Updated 4 months ago on .
Reno NV - Market shifting update for investors
Last month brought several key milestones to the Reno, NV (Washoe County) housing market. While prices hit a new all-time high, other underlying data points may be even more important for real estate investors. In particular, rising inventory and the types of homes that are actually selling.
π MARKET METRICS THAT MATTER
Median Price (Single Family Homes): $615,000 - all-time high
Active Residential Inventory: 1,548 - highest since Sept 2016
Month's Supply Of Inventory: 2.9 months - the highest since January 2019
Price Per Square Foot: $324 - down from May 2022 high of $336
Time to Sell: Smaller homes are taking longer than larger homes, which is not typical
π‘ WHAT TYPES OF HOMES SHOULD INVESTORS BE LOOKING AT
The combination of a record-high median home price without hitting the record for price-per-square-foot shows that larger homes are selling. Investors who are looking for a residential rental home, whether it for a BRRRR, long-term rental, short-term rental, Flip, or anything else; often find that smaller homes work best.
Currently, homes under 1800sqft are taking 13% longer to sell than homes over 1800sqft. Over the past 10 years, homes under 1800sqft have sold on average in 80% of the time that homes over 1800sqft take. For example, in a time when larger homes were taking 100 days to sell, smaller homes were selling in 80.
Smaller homes that could be easier to rent, and get a decent rental rate compared to the purchase price, could be a great opportunity right now. Sellers in this segment are more used to homes moving quickly, but with them taking longer, there may be more room for negotiation. Particularly if the home needs some renovations, replacing 1500sqft of flooring is half the cost of 3000sqft, so this could be a great time to pick up a smaller home that needs some updates.
π RISING SUPPLY
Last month hit a total of 1,548 active residential listings (single-family homes, condos and townhomes). This is the highest amount since since 2016. Meanwhile the month's of inventory hit 2.9, the highest since January 2019. This is a significant indicator of a shift from the strong seller's market that we've been having for the past few years, shifting back towards a buyer's market. When a seller is in a situation where they need to sell quickly, but their home is sitting on the market for a while, this gives investors a lot of negotiating power.
π AFFORDABILITY PRESSURE COULD SHIFT RENTER DEMAND
The Home Affordability Index in Reno remains extremely low at 43, tying the lowest ever recorded (previously July 2024). When the index is at 100, then someone making the median income can afford a median home, and when it's 50, then you need to earn twice the median income to afford a median home. Affordability this low means fewer residents can qualify for homeownership, which often leads to increased rental demand.
Nearby areas show various affordability:
- Reno: 43
- Sparks: 52
- Sun Valley: 64
- Verdi: 33
As buyers get priced out, these affordability dynamics should continue to drive more demand toward rentals.
π― TOP 3 INVESTMENT OPPORTUNITIES RIGHT NOW
- Value Deals in Smaller Homes: Look for smaller homes (under 1800sqft) that are taking longer to sell. These may offer better negotiation opportunities.
- Properties with Renovation Potential: Homes that need updates can be purchased at a discount. This allows for a lower cost per square foot when renovating.
- Rental Properties in High-Demand Areas: Focus on neighborhoods with strong rental demand, especially those with lower affordability indices. These areas are likely to see continued rental growth.