The practice of real estate is unique to a moment and place. It is fascinating how a dynamic set of data points can reveal an ever-evolving set of data points that output to the simple expression of ‘good’ or ‘bad’ in ways that are relevant when compared to recent performance.
The trajectory of the Reno Tahoe real estate market when sampling the month of July each of the last 3 months is a perfect example.
In 2022, the month of July transacted 815 residential units. This is ‘bad’ when compared to 1244 and 1394 the last few years. In fact, a 35% reduction in the number of sales during a period when inventory has risen could be an alarming metric.
However, despite reduced activity pricing has continued to rise with median price growing 7% year over year and a staggering 28% over the same period in 2020. Despite challenges in the region’s overall affordability, increasing prices are generally consistent with a ‘good’ market.
More nuanced data reveals similarly vexing conclusions. Days on market are identical to the same period last year 23% ‘better’ (fewer) than in 2020. Perhaps the single best descriptor for the market is found in the percent of asking price.
July 2022 97% of asking price
July 2021 102% of asking price
July 2020 98% of asking price
Under ‘normal’ conditions in a balanced market, there is a presumption of 1% – 3% negotiating room in any given transaction. While 2020 was the beginning of an historic run of demand in our region and beyond, conditions were only beginning to accelerate from the early doldrums of the pandemic. In July of 2021, the market was in an absolute frenzy as consumers sought to outbid competing buyers to win amid a period of limited inventory.
Today’s market appears much more balanced as rising interest rates and increased supply have cooled conditions relative the overheated years that have immediately preceded. Viewed through any other lens, the current state of the local market would be viewed as strong and steady.
A divide in perception certainly exists as buyers perceive an opportunity for greater leverage amid challenging economic conditions where sellers are house rich with perceived equity accumulated over astronomical appreciation over the last few years. The absence of distress and continue job growth fueling demand would seem to indicate that despite challenging macro conditions, a meaningful decline in the local market appears unlikely.
Rather, reduced transaction volume and increased days on market may yield slight price reversion but only from apex pricing experienced in the most irrational moments of the last few years.
Motivation is key as the market steadies
Price reductions are everywhere but when asking prices began high, is it really a changing market?
Manufacturing jobs continue to grow driving non-hospitality jobs throughout the region
Reno’s employment is at an all-time high
Downtown Damonte; a new tech campus for new companies bringing new jobs
The Club at Arrowcreek nears the end of a major renovation project
Crucial infrastructure: St. Mary’s named a Top 100 hospital
For the real estate voyeur, $30,000,000 homes at Lake Tahoe
