There’s no doubt that Northern Nevada has seen incredible growth in the past decade, but when housing prices hit an all-time median high last month there’s been a lot of talk about the “bubble” bursting. Well, I’m here to tell you that this is not a housing bubble.
My years of experience in real estate have taught me many things, but one of the most important that I have learned is to pay attention to economic development factors. In September 2020, housing in Reno-Sparks hit a record median home price of $444,900. Some are saying that this pricing is not sustainable, it isn’t here to stay, and the market is sure to crash. However, experts are quick to point to the law of supply and demand.
The demand for housing has far exceed the available supply and this has pushed prices higher and higher. So what makes this spike different from any others in the past? The Economic Development Authority of Western Nevada has been measuring metrics and was quick to point out many developing factors in an article that they released last month.
The Bureau of Labor Statistics has reported that the Reno-Sparks MSA has added over 8,000 new jobs per year in the past seven years (prior to the pandemic). Throughout this same period of time. there have only been 2,500 new housing units on average added to the entire region. With a ratio of 1.4 jobs per housing unit, this number is still nowhere near the more than 5,000 housing units needed to accommodate job growth. This is real, sustainable job growth and not just speculation on what the market may do. These record housing prices have also make homeownership impossible for many in the community, forcing them to rent and driving up rental demand more than 62% over the same period.
One of the biggest economic factors that Reno-Sparks has experienced over the past ten years has been diversification. Gone are the days of solely gaming and tourism to boost the economy, there are now more than 200 new advanced manufacturing, technology, logistics, and e-commerce companies here. The diversification augments the visitor industry demnad for the area and at the same time protects from excessive job loss. All of this means that the local economy will not crash as it has in the past.
Something wonderful about Reno, that every local knows well, is the many live-work-play advantages of our region. Well, the secret appears to be out. In August, a record number of new company leads came in at 46 (three times the monthly average). Many leaders are finding their companies in high-cost environments and/or dense metro areas that are likely facing increasing taxes, COVID-19 operational restrictions, and a reluctant workforce. Now Reno-Sparks is the next viable option, with employees and companies drawn to the many perks the area offers.
The bottom line is that demand for housing is growing, while the supply continues to lag. The pandemic has actually accelerate the current job growth, and even without it there is no slowing down growth. These “jobs of the future” are those with higher wages and generous benefits to replace the jobs lost to the pandemic and automation. The bubble isn’t going to burst, so let’s concentrate on increasing the housing supply so we can support the long-term success of our community.
Realtor® Sierra Nevada Properties