🐈🙏 Cat Archbishop Prays for Rate Hiking Cycle

This week on Real Estate Gone Wild I want to give a little update on where we’ve come from this spring and where we appear to be headed this summer. In spite of aggressive rate hiking for the past year which has nearly doubled many buyers’ monthly mortgage payment, the Reno real estate market remains resilient.

Sorry Hide-The-Pain-Harold, I think you’re just going to have to bite the bullet and pay it. The days of 3% loans are gone.

Inventory levels are normalizing towards a more “regular” summer in our new post-COVID market. We used to get up to around 1,500 active listings each summer pre-COVID, but since COVID inventory has been way tighter - usually well under 1,000 units. Price is still trending up for the summer and total available inventory is flattening off around 800 single family home units for Reno.

We only have 1.6 month’s supply of inventory meaning that if no new houses were listed, all of them would be sold in 1.6 months. In other words, we are back squarely in a seller’s market. Homes priced appropriately can still expect to go into contract very quickly and potentially have multiple offers.

This is all kind of amazing, isn’t? Price dropped 16% between May 2022 and January 2023, but that loss has already been trimmed to just 10% and is quickly regaining ground in spite of the average mortgage rate being over 7%. What could be the cause of such market resiliency? As discussed in some other prior newsletters, low housing supply, continued immigration into our market, sellers’ inability to move because they can’t afford the payment on a new home, and perhaps… just maybe… divine intercession.

Builders are feeling it too. New housing starts are also up nationwide eclipsing recent records, and housing sentiment is on a steady climb (link here). It’s still amazing to me to see this level of strength because there are a lot of folks sitting on the sidelines too that would love to buy right now but the monthly payments have priced them out of participating in the market.

My prediction for the remainder of this summer is continued price strength. Even if we get a bit higher unemployment like the Fed wants, I don’t anticipate that will cause distressed inventory to flood the market and reverse the price trend. Most people have healthy equity and can sell their properties if forced to without selling short. And perhaps most importantly, the cat archbishop remains dedicated to sustaining the economy. If his prayers falter or some other event makes a turn for the worse, I’ll keep you posted here on Real Estate Gone Wild.