Rosy Picture Painted By Q1 For Reno-Sparks Multifamily Market
By David Larson
Q1 of 2022 paints a rosy picture for the multifamily market in Reno/Sparks. If we look at the average sold price of smaller multifamily properties in the first quarter the price is close to $318 a square foot. Vacancy factors are down about .5% from the previous quarter and at 2.66% we are way below the average of 5% that is considered a healthy market. Average rents are up slightly from last quarter at $1,633. Currently under construction there are about 4,500 units with another 6,000 in the planning stage per Johnson Perkins and Griffin Appraisers. The under construction and planned unit numbers seems large but due to the staggered nature of finishing projects and the strong population and job growth in the market I believe the impact of the units coming online will be minimal.
Much has changed in the world in the first quarter of 2022. We have a slight hangover, but it appears that Covid is mostly behind us. Russia invading Ukraine is changing the dynamics of politics in Europe, which may have a spillover effect in our market. Interest rates are rising. Inflation has risen at rates not seen in some time. All these factors could have an affect on our marketplace. These changes are not reflected in the first quarter of 2022. Looking forward for our market I see the sales transactions of multifamily leveling off somewhat, and lease rates tapering off in their increases. Interest rates, although rising, are still less than their average over the last 50 years. What may be a more important factor is interest rates are well below the current inflation rate. All in all, I see a cooling of the real estate market in general, with the local Reno/Sparks market being somewhat insulated from the national market.
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