Reno-Sparks sets record at $375,000 for median home prices in March
Read more: Northern Nevada Real Estate Journal, April 2018This is among a series of stories included in the April 2018 edition of the Northern Nevada Real Estate Journal (NNREJ), which the NNBW publishes on a quarterly basis to provide various real estate market updates across the region. To read more from the April 2018 series of NNREJ stories, click the links below:• Reno’s Melissa Molyneaux: ‘I have always loved learning about people’• Reno’s Shoppers Square: Summer 2018 modernization plans were decades in the making• Despite Sears, Toys ‘R’ Us closures, Northern NV retail market forges ahead• Need for Reno-area big box space key focus in tightening industrial market
RENO-SPARKS, Nev. — Signaling a return of prosperity for the Northern Nevada housing market, the median price for a single-family home in the Reno-Sparks area broke a record set before the Great Recession, totaling $375,000 last month.
The price is likely to keep increasing as the year progresses, according to the Reno Sparks Association of Realtors.
The March report released by RSAR says there is short supply of housing, and current demand for new listings is outpacing the available active inventory on the market, which was at a low of 551 listings.
However, experts say apart from low inventory, there are other factors contributing to high housing costs in the Northern Nevada region.
“We have sort of a myriad of things putting pressure on housing prices,” said Don Tatro, executive director of the Builders Association of Northern Nevada. “We have population growth contributing to that; the time it takes to get a project started from conception to completion is still a long process; and rising costs for land, labor and materials for new builds also exacerbate the problem.”
Tatro says as land becomes more expensive and difficult to build in the Reno metro area, places like Fernley, Fallon, Silver Springs and other outlying areas have become places of opportunity to build.
Development not keeping pace
Even with all of the housing construction underway around the city, Tatro said development has not kept pace when compared to previous years.
Last year, there were 2,133 permits for single-family projects for all of Washoe County, which is below the average of 3,000 and not close to some years where nearly 6,000 permits were issued.
However, 2017 was the first year that Tatro saw fewer permits issued for single-family housing projects compared to multi-family housing projects in a single year, meaning there are more apartments being built than there are homes.
Those apartments may not come cheap once they are built if current apartment rent rates are any indication.
According to data from Johnson Perkins Griffin, a real estate appraisers and consulting firm, the overall average rent costs for the Reno-Sparks area was $1,180 in the fourth quarter of 2017.
Rents in the Reno-Sparks area have been increasing consistently year to year since 2011, when the overall average rent that year was only $822.
Locals paying a higher price
With years of recession and recovery, increased population and the addition of a new diversified and stronger local economy, what are the implications from the high costs of housing and rents for both incoming residents into the Northern Nevada region and locals already settled here?
“Two things, one obviously locals are going to be paying a higher price, but (with) buyers coming in from other places like California and selling a residence down there to move here, the rates may not be that big of a shock to them,” said Doug McIntyre, president of RSAR. “I see it being a sellers’ market for a couple of years. But with that being said, if you sell your home today, where are you going to move? If you sell your home for $400,000, where are you going to move that you are going to pay $400,000 and get the same home?
“So that is the catch for homeowners right now is they are in a situation that even if they were looking to move, it may not be the best option. So they are staying in their homes longer and that reduces the number of homes available.”
Positive outlook for the future?
Despite the current housing situation in Northern Nevada, McIntyre doesn’t think the housing shortage has impeded growth.
He says many factors continue to draw residents and businesses to the Silver State such as low taxes, affordability, quality of life, proximity to outdoor recreation and places like Lake Tahoe, Sacramento and the Bay Area.
He added as affordability continues to be a concern, a strong job market, wage growth and low interest rates may help reduce the issues of affordable housing and the rising median price.
Though there has been some setbacks for the region, sentiments of optimism has been echoed by developers and Realtors alike. They predict a positive outlook for the future as development continues and new projects begin to tackle the housing shortage the area currently faces.
The $625,000 deal included a low-interest SBA 504 loan facilitated by Nevada State Development Corp., the state’s largest SBA 504 loan provider. City National Bank partnered in the financing package.