Outside of major metropolitan areas like the Bay Area and Seattle, Reno has one of the highest median home prices in the American West.
Doug McIntyre is the president of the Reno-Sparks Association of Realtors®. He says one cause is increased labor costs, as construction companies try to lure back workers who left the region during the Great Recession.
But, that isn't the sole reason for Reno's dramatic increase in housing costs.
Reno Public Radio’s Noah Glick sat down with McIntyre to learn more.
KUNR: What factors are leading to this sharp increase [in housing prices] since the height of the Recession?
McIntyre: There are a number of things that come into play. The first one is supply and demand. We just don’t have the houses. We’ve got a lot of industries that are moving into the city and the outskirts of the city, and they are needing places for their employees to live.
The economy is healthy, so they’re starting to build again, but not at the pace that they used to.
You look at the numbers. It’s doubled in seven years. Why is it going up so fast?
One, there’s not a lot of available land to build on anymore. They’re having to move to the outskirts of the city. The materials, building materials are going up. It’s hard to find the employees now. So, when there’s a demand for employees, wages seem to go up, and there’s just not enough houses.
You bring up a good point about labor, because during the Great Recession, there was a mass exodus of construction labor because there was no construction work here. So, are we seeing the effects now?
Oh, definitely. You’ll actually see that across the country. One of the problems is employees are not becoming electricians anymore, they’re not becoming plumbers anymore, they’re not getting into HVAC anymore. And as a result, the pool of employees are low.
Is there still some fear or anxiety, this idea that the market’s going to crash again or that the housing or construction industry is going to have a downturn here in Nevada?
Some people think that’s going to happen, but I believe it’s going to be a few years simply because there’s so much industry that’s here in town, [and] in the outskirts, that are building homes for those employees.
So, it’s probably going to be another good four or five years of growth and the prices will continue to go up.
I want to read a list of cities across the American West that have lower median sales prices than Reno: Las Vegas, Boise, Phoenix, Sacramento, Salt Lake City. What are the main differences here in the Reno area that are leading to higher housing costs compared to some other cities in the American West?
Supply and demand is the biggest one, I believe. We’ve got some very large companies that have moved here with lots of employees that will be coming, and we are trying to house those individuals. Those areas that you mentioned, they’re not surrounded by mountains, so they can really spread out for their housing. We don’t have that luxury here. Vegas does, Reno does not.
There’s more opportunity for sprawl in some of these other areas?
That is correct, yes.
And we have some big tracts of land that developers are looking at. But it’s years away, and they say that “We’re going to be build 1,000 houses, we’re going to build 2,500 houses.” That’s great, that’s fabulous, we need it. But we need it today, not tomorrow.
How do we encourage more affordable options for folks? If you’re just scraping by right now, but rents are continuing to go up, what kind of options are we going to start seeing for folks moving forward?
They’re going to have to move further away from Reno. Their commutes are going to increase. It’s something that the local officials and state officials deal with, they’re trying to figure it out. How do we do that? How do we bring affordable housing to Reno?
That is a very tough question, and I don’t think anybody has the answer right now.
Note: An earlier version of this story quoted $345,000 as the median sales price of a single-family home in Reno during the last quarter of 2017. That figure was the annual median price. The median sales price in Q4 2017 was $356,900. The story has been updated.