HOUSING NEWS REPORT
ATTOM DATA SOLUTIONS
DARK SIDE OF A WHITE-HOT MARKET
Northeast of Lake Tahoe. Big-name companies are relocating to the TRIC to take advantage of tax abatements and lots of available space. Some of the biggest new tenants include the Tesla Gigafactory 1, Google, Apple, Switch and Rackspace. Unemployment was down in the Reno metro area to 4.0 percent as of September 2017, according to the BLS. Additionally, the State Demographer’s office is projecting steady population growth of 1.7 percent per year every year from 2017 through 2021 for Washoe County. “Reno is affected by activity at the TRIC,” said Stephen Miller, UNLV economics professor and director of the CBER. “In the situation in Reno, I would say that speculators are driving up prices today, which will stimulate construction so that employment and population grow. Prices will not be as high tomorrow because of the speculation today.”
“What I notice is that flippers are moving to manufactured homes and mobile homes and fixing those up because they are still very affordable,” she said. RENO RIPPLE EFFECTS An investor and broker with Coldwell Banker Select Real Estate in Reno, Ron Bell is also keenly aware that it’s a tough market for investors. Given current market conditions, Bell said he’s advising many of his investors to get out of their properties and sit on the sidelines with the cash for now. “The challenge is finding anything because the inventory is so tight,” said Bell, who is also president of the Reno Real Estate Investors Club. Still, he is bullish on the market when it comes to buying in the outlying areas like Fernley and Elko. “I like the less speculative areas like Fallon where the navy base is located,” Bell said. “I like those areas because there’s core employment. I’m afraid in Reno we’re on a self-fulfilling prophecy. When Tesla came in the construction people came in. What happens when the real estate jobs evacuate like they did around 2008?” Bell said he is still buying rentals — apartments and other income properties — if he can find them, which in many instances can take months to a year. “For long term investors I tell them to hold,” he said. “Keep buying if you’re long term. For flippers, just keep your inventory low. Keep flipping, but don’t get stuck with too much inventory in case the market corrects.”
The highly speculative seller’s market in Reno does have a dark side, according to local experts. What is making it particularly tough on the buyer’s side is that sellers are getting greedy, according to Foster, the sales agent with Sierra Nevada Properties. “Sellers are saying I want more and I want to do less and give less,” she said. “If you want help with the closing costs you have to build it into the offer.” Foster tries to educate her clients about the market, warning them that they may not get a second opportunity to up their offer, so they need to decide up front how important a particular house is to them. If they absolutely have to have it, then they need to bring in a good offer. The red-hot real estate market in Reno is also forcing real estate investors to shift strategies, according to Foster.
indicators, a solid economic and housing recovery is well underway there according to John Restrepo, principal at Las Vegas-based RCG Economics. “A strong housing market and a recovering commercial market are bolstering construction in Las Vegas, leading to more construction jobs,” said Restrepo in his latest Las Vegas Economic Metrics report. Job growth is also in the cards for Las Vegas with a number of major projects such as the Apex Industrial Center just north of Las Vegas where Hyperloop One is set to build its test track facility; the Las Vegas Stadium, a $1.9 billion domed stadium, future home for the now Oakland Raiders starting with the 2020 NFL season; and Resorts World Las Vegas, a $4 billion, 3,000-room modern Chinese-themed resort being built on the corporate broker Paul May with Keller Williams Realty Southwest said he has not seen a lull in his business whatsoever. “The market is pretty robust right now and people are itching to buy in that $250,000 price range. They’re selling like hotcakes right now in Vegas,” May said. “The inventory being low is keeping the site of the former Stardust Hotel. With all this activity going on,
prices strong.” For August 2017, ATTOM reported a median sales price in Las Vegas of $235,000, a 13.5 percent increase from a year earlier — the sixth consecutive month with a double- digit increase in home prices. Those rapidly increasing home prices are making it tougher to find cash flowing rentals, according to investor Schurr with WeBuyHouses.com. “If we get anything under a certain price level we will hold them for rentals,” he said. Rents are increasing. If you can get a super low price then you have to hold them.” Schurr’s biggest concern at the moment is the city’s new law against rentals for less than 30 days, such as in the case of Airbnb properties. Due to public concerns over “party houses”, the new law requires the homeowner to have a special use permit from the city, proof of $500,000 of liability insurance and placards outside with the owner’s contact information and maximum allowed occupancy.
of the fastest-growing states in the nation in terms of population growth at 1.95 percent behind only Utah for the fastest population growth percentage. Two counties — Clark and Washoe — account for approximately 90 percent of the state’s population as well as 90 percent of its housing stock. As of September 2017 the state unemployment rate was 4.9 percent, a substantial decline from its peak 7 years ago, according to the Bureau of Labor Statistics. While these factors will help shape future economic growth, UNLV economics professor Stephen Miller believes it is too early to tell whether the Trump administration’s economic policies will have any significant impact either locally or statewide. “The current economy largely reflects going back over several years,” said Miller, director of the CBER, noting it’s also too early to fully gauge the impact of the mass shooting in October during the outdoor concert at the Mandalay Bay Hotel. “So far the evidence is anecdotal. Some cancellations have occurred immediately after the event. The data will give us an answer in several months.” •
SILVER LINING FOR SPECULATORS IN LAS VEGAS
Home Flipping Rate (Share of Sales)
Q2 2017 Home Flips
8.9%
6.7%
1,207
174
JOB, POPULATION GROWTH LIFTING ALL BOATS According to the Census Bureau, in December 2016 Nevada was one
Las Vegas, NV
Reno, NV
STILL BETTING ON VEGAS While Las Vegas is lagging behind Reno when it comes to most housing
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