4/16/2024 – Real Estate Overview
30-Year Conventional Mortgage Rates: 7.50% (7.536% APR)
March 2024 Review:
Median Sales Price – The sale price in the middle of the data set. Keep in mind that February is the slow season for Reno/Sparks.
Closed Sales – The total number of transactions. February 2024 was up 9.29% to 2023. A substantial increase in purchases.
Median Days to Contract – Down from 2023 year considerably, showing that the market is picking up.
New Listings (2023) & Active Units (February 2024) – This indicates that the number of sellers is declining faster than the number of buyers/transactions. That’s why prices are holding steady and only lost 1.8% for all of 2023.
Months Supply of Inventory – This represents how many months it would take for the present available homes for sale to sell complete out to zero if no other homes went on the market and present pace of transactions remained the same. A balanced market is 3.5 to 4.5 months supply of inventory. So we’re still in a sellers market.
Conclusion – The Reno/Sparks Real Estate Market is still a strong Seller’s Market. Definitely not like 2020/2021 when the market was a White Hot Seller’s Market. We should continue to see prices moving up a little and until the number of sellers (Active Units & Month’s Supply of Inventory) move to balanced, we probably won’t see much of a reduction in home prices.
Reno/Sparks Economy
30-Year Mortgage Rates – In March 2020 the pandemic hit and the Feds decided to close all public services (not deemed essential) in an effort to reduce exposure to covid.
In a short few weeks, they found that the economy was headed for a financial disaster, so they reduced the Fed Fund Rate to .25%. That brought down 30-year mortgage rates to 3% and the housing market exploded with activity.
Fast forward to June 2021 and the Feds found inflation was increasing quickly. So they increased the fed fund rate which increased the 30-Year Mortgage Rates which hit 8% in October 2023 (a 20-year high) cooling off the Real Estate Market.
So what does this mean for our housing market in 2024 and 2025? On March 20, 2024, the Feds announced that they are looking at reducing the Feds Fund Rate in June 2024. Probably .25% to .5% which will make for a small change in the 30-Year Mortgage Rates, but not by much. It may not be till 2025 that we start to see 30-Year Mortgage Rates in the 5-6%.
Conclusion/Predictions
- If the Feds hold true to their March 2024 statement, we won’t see a lot of movement in interest rates or home prices for 2024. Sellers will be on the sidelines watching (not putting their homes up for sale) Buyers will continue to have difficulty qualifying for loans that will get them the house that they want. So for Buyers, this is the perfect time to “Prepare to Buy a Home” and for Sellers, you’ll want to position your home for selling in the future and here’s a great article to review if you’re “Thinking of Selling”. It’s probably a good time to do those upgrades that you’ve planned for, that will bring you the greatest Return on Investment.
- Trigger Events! This is an event that causes a great change in the market.
- For example, in 1929, the stock market was greatly over-valued and when investors started to figure that out, there was a mass exodus out of the market which caused the Great Depression. Ok, there’s a bit more to it than just that. However, the Great Depression caused a huge drop (about 60% in value in some areas) in the Real Estate Market in the 1930’s.
- The next big “Trigger Event” for the housing market was in December 2007, when banks realized that a huge number of home loans were made to people that couldn’t make their payments when the loan adjusted to long term. That caused 3.1 million home foreclosures in just 2008. The Real Estate Market was flooded with homes for sale and in distress. Prices dropped dramatically and yes, there was a lot more to the Housing Market Crash than toxic mortgage loans, but that’s what basically happened.
- Are we headed for another Trigger Event in the residential real estate market? There would have to be a catastrophic trigger event or a combination of events. I.E. – war, recession, another health crises or something that may be new to the list of Trigger Events. The point being that it is unlikely that we’re going to see another huge drop in the Real Estate Market soon.
- There is one event coming up that could have an effect on the Real Estate Market, “The Presidential Election”. It’s a given that Donald Trump is a Real Estate Investor, and he believes that a strong real estate market contributes to a good economy. So, if he is elected, we will probably see a reduction in 30-Year Mortgage Rates which will trigger an increase in transactions. More Sellers will enter the market. Will that make for price decreases or increases? We’ll need to see how the numbers start to move to make better predictions.
April marks the beginning of the Real Estate season for Reno, Sparks. So it’s a given that there will be a normal increase in sellers and inventory on the market. If you’re a buyer, keep your search portal going as there will be great deals out there from time to time. Make sure you’re as best prepared as possible to get the best interest rates, terms, and conditions. If you have to sell, have no fear because the market is still in favor of the Seller. Most importantly, get with the right Realtor. One that puts your interest First!
Disclaimer: This article/website contains forward-looking statements which are predictions and opinion based on data and information at a particular point of time. As data and information is updated and changes, the predictions and opinions can and will change. It is recommended that you always conduct your own research and base any of your investments and decisions on your finances on your own conclusions.