Reno And Sparks Nevada Housing Market Update – January 12, 2023

Welcome to the first market report of 2023. We are into the second week of January and there are some big changes worth mentioning in terms of the data we are reviewing. In the fourth quarter of 2022 we were comparing numbers from the fourth quarter of 2021. And you may recall that week over week over week they were very similar to each other. That will not be the case as we compare year over year and week over week numbers in the coming months. Here’s why…

2022: The Huge Spike and The Rate Hike 

Last year we saw a huge first quarter spike in the real estate market, followed by a federal interest rate hike and a subsequent decline in the market for quarters two, three and four (an adjustment back to the 2021 marketplace). Now here we are in Q1 of 2023, comparing data from the same quarter of 2022’s spike – a pretty dramatic shift in numbers if you are only looking at the data year over year. That said, in the upcoming weeks as the updated numbers and information rolls out, you can expect national news outlets to begin reporting on the significant price drops from last year at this time. And for the next few months, likely through mid-May, these weekly reports will reflect the big price differences between 2022 and 2023. 

Let’s dive in. 

Reno and Sparks Market: Q1 2023 vs Q1 2022

Reno Houses. Houses are down 16% – that’s down an average of $100,000 from Q1 of 2022. Currently the average sales price in Reno for a single-family home is $525,000, a 16% reduction from last year’s average of $625,000.

Units Sold. In terms of overall units sold, the local market is down about 68% from Q1 of 2022 – a considerable decline due largely in part to the big frenzy that was driving up prices early on and the many corresponding transactions at once. We're down about 68% from this time last year. That's a huge number, a newsworthy number. Again, expect to see this kind of info in national headlines because these are remarkable numbers – the kind of numbers we haven't seen in a long time. And because, essentially, it’s comparing our slowly declining marketplace, our “flat line”, to the spike of 2022. 

Inventory. Locally we are experiencing a small spike in single-family home inventory with new listings hitting the market – leaving us with a five-month supply, give or take. However, I caution that number because, historically, it is not uncommon to see a seasonal spike in inventory during this time of year. Furthermore, it’s unlikely that inventory will continue to increase at this rate – leading me to believe much of it will be quickly absorbed as we have many buyers in the marketplace who are actively looking. Q4 of 2022 saw us averaging around 2.5 months of inventory, and I anticipate it shrinking back down again into that 2-3 months’ supply in the near future. It’s likely nothing more than a little seasonal push – as small spikes such as these are common in the marketplace and become more apparent the more one follows the weekly market reports. 

Sparks Houses. As for the Sparks market, houses are down 14% from this time last year with a $479,000 average purchase price – tracking consistently with Reno averages that have also seen a $100,000 price reduction. Sidenote: it’s important to remember that most of this adjustment occurred during the months of September and October 2022.

Sparks Inventory. The average inventory in Sparks is comparatively a little lower than Reno at 3.75 months. Sparks did not experience the same spike in inventory as Reno single-family homes did and it’s likely that this small increase over the late 2022 average will also get absorbed from the active buyers in the market. 

Condominiums. Reno condos are down 16% from this time last year with an average sales price of $326,000. Contrary to single-family homes in the area, the local condo market did not encounter the seasonal spike, and we are currently seeing an average of 2.5 months of inventory in that sector. It’s important to remember that is still a pretty low place, as only 12 homes sold in the last week. That number is actually up, but when you’re dealing with five to ten homes a week, it can be highly volatile – unlike the single-family home market where we’re beginning to see those big changes from the spike in prices from last year. 

Market Index. In terms of the overall market index, the computers are all saying this is a strong seller's market. I've said it time and time again – that is not really the case. What we are currently experiencing is a pretty balanced marketplace. That’s why, at present, we are seeing an increase in the average days on market.

Average Days on Market. In Reno, the average days on market for a single-family home is 48, whereas in Sparks that number is roughly 29 days. Reno condos are averaging 53 days and Sparks is following with 76 days – all the hallmarks of a balanced marketplace, and yet another dramatic swing from this time last year when it was common to see averages maintain in the single digit range. 

Relisted Properties. As is normal in Q1, the new year generally brings with it a spike in relisted properties – often due to listing agreements being signed with an expiration date of December 31st. At present, 6% of inventory has been relisted. 

In summary, the biggest trend we are going to notice in the coming months is the huge disparity in percentage differences between 2022 and 2023. But in my estimation, as I continue to do weekly reports and we get into May, we will see that disparity begin to reduce back to the tighter numbers we talked about last year.