Courtesy Sierra Nevada Realtors
The median sales price for homes in Reno-Sparks in July was $574,475.
With 30-year fixed mortgages rates stubbornly hovering just under 7 percent, would-be homeowners across the Truckee Meadows are opting to stay put, which continues to create a dearth of sale inventory in the residential sector.
According to mortgage lender Freddie Mac, the average mortgage rate for 30-year home loans was 6.96 percent in mid-August, a slight uptick from the start of the month, though shy of the recent high mark of 7.08 percent set last fall.
Higher interest rates create additional financial burden for homebuyers in the form of higher monthly payments, as well as reduce their overall buying power. As a result, many potential home sellers — especially those who locked in low-interest-rate home loans during the COVID-19 pandemic — are sitting on the sidelines since they can’t sell and purchase a home with comparable interest rates.
However, high interest rates are simply the new playing field, said Sara Sharkey, president of Sierra Nevada Realtors and broker-salesperson for Re/Max Professionals in Sparks.
“Interest rates definitely make a difference on sales volume; however, we are not going back to 2 and 3 percent interest rates – those are not happening; it’s in the past,” Sharkey told NNBW during an interview last week. “Back when that was happening, our economy was in the middle of COVID. The economy has changed, and it’s still a good time to buy a home.
Sara Sharkey
“(Interest rates) really affect sellers, because a lot of them have a 2 or 3 percent rate, and they try to look for something similar but can’t use that same interest rate when they look elsewhere. What we have seen is that a lot of sellers are staying, and that leads to lower sales inventory for buyers to look at.”
There were 509 new listings in July, bringing total active inventory across the Truckee Meadows to 772 homes. That’s about a 1.8-month supply, Sharkey noted. Six months of inventory is considered a balanced sales market.
“We haven’t seen six months of inventory in a while, and I don’t foresee it happening anytime soon,” she said. “We still have buyers out there, but they are taking (inventory) so quickly that we just don’t have it.”
Many homebuyers reluctantly resigned themselves to the new normal. According to SNR, there were 428 closings in Washoe County (excluding Incline Village), in the month of July. That’s a 3 percent dip from June, but it’s up nearly a full percentage point from the same month in 2022.
“Interest rates go up and down; we’ve seen it,” Sharkey said. “Obviously, you want to buy when interest rates are lower, but we can’t control that. It’s still great to have your own home, so it’s a good time to buy.”
The median sales price for homes in Reno-Sparks in July was $574,475, Sharkey said. Sales volume, as well as median price, is expected to decline slightly as summer wraps up and Northern Nevada heads into the brisk fall and holiday months. Summer months are historically the busiest time of year for Realtors and agents since it’s easier to move homes when kids are out of school, as well as to change to a different school, Sharkey said. Wet weather also doesn’t usually loom on the horizon.
Days on market have also seen a significant shift from the frothy sales days of 2020 and 2021, when homes often sold the same day they were posted on the Multiple Listing Service. Current median days on market is three weeks, compared to just six or seven days last year.
“The year before (2021) it was like 15 minutes,” Sharkey said. “You put it on (the MLS) and it was gone. Houses are staying on the market longer but don’t be surprised if you look, come back, and the house you want has gone pending. Even though days on market are expanding, it's across all properties – the house you want may be gone in two days.”
Courtesy Sierra Nevada Realtors
The median sales price for homes in Reno-Sparks in July was $574,475.
The steep median price of homes in Greater Reno-Sparks also has more buyers casting an eye toward outlying communities such as Fernley and Fallon, as well as Carson City, where median prices are significantly lower, Sharkey added. According to Sierra Nevada Realtors, the median sales price for homes in July in Fernley was $375,000, while the median sales price for all of Lyon County was $424,495.
“If you are willing to drive just a little bit further, you can still get a really nice home out there,” Sharkey said.
In Churchill County, meanwhile, the median sales price was just under $370,000 in July. That’s 1.6 percent lower than June and a 7.5 percent dip from the same month in 2022. In the town of Fallon, the median sales price was $325,000. The problem, Sharkey said, is that there are just 26 homes available for purchase in Fallon, a 67 percent decline from 2022 numbers.
Carson City saw 55 home sales in July at a median price of $510,000. Sales volume was up nearly 2 percentage points from June, and price escalated almost 4 percent. There were 60 homes sales in Douglas County for the month of July, down 15.5 percent from June but up almost 18 percent from the same month last year.
The playing field isn’t expected to level anytime soon – the Federal Reserve projects additional interest raises for the later half of 2023. The fed funds rate is projected to end the year at 5.6 percent. However, it’s expected to dip back to the 4-percent range in 2024 and fall into the 3-percent range by 2025.
