Who is Buying the House Next Door?
I have been writing about the pain of the lack of homes for sale in our marketplace for some time, and that hasn’t changed at all except for an increase in the median price of homes in the Reno/Sparks area; up to $310,000 this past May. If you break it down further and only look at Reno, the median price for that same period was $326,000. We still have only a one-month supply of homes available under $300,000, instead of the 180 days that is considered a “balanced” market. And, we have only a 3 month supply in the price range from $301,000 to $600,000. These two price ranges are where 95 percent of the sales in our area occur. To date, we are not building or listing homes fast enough to meet the demands in our marketplace.
I believed, like many of our sellers, that active listings were being purchased by the hundreds of employees being hired by the 100-plus new companies in our community, a phenomenon we lovingly call the “Tesla Effect.” To prove my point, I surveyed 32 Dickson Realty agents that represented buyers from January 2016 to June 2016. I asked the questions: Where did your buyer come from? Were they investors, local buyers or buyers from outside the area? If they relocated, where did they relocate from, and did they relocate to work for a new or existing company? I captured in my informal survey information on approximately 65 percent of all buy sides from Dickson Realty from January 1st to June 24th. I made the assumption that our firm was indicative of all purchasers in the Reno/Sparks area.
I was surprised by the results, and perhaps you will be as well. Here is what I discovered:
- 51% were local buyers (owner occupied, not investors)
- 22% of buyers were investors
- 9.4% were parents purchasing for UNR students
- 7% were moving from other states to work with existing companies
- 4% of buyers were retiring from California
- 2.7% were medical professionals
- 2.3% were small- to mid-size company owners relocating their companies to northern Nevada
- The remaining 1.6% was a combination of reasons, such as a new pastor in the area, retirees moving from Elko or older couples moving to be near family
What did not show up, are the hundreds of employees that I assumed were buying homes and moving into the area to work for new companies. Of course, for many of these companies, it may simply be too soon as they are not fully operational yet. While the “Tesla Effect” may not yet be fully present in home purchases, we have witnessed an increase in website traffic from people wanting to learn more about our community and neighborhoods, researching home values and registering to receive information about new listings coming on the market. People from outside of our area are spending more time on our website when we compare year-over-year analytics, and we are seeing more first-time and returning visits to our website than ever before.
These statistics were surprising because they indicate we haven’t yet seen, except perhaps in the rental market; the impact of new employees in our area. Hopefully, by the time they begin to look for homes, our inventory supply will have increased, otherwise the median pricing will continue to rise and with that, cause affordability problems, as we have witnessed in the rental market.
While Reno and Sparks have not been relocation hubs in the past, the EPIC Report and reports by EDAWN and the Center for Regional Studies at UNR have projected an estimated 50,000 new jobs coming to the region. At Dickson Realty, we have hired a new Vice President of Relocation, Kylie Rowe. This is the first time in 40 years that we have needed a highly skilled employee working full-time with companies and their relocating employees. It is critical to both new and current regional employers, that we help their employees moving to the area integrate into our community as quickly as possible, and with sufficient housing inventory, they will be buying the house next door.