Nevada’s economy has struggled through the COVID-19 pandemic. Many small businesses are just scraping by. But the housing market? That’s a different story. For the first time, the median price of an existing, single-family home in Reno has reached $500,000. To better understand what’s going on, KUNR’s Paul Boger reached out to Gary MacDonald with the Reno/Sparks Association of Realtors.
Paul Boger: Gary, we are smack dab in the middle of a pandemic that has had serious impacts on the economy. And yet, the Reno-Sparks housing market seems to be trucking right along. So I have to ask, what gives?
Gary MacDonald: That has been the case. If you had asked me at the beginning of the pandemic if I thought that this would turn out this way, I would have probably said no. What the pandemic has allowed is for people to work from home, like you and I are today, and home can now be someplace other than a business office or a building.
So people are moving, and this is not just a dynamic to Reno, Sparks [or] Northern Nevada. This is worldwide. People are moving to areas they really want to live. That's what's been driving people here.
Couple that with the fact that, even before the pandemic, we had a shortage of available product for sale. And when the pandemic hit, I think that it slowed down the listings because people were afraid to have others come into their home. So we have been doing a great job. We sold more homes for higher prices with almost 75% less inventory at the end of the year than we had the prior year.
Boger: So I guess there's simply a shortage of housing?
MacDonald: A healthy market is six months supply of inventory. In other words, if we did not take another home available for sale, it would take us six months to sell through that inventory. In the $300,000 and less [range], we have less than five days supply typically right now. In the $300,000 to $600,000 range, we've probably got 10 to 20 days supply. In the over $1 million to $1.5 million range, it's less than three months supply.
Economics 101 is supply and demand. Right now, we have a high demand and a low supply. If all of a sudden our daily supply of inventory starts creeping up to nine months, then that tips the scales from being in a seller's market to a buyer's market, and we have not had a buyer's market for many years now.
Boger: Lawmakers are set to convene in Carson City soon. What do you think should be done, at least on the state level, to increase the supply of lower-cost housing or affordable housing projects?
MacDonald: When it comes to the direct political questions, I would defer to the Nevada Association of Realtors for that. With that said, in terms of affordable housing, it usually comes in the shape of government-backed programs, where a builder will go and make an application.
I'll give you an example. There's an apartment complex being completed now behind Dillard's on Mount Rose Highway, between the freeway and the shopping center. That was developed, and a portion of that was developed as affordable housing. There was a bucket, if you will, at the state and the builder committed to building X percentage of that unit development as affordable housing. This is affordable housing rental, not affordable housing to buy.
With affordable housing, it takes money. So from a builder perspective, if they're not being subsidized to build that product, and they can make X amount more building what the public is demanding, they're going to build what the public is demanding. It's always been that way. I don't see it changing.
