We knew we were going to see a correction in home prices this year. We don’t know how long it will take to correct. I do have a theory that I’ll share with you after going over the stats.
Prices in the Reno/Sparks area dropped another 4% month over month in July putting us at $574,510. We are closing on less homes due to buyer’s dropping out of the hunt mostly because of rates. Homes are staying on the market a little longer these days clocking in at 25 days until contract. We have a ton of homes on the market. We are up almost 300% from last year when looking at months supply of inventory.
I’m not scared yet and I don’t think you should be either. Here’s why:
- Even though we are seeing a pretty steady monthly drop in median sales price we are still over 9% up from this time last year. My brother is a wealth manager and if he could get 9% growth for his clients Y-O-Y he would be the greatest to do his job ever. Like I said last month, we need to stop looking at the month-to-month numbers and pay more attention to the big picture. If we end up seeing this Y-O-Y number drop below 2% I will start to get nervous. Hopefully we don’t see that.
- July and August are generally slow months in real estate. Families are out enjoying the summer, taking vacations, or staying out of the heat. We usually don’t see buyers really ramp up their searches again until September/October when they get back in their routines.
- Buyers have a TON of power right now. It’s a lot of fun shopping right now. Sellers are giving credits left and right to entice buyers to pull the trigger. We have more inventory on the market right now than we have had in a LONG time, so buyers have more options. Homes are sitting on the market longer, so buyers have some time to make decisions. It’s much less stressful and feels like a more balanced market.
How long will it take to correct?
Throwing out my prediction is pretty scary. Obviously nobody knows what’s going to happen. Maybe I’m just a crazy optimist, but I feel like we will be out of this pretty soon. August numbers are probably going to drop again making buying even more appealing. With the incentives that sellers are giving out a lot of buyers are able to get their rates down to numbers they can swallow. I think the market will feel a little more balanced when families settle into their normal routines. I want to see the Y-O-Y median sales price stick at around 2% for a couple months. Stay with me over the next couple months to find out what’s going on.