Washoe County's housing market is one of the least affordable in the U.S.
51,585 more jobs and 54,470 more people are coming to the region over the next five years (EPIC Report 2.0) and they will all be looking for a place to live! The affordability issue in Washoe County will get worse before it gets better and here’s why:
The cost to build a home in Northern Nevada is among the highest in the nation - even when compared to Northern and Southern California!
The time from building permit to certificate of occupancy is among the longest in the nation, now exceeding 6 months, adding more cost to the home!
The entitlement process is becoming much more difficult and impact fees from local governments are on the rise.
The cost of land has risen over 130% since 2012 and continues to escalate.
Combine these facts with a City of Reno that appears to be unwilling to expand the supply of attainable single-family homesites in desired locations, and we get a housing market our kids and grandkids will not be able to afford.
We are rapidly become a bedroom community for the Bay Area. People from the Bay can still push our prices using the equity from their homes, but what happens when this immigration slows? We do have a steady supply of new apartments, but we can’t allow this to be the only attainable housing option.
We don’t want to wait for another market crash to correct our housing prices. All of the stakeholders involved in the planning, development and construction of our regions housing need to come to the table and fix the problem now! We need to ensure that Washoe County can continue to offer the American dream for all of us.
Mark Krueger, Principal - Krueger Land Team
Below is the article written by Jason Hidalgo on April 10, 2019 for the Reno Gazette Journal. Click here for the article on RGJ.com.
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Washoe County's housing market ranks among the least affordable in the nation — something that likely won’t come as a surprise to anyone who has tried to buy a house in Reno during the last few years.
Washoe was the 66th least affordable housing market among all 3,142 counties and equivalent areas in the United States, according to a study by mortgage information website Freeandclear. The ranking places Washoe, which includes Reno, Sparks and Incline Village, within the top 2 percent of markets when ranked from the least affordable to most affordable based on house prices and area incomes.
Washoe’s ranking also places it among the 138 counties that the study considers to be unaffordable overall. Topping the list are the counties containing Brooklyn and Manhattan in New York, and San Francisco in California.
External factors affecting housing market
Washoe’s situation, however, is different from those markets because it sees more pressure from outside forces, said Michael Jensen, co-founder of Freeandclear. These factors include more companies and people moving into the area in the last few years.
“Sometimes (they move) for tax purposes, sometimes it’s because houses are more affordable (compared to the Bay Area), but that really limits the available housing and supply for people who have median income jobs in that market,” Jensen said when reached by phone. “You guys, in some ways, get a little bit of a disadvantage ... because of external factors that are independent of the Reno marketplace.”
“You guys, in some ways, get a little bit of a disadvantage ... because of external factors that are independent of the Reno marketplace.”
Michael Jensen, co-founder of Freeandclear
The influx is putting pressure on available inventory and raising prices while incomes are unable to catch up quickly enough, Jensen added.
The rankings are based on comparisons between a county's median home price and median household income through 2018. The study used data from such sources as the U.S. Census Bureau, Bureau of Labor Statistics and Federal Housing Finance Agency, Jensen said.
The median home price for Washoe County last year, for example, was $386,179. But the median household income — $60,386 — could only afford a $325,477 home, or 84 percent of the median-priced house. This makes Washoe the least affordable market in Nevada.
In contrast, the median home price in Las Vegas last year was $309,500 while the median household income was $56,560. Median income earners in Las Vegas can afford a home priced at $304,853, or about 98 percent of the median-priced house, according to the study.
Although Las Vegas has the third least affordable housing market among Nevada counties, after Washoe and Douglas, its residents could still almost afford a median-priced home with a median household income.
One of the surprising findings in the study is that only 4.4 percent of U.S. counties can be considered unaffordable for its residents, Jensen said. Those unaffordable markets, however, have
a total population 73.5 million or just under a quarter of the U.S. population, which points to a serious problem, he added.
“The gap of who can afford a home and who can’t buy a home in these markets is getting wider and wider,” Jensen said.
At the same time, Jensen noted that just because a county is ranked among the most affordable in the country does not mean everything is in good shape. There could be a number of factors leading to that high affordability, not all of which are necessarily positive. While the least affordable markets are typically in coastal states, for example, a lot of the affordable markets are in the Midwest.
“They could be less desirable places to live with fewer job opportunities and less demand overall for housing,” Jensen said.