As the end of the year approaches, the country is still feeling the pinch of an economic crisis amid the COVID-19 pandemic – but interestingly enough, several states are enjoying a boom in their respective housing markets. Look no further than Nevada, which has enjoyed the benefits of a steady exodus of citizens moving out of expensive states – California, for example – in search of more space and affordable housing.
This isn’t a new development; in 2017, the United States Census reported that California had the highest out-migration of any state in the country with approximately 660,000, followed by Texas, with 467,338 movers, and New York, with 452,580. And between 2017 and 2018, approximately 50,000 California residents made the move to Nevada.
Housing prices in California are notoriously high. In September, the median price of homes in the Golden State rose to an astronomical $712,430. Compare this to Nevada which, even with a robust housing market, still only tops out at an average median price of $330,000 on previously owned single-family units.
A study released by the University of Nevada-Las Vegas Lied Institute for Real Estate Studies showed buyer momentum in the state as early as April, with a 10.6% increase in home prices in the Las Vegas area of Southern Highlands, a 15% price increase on condominiums in Washoe County, and the city of Mesquite reporting 4.1% growth in single-family home prices.
Nevada’s census data projects a 1.51% increase in population between 2020 and 2025, as well as a 1.46% increase in median household income over the same time period – a forecast derived from an expected increase of California transplants.
Already, the demand from homes in Nevada is dwarfing the current inventory, said Thomas Blanchard, the 2020 president of the Greater Las Vegas Association of Realtors and managing broker for Signature Real Estate Group.
“The shrinking supply of homes for sale is not coming close to meeting the demand,” he said. “Additionally the lure of living in Nevada with the low- to non-existent tax rate and the great communities here just add to the demand. Then, add in that the current sales price in Nevada is one-third to one-half as expensive as the surrounding states and East Coast.”
Blanchard cited October 2020 median home prices in Las Vegas, which, he said, set a record for the fifth consecutive month at $340,200 – up almost 11% from October 2019.
“The number of existing homes sold in Las Vegas in October was also up about 11% compared to October 2019,” he said. “That’s remarkable when you think about what’s going on in the world and in our local and national economy.”
Simply put, people are looking for more bang for their buck. And Nevada, a close trip for California out-movers, is profiting.
The cherry(s) on top
Low taxes, plenty of sunshine and ample living space are certainly draws for movers looking to escape the financial squeeze of California, New York and more expensive states, but Nevada has additional attractions, local Realtors said.
In addition to the lures of the Strip, the state also offers plenty of outdoor activities such as hiking and camping. The Nevada job market is up-and-coming, with a brand-new UnitedHealth cancer treatment center in the city, a myriad of casinos and restaurants, Reno’s AMERCO and Renown Health corporations, and government offices in Carson City. And, of course, the tech-giant Zappos calls Las Vegas home.
“Google, Apple and Tesla have offices here, too,” said Michael Givens, a Reno-based Realtor with Dickens Realty. “There’s quite a few people that come to Nevada for jobs.”
Reno – A place to be?
Givens, a fifth-generation resident of Reno, said the city has become a haven for people looking to stretch their money while enjoying the outdoor lifestyle that living near Lake Tahoe offers.
Never more than one hour from either the lake, beautiful hiking areas, and picturesque mountain landscapes, Reno is blossoming – and the current home prices reflect it.
An October 2020 report showed median home prices in Reno hovering around $320,000 – up 7% year-over-year. Givens acknowledged the high cost relative to other areas of northern Nevada, but said that the area is attracting “tons” of retirees, and California families looking for more space and low-to-no income taxes.
“Moving from California to Reno amounts to what is, basically, a substantial pay raise,” Givens said. “Carson City has high prices, and so does the Sparks area, but Reno is still a little higher. There’s really been a lot of demand. Retirees look at their social security or retirement income in California and they realize it’s not enough to live comfortably.”
Reno also has an interesting law regarding property taxes.
According to Givens, property taxes are based on when the property was built, and not the current, 2020 home value. He pointed to $2 million homes that, if built in the 1950’s, could have a tax bill of only $2,500 in some areas.
“In Reno, you can keep one room of a home built in the 40s or 50s, knock the rest of the house down and rebuild, and if you keep that one room, your property taxes might only go up a couple of hundred dollars,” Givens said. “I’ve heard for a while that the state might be voting to change that, but for now, that’s how it works.”
A solid foundation
As the calendar turns to December, the state of the housing market in Nevada is as strong as ever. Many Realtors point to the response following emergency shutdowns in March as key to a now-robust market.
“Many people look at this surge we’ve been seeing in local home prices and home sales over the past five or six months and say these conditions are defying logic,” Blanchard said. “But if you look more closely, you can see that historically low mortgage interest rates and pent-up demand have a lot to do with it.
“We saw a shock to the system in March and April. But we began to recover pretty quickly after that, once our state lifted its stay-at-home orders.”
Home sales in March were already ahead of the pace set in 2019, so even with a short work stoppage as the country responded to the pandemic, the Nevada housing market was able to survive a dip before ultimately beginning to prosper in late spring and summer.
In fact, many Nevada Realtors enjoyed their best months during 2020 – some, according to a report by NPR, reported their best year of home sales in three years. In July, for example, nearly 4,000 Nevada homes were sold.
“The fundamental reasons people move to Nevada and buy homes here are still the same, even though our economy has been hit hard by this pandemic,” Blanchard said. “The more affluent buyers we see competing for a shrinking supply of homes here have not been hit as hard by the pandemic. They see this as a good time to buy.”
Blanchard and Givens noted the low inventory levels across the board in Nevada’s housing market, and expressed hope that the new year will bring more available homes if residents feel comfortable moving.
“We can easily absorb three to four times the current available inventory without tilting the scales of meeting our current demand,” Blanchard said.
Tim Glaze is a reporter for HousingWire. He can be reached at [email protected].