Homeownership Month and an Economic Update
June is National Homeownership Month and we believe that everyone has the right to the "American Dream of Homeownership." It's important to share the benefits of owning a home and why now is still a good time to buy even if we are dealing with inflation and rising interest rates.
At the beginning of the month, a local title company hosted an economic update.
Ted Jones, VP and Real Estate Economist of Stewart Guarantee, shared some VERY insightful information about our local economy and what we have in store going forward.
He hit on 5 key topics.
He spoke for over two hours, so we will hit on some of the most important pieces that affect us here locally.
Jobs in Nevada were very surprising. Every job we gained from the recession to 2019 was lost in 2020 because we were significantly hit by the shutdowns of our hotels and hospitality. From 2021 to the First Quarter of 2022, we have gained EVERY SINGLE job back that we lost. Even better, the jobs we gained are higher paying and have higher skill sets than previous jobs.
When it comes to Existing Home Sales, all people are asking is are we headed to a recession or a housing crash. Many people would argue that we are already in a recession because of the definition and that it was a mortgage crash, not a housing crash. But let's look at what is really going on so we can get a good idea of the facts. In many states across the US, they are seeing a slow in home sales and home values. Now, most of those states as a whole were not seeing the decrease, just Cities within. Here locally, we are seeing a slow in sales, but we are seeing an increase in sales volume. We are down 11% in sales from last year to this year. We are still selling more homes than pre-pandemic, just not from the prior year. With the market's peak behind us, we will be interested to see what the rest of this year brings.
Rents have increased significantly. 22% year-over-year "significantly." The average rent for a studio apartment in Reno was up 12%, and a 3 bedroom increased by 19%. This increase will cause many issues for renters, and with no end in sight, the only security they have is securing a monthly mortgage payment to lock in a payment. But that point brings up to down payments.
It is widely believed that you need 20% to purchase a home, and although that takes you out of Primary Mortgage Insurance (PMI), this is far from the truth. The average homeowner put down 13%. The average monthly payment was $2,532, $100 more than our three-bedroom average rent.
First-time home buyers made up 34% of the market last year, and there were a few surprising statistics regarding down payments. 52% of the purchasers used money from their paychecks as a down payment, while in second place, at 24%, was stimulus money! 12% came from cryptocurrency, an uncharted and new category over the past few years.
The thing none of us want to talk about or HATE talking about. Gas prices, grocery store visits, and even the pooper scooper increased prices. Inflation is the second-highest it's been in 40 years, and we will probably see it for another two or so years.