RENO, NV. - The once red-hot residential real estate market in Reno, Nevada, has cooled off following the Federal Reserve's decision to begin a series of rate hikes. As a result, prices have fallen both in Reno and Sparks, with the median home sale price dropping to $533,532 in Reno and $495,000 in Sparks. The last time the median house price was below $500,000 in Sparks was October 2021.
The Reno/Sparks Association of Realtors (RSAR) calls this trend "normalization" after three years of skyrocketing home values. In January 2017, the median home price for Reno-Sparks was only $304,000 - a far cry from last May's record high of $615,000.
Amidst the cooling housing market are higher mortgage costs due to higher interest rates. The average for a 30-year fixed mortgage rate rose from 2.65% one year ago to 6.48% today - even hitting 7.08% at some points during October and November. As a result, Reno's average monthly mortgage payment has increased by 50%, from $1,824 to $2,747.
The impact of higher interest rates can also be seen in other areas besides median home prices; it now takes almost two months (53 days) for a house to reach a contract after it is listed on the market compared to just two weeks one year prior. Additionally, sales have dropped 33% from 522 units in December 2021 to only 337 units last December.
Furthermore, sellers are now getting 96.9% of their asking price compared to 102% year-to-date one year ago - meaning that buyers can expect lower offers than initially asked for homes on the market now more than ever before.
Despite all these changes and shifts, however, RSAR President Sara Sharkey sees an opportunity within this new "normalized" housing market:
Our return to normal market conditions is opening the door to homeownership for many families," she said "and with all the choices available on the market, buyers now have more room for negotiation than ever before."
People are finding it easier to buy homes in Reno-Sparks. With low-interest rates, people may want to buy a home before the rates go up. In addition, in Reno-Sparks, mortgage payments have only increased by 50%. That is not as much as in other places where the increase was 84%.
It remains uncertain how long these conditions will remain stable or if another shift or spike will happen soon; however, buyers may find great deals within this "normalized" housing market by taking advantage of current trends.
In contrast, prices remain low in comparison with recent years – allowing them an unprecedented opportunity at homeownership they might not otherwise have had access to before this shift in trends and prices over recent months.
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