What's expected in the real estate market in 2018?
2017 was a sellers' market in northern Nevada with home prices consistently on the rise. According to the Reno/Sparks Association of REALTORS (RSAR), the year started with median home prices just over $300,000 and ended with the median price around $365,000. Doug McIntye, President of RSAR, says affordability will continue to be a problem in 2018.
"I think that we are probably going to reach $400,000 this year [for median home prices]," he said.
The problems start with basic supply and demand. Homes are being built, but not in large quantities. McIntyre says developers are building 20-25 homes at a time. That's a significant decrease from the 50-75 homes developers were building before the Great Recession. The homes that are being built also start well above $300,000; much more than most first-time home buyers can afford.
The inventory for homes under $300,000 isn't high. There's about a month and a half of inventory, according to McIntyre. Six months is what the real estate market considers balanced. While sales and new listings of existing homes typically decline in the winter months, McIntyre says affordability is keeping people from selling.
"You sell your home today, where are you going to go?" he asked. "There's really no place to go but up. You sell your house in Reno, you want the same size house for the same price, you're going to go to Fernley. You're going to go to the very North Valleys."
McIntyre expects east and downtown Sparks, as well as the North Valleys, to be the most affordable locations for people looking to buy a house in 2018.
"The older homes in Sparks for example, those are what's affordable," he said. "Buyers are having to really look at what they can afford, not what they want."
He also recommended first-time home buyers look at fixer-uppers, condos or duplexes as ways to get into the real estate game.
But buyers also face a lot of competition. With limited supply, homes are not staying on the market for long, so moving fast when you find something you like will be key. McIntyre says with the changes to the tax code, people here may not be competing with as many investors and cash offers. They will; however, be competing with people moving from California to Nevada.
"They sold their homes for a lot of money, and can afford to buy what they want here," McIntyre said.
Mortgage interest rates are also expected to increase in 2018. McIntyre says he doesn't expect the increase to be dramatic, but any rise in cost will affect how much house people can afford.
In 2018, expect the squeeze on construction costs and labor to get tighter. What labor force we do have will likely be pulled to California as the state begins to rebuild after a devastating wildfire season.
"We've had a lot of natural disasters in 2017 that have affected the homes," McIntyre said. "So we just have a limited number of employees to cover those areas."
As for renters, things will still be expensive. Nevada was the fourth fastest growing state for rent prices in the nation this past year. Renters will still be paying a lot, but McIntyre says those prices will likely hold steady. That's due in part to an increase in apartments being built in Washoe County right now. About 4,000 units are under construction with even more in the planning stage.