Why are Reno housing market prices going up?
Since 2015, the prices of Reno property have seen a significant increase. While this could be good news for current homeowners, potential buyers may have to dive deeper into their pockets to be able to afford a home in the Reno Sparks area. Why is this so? Well, the last two years have seen median income in Reno decrease, according to a research done in the University of Nevada. What does this mean? Low-income families are unable to afford Reno property, meaning that renting is the only option left, and with renting also on the rise, the situation is only getting worse.
1. High Growth Rate
According to the Economic Development Authority of Western Nevada and DETR, Nevada could be seeing a record high 40,000 job opportunities available annually, with North Nevada realizing about 10,000 each year. This means that, for the Reno housing market to keep up, about 5,000 new homes must be developed to accommodate such a high growth rate. This is similar to the 2005 growth rate experienced in the region, prior to the economic recession. This high growth rate means that Nevada is the second most preferred destination for people considering a move to the west.
2. Low Housing Inventory
When demand increases faster than supply, it results into exaggerated prices for commodities, in this case, Reno property. The number of houses available in the Reno housing market has been significantly low, therefore, this created a situation of high demand and low supply, meaning the available homes are expensive and since Nevada is experiencing an influx of movers, the situation is only getting worse. Big companies, such as Tesla, are attributed with the sudden influx of movers, therefore residents are having to work overtime to be able to afford their homes. Builders prefer a more sustainable growth rate as compared to this high growth rate being experienced in Nevada, and therefore they are reluctant to invest in Reno, which ultimately leads to a low housing inventory.
3. Low Wages
According to the Bureau for Labor Statistics, wages are increasing about 3 percent for low-income earners and 20 percent for high-income earners nationwide, as well as in Northern Nevada. What does this mean exactly? People earning less are unable to afford proper housing since majority of them are unable to balance paying rent and buying consumer products. This results into a low spend rate on houses, and when people are not buying houses, the growth rate in the economy is slowed down considerably.
The coming years are predicted to be even more difficult in the Reno housing market unless something is done to increase the housing inventory to support the high number of movers. The best way to prepare is to partner with a knowledgeable real estate professional to help navigate the ever changing housing market.