Housing market to remain hot

Northern Nevada's residential real estate market is on a roll that industry insiders say may only be stopped by limited land and resources.

Like the year before it, 2003 was a boom year for the industry here, driven by exceptionally low interest rates on most mortgages and an influx of new residents to the area, primarily from California.

And most in the industry expect more of the same in 2004.

By mid-December, over 3,400 building permits had been issued for Reno, Sparks and Washoe County, according to the Builders Association of Northern Nevada.

The total will likely reach 4,100 by year-end, said Ted Stoever II, an associate with Colliers International, in a speech at the commercial real estate broker's annual forecast meeting two weeks ago.

The median sales price for a new home rose 17 percent in 2003, to $222,000, said Stoever, which translates to a 5 percent rise in prices annually over the last five years.

Rising prices, and long waiting lists for new homes, is driving some home seekers to outlying areas.

Stoever said he expects in the near future about 3,000 new homes to go up in northwest Reno and 8,000 in Spanish Springs.

The North Valley is one area where raw land for homes is still available, but there is limited water in the area.

The county is now considering a project to import water into the area from north Washoe County, which extend development in the North Valley.

Outside Reno, Fernley and Dayton are hot markets, with 10,000 homes going up eventually in the former, and about 8,000 homes planned for the latter, according to Stoever.

Inside Reno, Stoever said Reno's South Meadows is nearly sold out, although about 7,000 new homes are planned there.

Reno's southwest, south suburban, and the Mount Rose corridor are tapped out as far as new development, he said.

Existing home sales did exceptionally well, too, in 2003.

The average sale price rose by about a third in the past year, according to Carol Murphy, president of the Reno/Sparks Association of Realtors and an agent with Keystone Realty in Reno.

"They rose anywhere from 28 to 40 percent depending on where you are," said Murphy.

"Conservatively, I'd say they rose (on average) over 30 percent."

Demand has been great at the low end of the price range, where inventory is hard to come by, said Murphy.

"We go into meetings (at the agency) and an agent says 'I have someone looking for a $150,000 house,' and everyone laughs.

You can save some money if you'll drive a little, to Fernley or Dayton.

But as far as Reno-Sparks, there is not a tremendous amount of houses under $200,000."

Mortgage rates have stayed low, hovering around 5 percent for most of the year.

They will close the year lower than they were at the end of 2002 at 5.82 percent and 5.14 percent for 30-year and 15-year fixed mortgages, respectively.

Rates may creep up some in the coming year, predicts Tom Powell, owner and president, intoHomes LLC, a Reno-based mortgage broker.

"In 2004, they'll move upwards to 7 percent, but I'm not certain about that." Even if rates rise, they likely won't put a damper on the housing market here.

"It's been a solid market for the last decade," said Powell.

"We expect the same (in 2004), barring any big swings in interest rates.

Northern Nevada is a growth market."