NEVADA - If you're planning to buy a home in Reno, Nevada, you should know the city's recent real estate trends. Home values have increased nearly twenty-one percent over the last year and will continue to increase for the foreseeable future. However, you should know the city's limited supply and pricey real estate.
Because of Reno's high cost of living, fewer homebuyers can compete with real estate investors. This means that renters would pay more for a rental property in Reno. Moreover, the city's housing market is primarily dominated by tourists and students who pay higher rent than locals.
The Reno, real estate market has many advantages for investors. The city is near Lake Tahoe, which draws tourists in the summer. In the winter, Reno is a popular resort town for people who enjoy snow sports. Reno real estate is also more affordable than its counterpart in Las Vegas.
In July 2023, the median price of an existing home in the Reno metro area was $584,256, up 0.4 percent from May 2022 and 10.4% higher than in July 2021. In addition, homes in Reno and Sparks were on the market for an average of twenty-five days before they went under contract, compared to six days in July 2021. As a result, the median price of a resale home in Southern Nevada is now $465k.
While home prices are expected to remain stable, prices are expected to decline in some markets. For example, new home construction has slowed considerably in the past five months. However, new multifamily construction has increased by 20 percent. This is despite the city's economy facing challenges related to the supply chain and high inflation. Meanwhile, the S&P 500 is up by nearly seven percent from its low in 2022, unemployment has declined to a half-decade low, and the Federal Reserve is pursuing an aggressive rate-raising strategy.
According to Zillow, the real estate market in Reno is set to continue its upward trend. Millennials will continue to drive home price growth in first-time home buyer neighborhoods. This demographic will continue to be strongest in counties around major cities. Rents are also expected to rise, with some cities seeing nearly 40% increases.
Fannie Mae estimates that the average 30-year mortgage rate will rise to 3.5% in 2023. After peaking in the first quarter of 2021, home value appreciation will slow to 5%. This should be a relief for investors looking to buy a home. It would also be beneficial for those looking to flip their property.
