Regression toward the mean is a concept whereby exceptional events give way to more typical events resulting in a predictable pattern over a long period of time.
In the case of real estate, the concept applies when extreme market conditions, whether up or down, return to a more balanced position. While these events may feel exaggerated in the moment, they lead to somewhat structured results in the long term.
Real estate in the greater Reno area continues to show signs of such a correction. While conditions are cooling from their previously torrid pace, they have only regressed to what may be considered balanced; a far cry from the market downturn of a decade ago.
As an example, the total number of sales in the last 30 days shows a decline of nearly 25% from the same period 12 months ago. While this is a statistically meaningful drop, median price has continued to creep upwardly by a very healthy 1% month of month which has contributed to a very steady 11.3% annualized rate of appreciation.
Further evidence of a stable market is measured in days on market for sold homes which remains virtually unchanged month over month and year over year. While inventory is accumulating in a way that is notable only for going from nothing to something, well priced homes are selling predictably.
What appears to be waning is the irrational purchasing of investors hoping to flip for near term profits and sellers who are able to command top dollar simply for lack of competition. Anxious sellers appear willing to negotiation approximately 1% from asking prices which is nearly .5% more than in previous months; still indicative of a market favoring sellers.
All of this equates a healthy market where rising interest rates and reduced purchasing power are causing some saturation; as they should. Demand for homes in the region appears uninterrupted as jobs continue to be added and families relocate to the Silver State. Developers of new housing projects in the region remain undeterred, betting on continued influx.
AROUND THE REGION:
An update on some of the larger projects underway around Reno
Reno City Council introduces “The Puzzle Pieces”, Reno’s newest housing strategy program
For those moving to Reno, urban neighborhoods are en vogue
Housing shortages continue to restrain job growth
The outdoor industry is an economic powerhouse for Northern Nevada
Finally, Nevada Day reminds us that the state has always been exceptional