Despite rise in housing inventory across Reno-Sparks, it’s still a seller’s market
Special to the NNBV
By the numbers
Northern Nevada regional home sales in 2018
9-month total: 4,508
Source: Reno-Sparks Association of Realtors
SPARKS, Nev. — Much like he did to acres of rolling hills and sagebrush in northwest Reno, developer Blake Smith plans to transform the northwest corner of Sierra Highlands and Pyramid Highway into the region’s latest master planned community.
Smith, founder of S3 Development, which built the Tonopah Lofts at Pueblo and Tonopah streets, as well as the Midtown Lofts on California Avenue, developed the Somersett master-planned community starting in the 1990s and commencing construction in the early 2000s.
However, while Somersett encompasses more than 3,000 acres with more than 3,500 residential units, Smith’s newest planned development is roughly 380 acres. Smith expects between 1,400 and 1,500 residential units at the Spanish Springs site, although density and other core features are still in the planning and design stage, Smith notes.
In addition to completing numerous housing and retail properties in the Midtown area over the last few years, S3 Development has spent part of the past three years getting the project ready for construction.
The area is just raw land at the moment, but so too was Somersett when Smith began acquiring land for the community back in 1991. It took him nearly a decade to assemble all the various pieces that would become the various neighborhoods within Somersett.
“Somersett was in the same condition when we started up there,” Smith says.
‘A BEAUTIFUL PIECE OF PROPERTY’
Unlike Somersett’s rolling hills, however, the new community sits on a relatively flat “tabletop.” It will feature an entrance about 750 feet up Highland Ranch from Pyramid Highway that cuts straight through the mountain to access high ground, much like the “cut” in the hillside entrance at Somersett. S3 Development plans to break ground at the site in the next year to 18 months, Smith says.
The community will feature multiple types of housing at varying price points with varying densities and lot sizes, along with common amenities such as a clubhouse and trail systems.
“Our goal would be to deliver homes starting at the $300,000s and going up from there,” Smith says. “Zoning is complete, and now we are into the design phase. We will start designing out those neighborhoods and talk to national, regional and local builders about buying out those neighborhoods.”
S3 Development will build out the community’s main infrastructure, roads and clubhouse, while residential builders will erect all homes within the community. There are multiple points from which to bring in electricity, Smith notes, and utilities such as natural gas and water terminate right at Highland Ranch.
“The utilities and road system, I have never seen anything more efficient,” he says. “All of the utilities are already virtually at the doorstep. I have never seen such a beautiful piece of property.”
Increasing residential supply
At Somersett, utilities were extended for miles and included construction of three water pumping stations to bring water to the community.
S3 Development has multiple names for the community in the queue. As it works through the final design process, it will continue to strengthen concepts for the community’s overall theme and layout, which will aid in defining its name. The project has utilized cash for initial stages of development but may use leveraged funding as it meets additional development requirements.
“The neat thing about the project is that you can’t see it — it sits on the tabletops,” Smith says. “It will have a majestic entrance, and once on top you will have unobstructed views of the Sierra, Mt. Rose and Spanish Springs. It’s a unique setting. It is not on the flatlands, it will have its own flavor and identity, and it will be isolated from other developments since it’s up there by itself.
“The goal here is to build another beautiful community and bring some more logical inventory into the housing stock. The more supply we have, we can bring better pricing to those (new) communities.”
The push for affordable housing
Luxury homebuilder Toll Brothers also is bringing a more affordable community to Sparks. The Horsham, Pa.-based Fortune 500 company is more known for developing upscale communities, but it’s pursuing a different demographic at Stonebrook in Sparks off La Posada Drive.
Donna O’Connell, vice president of sales and customer experience for Toll Brothers, says that after conducting extensive research on the Reno-Sparks market, Toll Brothers found that many homeowners aspire to own a Toll Brothers home but lack the purchasing power for the homebuilder’s typical price points. Homes at The Boulders at Somersett, for instance, are priced from $1.18 million, while homes at Latigo at Rancharrah are priced from $738,000.
Homes at Stonebrook, however, start in the upper $300,000s. There are two communities under development — Alicante and Catalina — with homes ranging in size from about 2,000 to just over 3,000 square feet. All homes feature two-story floor plans, and buyers can choose from a range of pre-selected cabinetry, flooring and countertops.
“Luxury and quality doesn’t need to mean $800,000 — we can still deliver Toll Brothers quality in a more affordable family friendly community,” O’Connell says. “Toll Brothers designers have preselected the most popular finishes for cabinets, flooring and countertops to simplify the process and still give buyers a great array of choices; that is where we provide the most personalization (at Stonebrook).”
The roughly 60-acre community will feature 363 home sites and is the company’s first development in Sparks. Models are expected to come online early in the first quarter of 2019. O’Connell says Toll Brothers pursued two-story floor plans because the various layouts best fit the family demographic it’s pursuing.
“The customers we are targeting are looking for family-friendly spaces, which includes lofts, upstairs bedrooms, large family rooms and great kitchens for entertaining,” he said. “We are able to do all that in a two-story design.”
Potential cooling in pricing?
Across the region, residential home prices in Reno and Sparks continue to hold strong. In September, the median sale price of $374,000 was up 11 percent from the same month in 2017, the Reno-Sparks Association of Realtors reports.
Sales volume has cooled noticeably, however. The RSAR reports that September sales of 439 homes was down nearly one-quarter from August and also from the same month compared to 2017.
Signs also point to a potential cooling in pricing. In September, there were 1,377 housing units listed for sale, up from a 12-month low of just 646 units in January.
The rise in inventory could potentially ease pressure on pricing, the RSAR reports. However, with just 3.1 months of inventory available, it’s still a sellers’ market.
“If you’re going to produce roughly 80,000 ounces (of gold) a year at $800 an ounce … and gold is at $1,900 or $2,000 per ounce, that’s going to create a tremendous amount of cash flow.”