Homes market in northern Nevada begins to stabilize
The northern Nevada residential real estate market leveled off at the end 2014, but still finished the year better than when it started, leading to optimism about the year ahead.
“The market was good initially and flattened out some and stayed stable at the end,” says Dan LePorte, a Realtor with Chase International in Minden and president of the Sierra Nevada Association of Realtors.
But an encouraging sign, says LaPorte, is that home prices held steady or improved despite a drop in sales.
In Dayton, for example, 36 homes sold in September and that dropped to 28 homes in October. But the median home price jumped from $169,000 to $176,000, while months of inventory dropped from 6.4 months to 5.6 months, according to SNAR.
In Reno, in November 296 homes sold, a 15 percent drop from the previous month, but the median home price rose 1 percent to $270,500, according to the Reno-Sparks Association of Realtors.
“There is always a dip in sales at end of year, but we were fairly steady on increases in price,” says Dave Hansen, technology training manager for Coldwell Banker Select in Reno and incoming 2015 RSAR president. “Our national association is projecting a 3 percent to 5 percent slope for home prices (in 2015) and I wouldn’t be surprised.”
A number of factors look positive for the year ahead, says Hansen and others. Interest rates on mortgages are expected to stay low at least through June. The average rate on a 30-year fixed-rate loan in mid-December was 3.8 percent, the lowest rate in a year and a half.
Two weeks ago, Congress passed an extension of the mortgage debt relief bill so owners of distressed properties can continue to short sell their homes through the end of 2015 without having to pay taxes on any debt forgiven by the banks.
Fannie Mae and Freddie Mac, the government-sponsored lenders, are again offering loans with 3 percent.
And Nevada, through a program called Home is Possible, is offering grants for up to 4 percent of a loan’s value to cover down payments and closing cost for qualified buyers in Washoe and Clark counties, the first time the state has helped urban homebuyers in the same way it assists rural buyers.
For homebuilders, there may be some good news in the coming year as well.
Housing starts averaged 1,100 a month in Nevada in 2014, up 10.5 percent from the previous year, according to the Department of Training, Employment and Rehabilitation. But builders may gain more confidence with widely expected legislation to come out of the 2015 session of the Nevada Legislature.
“The biggest issue for residential construction is the construction defect law,” says Aaron West, executive officer of The Builders Alliance, a Nevada construction industry member association. “It’s a huge issue securing liability insurance and also comes into play with getting financing.”
West and others expect the Republican-controlled Legislature to make several changes to the existing law, including tightening up the definition of a defect and amending it to minimize incentives to litigation.
Also, the Legislature, after the defeat of the margin tax at the ballot box, is expected to take up tax reform.
It is unclear what new taxes, if any, may be instituted, but the hope is whatever is passed will provide some reassuring certainty for builders looking to do business here.
“It will likely be fairly modest and more in line with reforming taxes rather than raising them,” says Josh Hicks, a shareholder in the law firm of Brownstein Hyatt Farber Schreck in Reno and a member of its government affairs and taxation practice. “Business will like that because it clarifies the situation. Every other year it seems there is some proposal to put in something onerous and large. If we work at creating stability in smaller bites, it will create a better system for everyone in the state.”
Reno-based design firm MBA Architecture and Design is assisting on the $47 million Caesars Entertainment project in downtown Reno.