Smaller home lots ahead?

The price of raw land for residential subdivisions in northern Nevada may be skyrocketing, but developers haven't yet responded by trimming the size of lots.

That's likely to change, says an analyst of housing markets nationwide.

John Schleimer, president of Market Perspectives in Roseville, Calif., notes that the median price of a new home in Washoe County rose by about 17 percent during 2003 it stood at about $232,900 at year-end and rising land prices are a big factor in the increase.

At the same time, however, lot sizes in the range of 5,000 to 6,500 square feet remain dominant in the region, Schleimer told members of the Builders Association of Northern Nevada.

He predicted flatly, "You be seeing smaller lot sizes." If so, the trend isn't yet apparent in the region.

One reason may be that homebuyers aren't yet deterred by rising prices.

Newcomers especially those who recently sold a home in California's skyhigh market have cash to spend on property, and they expect to own their own piece of the wide-open spaces when they come to Nevada.

Jeff Codega, chief executive officer of the Reno-based planning and

design firm that bears his name, said that smaller lot sizes may be ahead, but the way that the region is developing means the change will be slow to occur.

Most of the big residential development, Codega said, occurs in masterplanned communities at the edges of metropolitan areas.

Those communities are planned well into the future and often include a mix of property sizes.

Vacant land available for in-fill development within cities land that lends itself to smaller lot sizes is relatively rare in northern Nevada.

The mix of lot sizes in masterplanned communities reflects good planning, and not just for economic reasons, said Randy Mellinger, assistant city manager of Sparks.

He noted, for instance, that the upscale Wingfield Springs development includes homes on smaller lots, including condominiums and cluster homes.

"It allows for a lower price point," Mellinger said.

At the same time, he said the mix of lot sizes within many master-plannned communities in fast-growing Sparks helps to ensure that a variety of families lives in each community.

While the region's housing market hasn't yet felt the effects of higher land prices and higher new-home costs, Schleimer told builders they need to keep a close eye on the issue.

"There's going to become a point when people can't afford a new home," he said, cautioning builders to avoid what he called "good-market smugness."

But that point, he said, is unlikely to come this year.

He projected that housing starts in Washoe County will total somewhere between 3,300 and 3,700 units.

That compares with 3,074 in 2003.

Creation of new jobs continues to drive the housing market.

As a rough rule of thumb, he said every 1.2 new jobs in the region creates the demand for a new housing unit a home or apartment and every 1.5 new jobs creates the demand for a new singlefamily home.

Typically, he said, the demand for new housing lags job creation by about nine months.

Migration of companies, workers and retirees from California continues to play a key role in the new-home market, Schleimer said.

That means, he said, forecasts of continued strength in the Washoe County home market depend in part on continued chaos in the Golden States.

The new homes in Washoe County increasingly are built by the largest players in the market.

In 2003, Schleimer said, the 10 biggest builders in Washoe County accounted for 71 percent of the newhome sales.

That's up from 67 percent a year earlier, and Schleimer said it's a sign that smaller builders are having trouble holding onto their share of the market.