 4, the highest priced home sales.
I then did the same with December 2018’s sales data. Once I had both data sets split into their respective quartiles, I was able to calculate the sold price increase (or decrease) for the year for each quartile. The results are in the table below [click on the table to enlarge].
I found the data in this table to be very interesting. Looking at the last column, the median sales price of quartile 1 (the lowest priced home sales) actually saw a slight decline from a year earlier. The other three quartile each saw annual increases to their respective median sales prices.
While quartiles 2 and 3 each saw robust annual gains, it is quartile 4 (the highest priced home sales) that really skyrocketed. The median sales price of the homes in quartile 4 exhibited an annual increase of more than 16 percent!
Should we be surprised?
Upon observing the larger gains in the highest-priced homes segment, I was reminded that one year ago I published a blog post entitled Reno-Sparks luxury home prices skyrocket in 2018.
In that January 2019 blog post I wrote, “The luxury home segment is the fastest growing segment in the Reno-Sparks market.”
The data compiled above shows the 2019 luxury home market outperformed as well. Is this a precursor to 2020? I believe so.
Reno-Sparks Median Home Price Appreciation by Quartile (December 2019)
As always, I thank you for reading and I welcome your comments below.
Geoffrey
So the lowest price sold in 2018 was 190K (bottom of range), but 163K in 2019, a decrease of 27K or 14%. Something seems amiss there, just not consistent with the other bands of data.I having a hard time reconciling this with what is happening out there.
Guy Johnson
Thank you for your question, Geoffrey. It is a good one.
With any given data set of sold prices, be it monthly, annually, or other, there are always going to be extreme values at the low and high ends. This is why I use median (middle) values [rather than average value] when comparing data sets and observing trends. The median values lend a much more useful picture for trend analysis.
Just as you have pointed out that the lowest priced sale in December 2019 was $162,500, yet a year prior the lowest price sale was $190,000 for the same month, the highest priced sales were $2,150,000 and $4,200,000, respectively.
Hope this answers your question. Keep ‘em coming.
PD Real Estate
Very well Explained! Great work!
Guy Johnson
Thank you, PD Real Estate.