Clearly, the location of new and expanding offerings for tech giants like Tesla and Switch will impact Nevada’s economy. But what are the changes we can expect, and how is this important to the Nevada homebuyer?
Earlier this year, Jason Hidalgo with the Reno Gazette-Journal interviewed Steve Hill, director of the Governor’s Office of Economic Development, for this article. Hill explained that the impact of the Switch announcement doesn’t just concern the jobs the company will bring to the area, but also the opportunity to connect the northern and southern parts of the state.
“[Switch] will be connecting northern and southern Nevada with a fiber loop that will be critical for broadband services throughout the state,” Hill explained. “Switch has been a great corporate citizen and works with K-12 programs as well as helping schools connect to world-class technology infrastructure. This is really important for the whole state.”
Switch has also partnered with the University of Nevada, Reno to help design the University’s innovation center in downtown Reno. Switch designed the “Innevation Center” in Las Vegas, a 65,000-square-foot building that serves as a collaborative workspace to foster innovation in the area. The Las Vegas center will offer a blue print for the Innevation Center in Reno.
One of the most important assets of Switch coming to northern Nevada is that it will create traffic to the area, aiding in general economic development, solely based on Switch’s high profile clients. “We expect a few of our more than 1,000 clients in Las Vegas to join us here in (the Reno area),” explained Kramer. “With Switch coming to Reno and the technology infrastructure we’re bringing, we also anticipate bringing new clients and more technology companies who want to do business in Nevada.”
But what effect will these economic developments have on the real estate market? The answer is, plenty.
Eavesdrop on any conversation in any Sparks Starbucks between a realtor and his/her client, and you’ll hear the words “Switch” and “Tesla” bandied about. Not that we’ve done that. Well, maybe we have, but we like to call it “overhearing.”
Since Tesla’s announcement early last year, the prices for housing in Sparks, the area closest to the Tesla site, began a steady increase. Hidalgo outlines some major early points of the housing market upswing in his 2014 article 7 Trends to Know about the Reno Real Estate Market:
Reno posted 1,387 new home starts in the second quarter of this year, up 43 percent over the same period last year, according to Metrostudy. Meanwhile, only 36 percent of homes are priced below $300,000 compared to 64 percent last year.
This is causing many builders to finish rough-cut lands that were started during the boom but got paused during the recession.
Set this context as the backdrop against the most recent month for data in Reno-Sparks.
The Reno/Sparks Association of REALTORS® Reno and Sparks real estate market report for July 2015 revealed another record-seeing month for the local real estate market. According to Guy Johnson, writing for the Reno Sparks Association of Realtors, “Nearly 600 homes were sold for the month at a median sales price of almost $292,000. That median price is a $13,000 one-month increase over June’s median of $279,000. Days on market also hit a new low.”
For the complete July report, click here.
Interestingly, the Tesla announcement happened in September of 2014. Since that month, the region has seen an increase in median sales price on homes every single month since. For context, from August to September of 2014, there was a decline of 4.4 percent.
And inventory remains a challenge in the region. Real estate professional Candy Noel from Reno Sparks Tahoe Homes, when interviewed by Bloomfield for transportevolved.com, told the writer that there is a low resale inventory of around 2.6 months of homes, rather than the six months of homes considered the “healthy” norm.
“I have $5 million and I want an apartment complex near Tesla,” one investor demanded of Noel recently. Back in August, a 296-unit apartment complex in Reno sold for $27.5 million, while another 265-unit luxury ‘garden-style’ complex of Villas sold for $32 million in December.
Of course, the goal of economic development is that a combination of low supply and high demand will increase the prices for houses and properties in Nevada.
Those buying homes in Nevada have only one request: Make that increase a steady one, please.
Time will tell.
Do you have questions about the impact of Tesla and/or Switch on our housing market? Leave them below.