U.S. Housing Market Conditions, First Quarter 2003: National Data

Reno, Nevada
The Reno metropolitan area’s economy is based on tourism and gaming. Northern California is the source of more than 50 percent of its visitors. Because of the national economic slowdown and increased competition from Native American casinos in Northern California, gaming revenues in the 12 months ending February 2003 declined 3 percent compared with the previous 12-month period. Local casino/hotels and attractions have stepped up efforts to attract visitors. For the 12-month period ending February 2003 nonfarm employment in Reno declined approximately 0.7 percent, or 1,425 jobs, compared with the previous period. The losses were distributed over the trade, transportation, utilities, business services, and leisure and hospitality sectors. The Reno area has been diversifying its economic base in recent years, targeting high-technology firms such as CISCO Systems, Microsoft, Silicon Quest International, Oracle, CommScope, Sharegate, IGO, and Gizmo Wireless. However, a number of these firms have been hit hard since the technology boom ended in 2000.

The University of Nevada, Reno is a stabilizing factor in the local economy. The university has registered a steady increase in enrollment and as of the 2002–03 school year had 14,664 students, a 5-percent increase over the previous year.

The relatively strong economy resulted in steady in-migration and population growth during the past decade. Population grew 3.3 percent annually during the period, from 254,667 in 1990 to 339,486 in 2000 according to Census data. Since the Census the population has continued to grow at close to the same rate. As of July 1, 2002, the area’s population had grown to 362,325, approximately 3 percent annually. In-migration has accounted for nearly three-quarters of the area’s population growth during the past 2 years.

The market for new homes in Reno has been very strong in recent years due to the steady increase in employment and population. Single-family production as measured by building permits averaged 3,432 units annually from 1998 to 2002 compared with an average of 2,344 homes from 1990 through 1997. During the first 3 months of 2003, 846 single-family permits were issued, an increase of 14 percent over the first quarter of 2002.

During the first quarter 746 new single-family homes were sold in Reno according to the Gregory Group Newsletter. The median sales price on new units was estimated to be $199,000. Subdivisions in the Northwest, Sparks, Spanish Springs, and North Valley areas have been particularly active. Move-up buyers connstitute the largest share of the new sales market. As in other parts of the nation, low interest rates and relatively affordable prices have allowed many former renters to move to homeownership. The Reno area is also something of a destination market for retirees, attracted by the affordability of Reno home prices compared with higher prices of California’s coastal areas. Preliminary data from the Reno-Sparks Association of REALTORS^® indicate resales in 2002 were close to the high volume of 4,266 homes sold in 2001. According to the NATIONAL ASSOCIATION OF REALTORS^®, the median price for a home in the area increased from $157,300 in 2000 to $183,200 in 2002, approximately 8 percent annually.

After averaging more than 1,300 units annually from 1996 through 2000 multifamily building permit activity declined as job growth slowed and an increasing number of renters moved to homeownership. The decline in rental production has resulted in more balanced conditions. The apartment vacancy rate as of January 2003 was 4.8 percent, and average rents are up 5 percent to $770 compared with a year earlier according to the Johnson-Perkins & William Kimmel Apartment Survey. Approximately 47 percent of the projects in the area are offering relatively moderate rent concessions in the form of move-in specials, deposit and application fee discounts, and senior or preferred-employer programs. Currently an estimated 820 units are under construction in 2 apartment developments. The rental market is expected to remain balanced this year.

Next Profile