Demand rises for single-family rentals
The phone on David Martin’s desk rings 20 to 30 times a day with callers looking for a single-family home to rent.
And Martin, a property manager for Dickson Realty in Reno, isn’t alone.
The market for single-family rentals in Reno and Sparks is growing in strength, giving some property owners the courage to seek long-deferred rate increases.
But no one knows for sure whether the market’s strength is purely seasonal or the indication of something more profound in the local economy.
Martin, for one, thinks much of the activity is the normal seasonal upturn in the residential rental market. Families who rent homes often time their moves during schools’ summer vacations, and it’s easier to carry a sofa out to a rented van on a sunny day than the worst day of winter.
In fact, the Dickson Realty property manager says many savvy landlords try to time their leases to end in late spring, just so they can catch the annual wave.
Kevin Sigstad, president of RE/MAX Premier Properties in Reno, sees signs that there’s something more going on.
“Single-family rentals are flying out the door,” says Sigstad, whose firm manages 750 housing units, a figure that includes some small apartment complexes along with single-family homes and condominiums.
Among the factors driving the home-rental market, he says, is the shortage of entry-level housing in the market after years in which new home construction was almost at a standstill.
Now that young people are moving out of parents’ basements, getting jobs and looking to buy their first homes, they find themselves in bidding wars with dozens of other buyers and cash-flush investors.
“We keep making babies, and they keep graduating,” Sigstad quips. “Now people can’t find houses to buy.”
Unable to buy, they take the second-best option and rent. Other consumers, feeling burned or gun-shy after the housing collapse of 2008-2009, don’t want to buy at all and turn to rentals.
And the market is pressured further, Sigstad says, by the slow revival of migration into the region. As housing markets in California thaw, homeowners in the Golden State are able to sell and move to northern Nevada.
If they don’t want to buy right away, they’re likely to find a healthy supply of upper-end custom homes available for rent, says Kim Grist, owner of Reno Rental Finders.
Her firm has been acting as a matchmaking service for renters and landlords for 10 years, and she says Reno Rental Finders almost always has at least a few custom homes ready for renters.
“People haven’t wanted to sell their custom homes right now,” Grist says, noting that the higher-end residential market has been slower to bounce back than the entry-level market.
An executive transferred from Reno to New York City, for instance, might have decided to rent her home in ArrowCreek rather than take a loss on a sale. Now that business activity is rebounding in the Reno-Sparks area, newly arrived executives and their families are likely renters.
But Grist says demand remains strong across the board — from the hillsides of ArrowCreek to the working-family neighborhoods of Sun Valley.
“People have always liked houses,” she says. “They like a backyard where their kids can play.”
And some are looking for even more — a neighborhood that reflects their vision of themselves.
Bryan Raydon, whose owns Marmot Properties with his brothers Eric and Gary, says the company’s focus on redevelopment of residential units in the “West of Wells” neighborhood near downtown is paying off.
The company’s properties are near 100 percent occupancy, Raydon says, as the neighborhood captures a demographic of hip, often young, families and couples who want to live in the Midtown district.
“They don’t want to live in the suburbs,” Raydon says.
The demand for single-family homes as rentals is allowing landlords to begin raising rents.
Grist says landlords with whom her firm works have been slowly tacking $25 or $50 a month onto rents whenever they have a vacancy.
Sigstad says Premier Properties is seeing rent increases of about 5 percent — sometimes as much as 8 percent — in its portfolio of managed properties.
“There’s a lot of built-up pressure from the years that we couldn’t raise rents,” Sigstad says.
The rate effective Jan. 1, 2020, is 1.65 percent of wages paid to employees. That is two-tenths of a percent lower than the current rate, giving a significant break to businesses that pay the tax.