Reno, Nevada Housing Market Update: Inventory Shortage and Rising Prices in March 2023

Reno, Nevada Housing Market Update March 4, 2023

Welcome, everyone to the Reno, Nevada Housing Market Update for March 4, 2023. Recent data is showing that the available inventory of homes is nearing the all-time low of the COVID market. With mortgage rates increasing, what does that mean for area buyers? 

Let’s dive in. 

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Reno, Nevada Houses 

The median sales price for a single-family home in Reno, Nevada has increased to $567,000. This increase has folks wondering if the market has hit bottom yet, but it’s tough to say because of rising mortgage interest rates. The latest averages are nearing 7%, with some exceeding that number – which is frustrating for those of us in real estate as we had hoped for rates to stay level as outside industries recuperate. The latest data we have is based on the 6.5% interest rate we saw in previous weeks and prices have been increasing. Week over week, median prices have gone up. Hitting the bottom of 2022 right around the beginning of February is the current low point in the last year of median sales prices. It takes roughly a month for the data to start showing up, so only time will tell. Right now, the main issue affecting this market is inventory. 

New Listings

New listings have flatlined. As of late, there’s been very little increase in inventory and that’s really tough on those who are actively seeking out homes to purchase. A great number of buyers do not want to rent, as it is far more expensive than being an owner occupier paying a mortgage. Landlords are either raising their rents, or they’re coming in from outside the area and stunned at rental prices – and so they’re choosing instead to buy a house. The lack of new listings is what is going to inhibit recent predictions about a housing crash and falling purchase prices. No one is selling their homes. And when you have that kind of lack of inventory it puts pressure on demand and slows down the rate of purchase prices. The increase in purchase price is a reflection of that. It’s commonplace once again to see competition and multiple offers on a home, but it is not like the offer behavior we saw in 2022. 

Homes Under Contract

“Pending” sales are on the decline. Again, that’s not due to buyers not buying. There just aren’t enough homes for sale. There are no new listings to supplement the houses that are being absorbed. For a while we were experiencing an upward trend of buyers and sellers reaching agreements, but it’s back on the downward trend week over week due to lack of inventory. 

Active Inventory

We're running out of homes for sale. Down to only 378 homes. There are a lot of people that live here and a lot of people that want to own here. And when you have this downward trend of housing, this is the main issue on why prices are going up. In a free-market scenario where interest rates are increasing, prices generally go down. But this isn’t the case in Reno right now. Supply is tight and demand is strong, and that is slowing the decline in prices. The all-time low in inventory hit in early March 2022 – a month that saw fewer than 300 homes for sale. Here we are in March 2023 with only 378 homes for sale and, at this moment, there is no real upward trend in sight. What does that mean? It means we could reach the all-time low COVID market levels and that is going to put pressure on housing prices. People are moving here. There’s been an influx of employers setting up shop and around our region, which is raising the demand for living here – that is not a recipe for wild decline in prices. The data is showing we hit the bottom of the market at the beginning of February, and now it’s rising. As mentioned before, this lack of competition is a great opportunity for those interested in selling. When the snow melts, there may be a multitude of folks who decide it’s time to list their properties. Seasonality and warmer weather will likely create an increase in selection. It may not be a crazy surplus in inventory, or subsequent price compression, but it is competition nonetheless. Sellers should be encouraged to take advantage of having a new listing – if priced correctly, buyers will flock to it, regardless of the rain or snow. What it all comes down to is this: there’s a stronger chance for a better outcome if they plan on selling within the next few months. 

Percentage of List Price

The percentage of listing price that we are seeing in Reno is currently at 98.4% - another upward trend. Lately, we’ve started to see that number hit 100% due to lack of selection. Concurrently, that shows the strength of demand and limited inventory in our marketplace. Buyers have been finding success in writing offers. It’s not like what we saw in 2022, with offers being rejected right and left. There may be added competition on a house that everybody loves, but on scale there has been a lot of successful negotiation with buyers and sellers. 

Weeks of Inventory

Overlapping with the decline in inventory, we’re on a downward trend and presently hovering around 6.7 weeks of inventory – creating a heavy seller’s market. Of course, with the glass ceiling of mortgage interest rates, this doesn’t mean home values are going to be skyrocketing. The cost of money limits that. But buyers are absorbing what is hitting the market at a pretty aggressive rate. 

Median Days on Market

Median days on market again overlaps when you don't have a lot of homes to choose from. There are buyers out there buying, and sellers with more information to list at the correct price. Houses that are overpriced are going to sit on the market – especially with the cost of money being what it is. If priced correctly, this is evidence that properties are going to sell in a timely fashion – right around a week. Keep in mind, sellers who sell really quickly don’t necessarily have to move quickly. They can get back into negotiating moving strategies that work for everyone, so there’s no need to panic.

Unsold Listings

Properties are selling. They’re not sitting and they’re not disappearing off the market as unsuccessful sales. Sellers are serious, this downward trend shows that. And there is opportunity for buyers who get out there and make offers on homes that might be sitting for a little bit longer. 

In Summary,

The biggest takeaway in this marketplace is the continual decline in inventory and the narrow selection of homes. Buyer demand is still strong, even with the uptick in cost of money. The rental market has been challenging so, rather than worry about interest rates, buyers have decided to pivot their rental money into a mortgage payment. Even if their interest rate and payment has changed, buyers should not hesitate to write offers on properties. They can still get the conversation going with sellers who are serious about wanting to reach a deal to get their home sold.