The Economic Forum was told on Thursday the shortage of housing in western Nevada, particularly Reno, is making it harder and harder to draw the people to fill jobs created by the area’s booming economy.
Brian Bonenfant of the Center for Regional Studies at UNR said the Reno-Sparks and surrounding area have added almost 10,000 new jobs every year for the past five years, 40 percent of them in the Tahoe Reno Industrial Center. He said unfortunately, the area just isn’t building enough new homes and apartments to house workers to fill those jobs.
Mike Kazmierski of the Economic Development Authority of Northern Nevada said simply, “we’ve run out of people.”
As a result, Bonnenfant said the average single family home is now selling for nearly $400,000. That means a family’s household income has to be at least $80,000 to afford an existing home, $90,000 to buy a new home.
But median family income is just $75,268.
“Affordability is pushing people into the rental market,” he said.
But the shortage of apartments to rent has pushed the average rant to $1,300 a month.
Bonnenfant said there are signs of a correction in the market coming since the average home price actually dropped a bit from $391,000 in July to $370,000 now.
“Homebuyers are thinking this is another bubble on the way so they move to the sidelines and not sell or buy,” he said.
He added there are a lot of apartments under construction now but the extremely tight market in Reno is driving more and more people outside the metropolitan area and into rural areas like Dayton and Fernley.
In Dayton, Bonnenfant said, the average home price is $284,900 and, in Fernley, $252,500, much more affordable. In Carson City, the average price is $335,000.
He said the problem in large parts of those rural areas is local governments simply don’t have the infrastructure — water and sewer — to provide service to more homes. Those small county governments don’t have the money to build what developers need.
“That’s going to delay growth in those areas,” he said.
Forum member Craig Billings said there is a disconnect between housing supply and demand.
“Are we simply saying housing supply is not keeping up?” he asked.
“It’s very much a supply problem on the construction side,” said Bonnenfant.
He said banks and developers are holding back, hesitant about committing to major projects.
Asked why the market isn’t working, Bonnenfant said the area is still “trying to figure ourselves out after such a big drop,” a reference to the recession when housing prices plummeted to a third of what people were paying just a year earlier.
As a result, only about 4,000 permits for new units were issued in 2017. He said 2018 might reach 6,000 permits.
Kazmierski said the area is pretty much at full employment.
“We may need to throttle back on our growth because our area needs a little time to get caught up,” he said.