Spring has sprung and the real estate market is heating up with the temperatures!
Our median sales price for single family homes in Reno/Sparks has increased for the 3rd straight month in a row and clocked in at $528,500 for the month of March. With interest rates as high as they are and prices rising, why would I think it’s a great time to buy? Great question.
Because the average price was dropping, buyers were able to get sellers to pay for a rate-buy down and additional closing costs without having an issue with the appraisal value coming in lower than the purchase price. Recent comparable sales an appraiser would use to value the house would support a price 2 or 3 percent higher than the actual market value. This left some room for negotiation to get the seller to pay up.
If prices continue to rise, comparable sales from the prior months will not support the higher price in the appraisal, making it difficult to fit a seller credit into the purchase price. If prices rise for another 4 months, it will be almost impossible to negotiate for a seller credit. This is especially the case if we don’t see a lot more inventory quickly.
Low Inventory & Closed Sales
With only 555 homes active homes on the market at the end of March, we have the lowest inventory we’ve seen in the last 11 months. With 399 closed sales in March (a 45% jump from February) I’ve got to believe that buyers are more active than they’ve been in the last 5 months. Just a simple glance at the law of supply and demand tells us that prices should continue to rise. If we don’t see an uptick in new listings, we will see fewer seller credits and higher prices making it more difficult for buyers to buy.
Days to Contract
If the 45% jump in closed transactions in March doesn’t convince you that buyers are active, take a look at how many days it’s taking to get a listing into contract. 18. It’s only taking 18 days for a buyer to write an offer on a home that’s good enough for a seller to accept. In January it was taking 57! That should clarify for you that buyers are still hungry, even with interest rates where they are.
Interest Rate Forecast
Mix all that in with the interest rate situation. As we know, high interest rates bring prices down. The flip side of that says that when rates drop, prices rise. Experts are calling for a pretty substantial drop in interest rates at the end of May. If this happens, prices will start to rise even faster than they have over the last 3 months.
So, A Good Time To Buy?
After taking a look at those stats, I’m pretty darn convinced that buyers are running out of time to purchase at a low price and have sellers pay for closing costs. It’s going to get very interesting over the next few months! I’ll keep you posted on what’s happening next month.
In the meantime, if you know someone that wants to buy a home and is nervous about the market, please have them reach out to us! We are here to help.