Home Prices Soar in Reno
for Class Project “Reno Grows Up,” due Nov 22
Robin Joyce, a businessman from Las Vegas, is happy about the appreciation of his property in Reno, thanks to the skyrocketing home prices in this area.
He bought a condominium for $210,000 in 1998 in Incline Village, a place overlooking the scenic Lake Tahoe in Reno. Two years later, he sold it for $425,000. In the same year he bought a bigger condominium, about 2,000 square feet, in the same neighborhood for $280,000. Now he believes the property is worth at least $600,000, as his neighbor has just sold a smaller condominium for that price.
Although he bought a house partly for vacation and partly to save money from hotel expenses for his frequent visit to Reno on advertising business, Robin believes it is a good investment.
“Believe me, the real estate prices will never stop growing, especially in a place like Reno,” he said.
Soaring home prices
Chas Horsey, director of the Housing Division of the Nevada state government’s Department of Business and Industry, described the price hike in the past few years as “frantic.”
“I have never seen the prices grow more frantically than now since I began working in real estate in 1966,” he said.
The Housing Division's statistics shows that the average sale price of homes in Washoe County is $369,600 in September, up 38 percent from about $267,400 the same period last year.
Back in 1999, the average sale price of all homes in Reno was $158,900, according to a report on Realty Times in March 1999.
The realtors, who help people to buy or sell homes, are the real witnesses on the frontline to feel the heat.
“The market has been crazy for the last couple of years,” said Cathy Blane, who works as an assistant of her husband Steve 000 at 000 Realty. “Virtually every home in our area has had multiple overpriced offers within the first couple of days on the market.”
As a result, the sellers have always been able to ask and receive way more for their homes than before. On the other hand, the soaring prices have become intimidating for the buyers, especially first-time home buyers like Limin Liu.
After working at the tourism department of the Nevada state government for two years, the UNR graduate and former Chinese swimming champion figured that her saving should be enough to buy a medium-sized home in Reno. She planned a budget under $200,000. But after she did a brief research about the housing market, she was taken aback.
“Two years ago a friend of mine bought a nice house at a nice location for $200,000,” she said. “But now when I asked the agents for homes under that price, I’ve been shown only those ugly houses at remote or unpopular places like Stead 000.”
Liu said she became pessimistic now on the prospect of buying a home. She will have to either increase her budge to $250,000, or downright give up the idea to buy a house for the time being.
“Maybe I’ll have to go back to China,” she said.
Why prices keeping climbing?
Horsey attributes the influx of people, especially those from neighboring California, as the major factor to push the home prices so high.
“A large number of Californians came to Reno each year,” he said. “They have been used to paying much higher prices for a home in California. So the growing prices here in Reno are still very cheap for them.”
The much less living expenses, less traffic and crimes, and moderate climate and beautiful sceneries are believed to be factors that attract people to come to the “biggest little city.”
Even Joyce, from Las Vegas, said he likes Reno very much.
“The Lake Tahoe is so beautiful,” he said. “That’s why home prices around the lake grow the fastest.”
The increasing prices of building materials all across the country also contributed to the price surge in Reno, according to Horsey.
Another factor is the limit of land use. Currently about 90 percent of the land is owned by the federal government, and only 10 percent is in private hands. Although the government began to dispose some land for private development five years ago, it is still far from enough to cure the soaring housing prices, Horsey said.
The record low interest rate has been encouraging more families to move into home ownership in the past few years. The interest rate for home loans is now lower than even that of 1966.
In the mean time, the economy in Reno as well as the state of Nevada is growing strong, thus creating more jobs and enhancing people’s affordability, he said.
According to a report on the Reno Gazette Journal, the economic momentum kept strong in the third quarter this year, with job growth rate at nearly 4 percent and unemployment rate in Washoe County a statewide low of 3.1 percent.
“We’re approaching the peak years of the mid-90s,” the newspaper quoted state economist Jim Shabi as saying. “This is clearly the strongest job growth since 1996. It’s just very solid and consistent.”
The job growth is powered by the continuing growth of construction throughout Nevada. According to Nevada Department of Employment, Training & Rehabilitation, construction employment has increased by nearly 12 percent in the past year and has provided more than 12,000 new jobs since October 2003.
The statistics also shows a good year with the tourism industry. Every major gaming jurisdiction reported higher gaming revenues than a year ago. Airline passenger counts in Reno are up 12 for the year to date, the report said.
Signs of cooling down
The red-hot real estate market is showing signs of cooling down following the seasonal peak time during the summer.
“The houses will stay on the market longer time now,” said Bren Shahnam, an agent with Assist-2-Sell.
During the summer there might be a dozen people making offer on one house in a few days after it was put onto the market. The buyers tended to bid on each other. The final deal often ended up with $10,000 more than the listing price.
But now, a house may be listed for three weeks with only one or two offers from potential buyers. As a result, the final price could be $10,000 lower than the initial one, she said.
She admitted that the surge of home prices meant good news for her Assist-2-Sell, one of the discount real estate companies that charge customers a “flat rate” of $2,995 instead of 6 percent of the sale price for each house.
“If the house is going to fly off the market in a few days anyway, why should I pay more to sell my home,” Shahnam said, adding that her company’s non-discount competitors were quite unhappy with Assiss-2-Sell those days.
Now that the boom time slows down, the bigger realtors are winning back their customers.
“This month my husband has sold a home that was previously listed with those companies for a few months and didn’t sell,” Cathy Blane, of 0000, said.
But that demanded more marketing efforts, such as listing the house on the MLS (Multiple Listing Service), creating a virtual tour on the Internet, providing open houses and attractive flyers, she said.
It is true that home sales in Northern Nevada have cooled a little with the onset of fall, but there is no reason for people to be optimistic as prices continue to rise throughout most of the region.
Washoe County's median home price, an alternative indicator with average sale price, rose 3.4 percent from September to $299,000 in October, according to the latest report from the Northern Nevada Regional Multiple Listing Service.
Carson City's median jumped 10 percent month over month to $298,000, while Lyon County's median rose 9.3 percent to $205,000.
“I’ll still have to wait,” Limin Liu said.