Link to original article:
Regional real estate: Reno-Tahoe housing in 2017 — What’s Next? | SierraSun.com:
Newspaper article brief:
"It should be obvious when there is little inventory, and those price ranges ($600,000 and under) are such a large part of the sales total, that prices will rise due to supply and demand. Sales units may increase only slightly or may be flat because of limited inventory.
In the $600,000 and under price range, sales this year will look much like they have in 2016, perhaps experiencing a bit more stress in the market.
We have a shortage of homes in these price ranges and because of the great job that EDAWN, the state and industrial developers have done attracting new companies, we have jobs and people moving into our community.
Supply and demand will continue to increase prices until we see new construction start to catch up. Once the supply of new construction catches up, we will see prices start to flatten and perhaps fall, which may entice the investors who purchased homes in the downturn to sell. However, this won’t be corrected in 2017.
Currently, we have a 2 percent vacancy factor in apartment rentals, which is extremely low. Again, supply and demand will cause rental rates to continue to rise until the approximate 7,500 new “doors” currently approved become available.
Mortgage rates went up in December. With predictions from the Federal Reserve Board, there will be more increases in 2017. Projections from most economists don’t expect the rates to exceed 5 percent in 2017.
Rising prices will affect the down payment and credit scores needed to purchase a new home creating a new challenge in addition to the limited supply. Competition from cash sales will continue to be a challenge for buyers who must obtain a mortgage.
Luxury home sellers may get a short term bump in sales with a new administration coming into office who inspires confidence, and mortgage money will be plentiful, but all eyes will also be on the stock market.
Currently, we have more than a 45-month supply of homes in the $1.5MM and above price range. I believe prices may come down based on the absorption rate in this price range but also by the changes in buyers’ tastes and lifestyles by the end of 2017.
In summary, I predict there will be a modest gain in existing home sales in 2017. The National Association of Realtors (NAR) is predicting sales to increase a modest 2 percent, from $5.42MM to $5.52MM in 2017.
NAR is also predicting median home prices to increase by 4 percent. I believe we will see median prices continue to increase at a higher rate in our community due to the supply and demand in the properties available for sale under $600,000.
This will be coupled with job and population growth, and tempered by rising mortgage rates and possibly consumer confidence. The median home price has increased 42 percent over the last five years while the median household income gain has only increased 17 percent.
This disparity will hurt affordability and is not sustainable over the long term. We are starting to see some California markets (e.g. San Jose) slide into a negative growth category because of this disparity, but I don’t believe we are there yet in our market."
Thank you for viewing the Incline Village Real Estate blog. If you require additional information or discussion contact me via Randy@RandyBull.com.
