Home prices are skyrocketing faster than ever in Northern Nevada and beyond. Mike Wood is a longtime realtor in Reno-Sparks, and he spoke with KUNR business reporter Kaleb Roedel about why housing prices have spiked during the pandemic and how high he thinks they might rise.
Kaleb Roedel: So Mike, home prices have been going through the roof during the pandemic. Bidding wars are breaking out. Homes are selling in days, if not hours. Walk me through how we got here.
Mike Wood: Oh, gosh, that’s a very curious question. Let’s say, February of 2020, we get hit with a pandemic, our markets slowed tremendously through February and March. In fact, people in the industry thought, “Oh, this is it, the pandemic is going to be what takes away our demand and prices are going to fall.” And sure enough, we were totally wrong. A month or two later, you started to see the wave. It was even a joke where Saturday Night Live did a skit with a Zillow commercial, making it where adults were, you know, they were on Zillow, and it was their dirty pleasure of, “Hey, let’s look at Knoxville, Tennessee, and look at this house.”
Places like ours start to become more expensive on the housing because we have people with a lot of money coming over buying up our homes thinking, “Hey, it may be expensive for that market traditionally, but from where we’re coming from, man, it is a lot cheaper. So I’m willing to spend the money,” which people in Reno said, “Ah, Californians coming in with their cash, they don’t care, they’ll pay up.” And it was hard to argue with them because a lot of them were.
Roedel: Yeah, it made me wonder, how difficult is it to see people get their offers rejected over and over, and eventually just get priced out of this market?
Wood: So, in all honesty, it’s heartbreaking. Because what happens is, historically, it was you come to the agent, the agent identifies what it is you’re looking for, goes to the MLS, pulls a number of homes, you go out and look at sometimes up to 15 or 20 at one point in time. I mean, I had to create spreadsheets so that people could remember the first house after they’ve seen house number nine. Nowadays, it is, “this is what we want; we’re from someplace else and we’ve heard you’re very affordable; here are our criteria.” And then we say, “OK, just based on your criteria, here are the homes.” And we send them back, and sometimes there’s one home, sometimes it’s zero.
Roedel: And why is there such an imbalance of supply and demand in the housing market right now?
Wood: I believe that the reason there is such an imbalance is homebuyers are competing with investors. People are buying homes as a side hustle. And they’re competing with the same family that’s trying to buy the house to live in it. And until the investors do not have the returns that they want, and they pull back, the owner-occupants will have to compete with them.
Roedel: What other trends have you noticed in terms of just the state that the housing market is in right now? And where do you see things going from here?
Wood: Our pricing will continue to accelerate until we hit that breaking point where the forecast is no longer 12%, 15%, 18% growth. But more of a flatline. The question is, when is that going to be?
Roedel: And that’s exactly the question I was gonna ask you. What do you think that breaking point is in terms of median home prices in Reno?
Wood: So, I don’t necessarily see it falling. I see it remaining steady with price increases up to $800,000 to $850,000, which just blows my mind, really, because I was selling homes in 2010 that were $150,000 in South Reno, and now those homes are $600,000. So with the amount of buyers that are out, I don’t see it slowing down. What I expect is I expect the new home builders to continue producing at their highest output. The problem is they’re now limited by skilled labor. They’re also limited by supply chains. A few of the builders used to run on four-month build cycles. Those are now out to eight, nine, 10 months. So, from the time they start the home until the time they finish the home can be upwards ... I’ve got one closing next week, 13 months ago is when she went into contract. But the builders just can’t keep up.
KUNR reached out to the Reno/Sparks Association of REALTORS to see if it also thinks the median home price in Reno could eventually reach $800,000. The association doesn’t think it will jump that high in the near future, but it said it is possible those numbers could be seen in the next five to seven years, given the rate at which Reno is growing. Last month, the median price in Reno reached $600,000 for the first time ever.
