Year to date the prices in the Reno Luxury Real Estate Market have remained stable, and have shown a modest increase during 2007. However, because of mounting inventory, and few sales, this situation should change within the next 12 to 18 months.
MARKET OVERVIEWThe current market conditions for the $1 million plus market in the Reno area are extremely challenging. The number of million plus homes for sale in the Reno area has more than tripled in the past year and a half. On Feb. 1, 2006 there were 96 million dollar plus homes for sale; today there are 298!
Only 22 homes have sold for million plus since Sept. 1, 2007. The following graph shows number of listings by price band for each time period as well as the homes sold by price band.
The combination of increased listings and a low level of sales has casued the months on hand inventory to climb to 2 – 6 years worth of inventory! The following chart shows the absorption rate (i.e. the number of homes sold per month by price band) and the corresponding months of on hand inventory.
As shown on the above chart, there are over 48 months of inventory (4 years!) in the $1M - $1.25M price band, and over 71 months of inventory ( almost 6 years!) in the $1.75M - $2M price band. This means that at the current absorption rate per month of homes sold it will take this long to burn off the current inventory. This is without adding new inventory to the mix (which is unlikely).Because of this mounting inventory the basic laws of Supply and Demand suggest that there is going to be major pressure on prices on those few homes that actually sell in the next 12 – 18 months. Data is courtesy of my Broker at RE/MAX Realty Affiliates and NNRMLS.
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