Incline Village Real Estate and Community News

Sept. 11, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

While home prices continued to rise, it was headline news that boiled Bond prices.

Home prices continued to heat up in July, and the heat wave is expected to last. CoreLogic, a leading provider of data and analytics, reported that home prices, including distressed sales, rose 6.7 percent from July 2016 to July 2017. From June to July, home prices increased 0.9 percent. CoreLogic says the "combination of steadily rising prices along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of the year."

Also of note, the second read on second quarter Productivity rose to 1.5 percent from the first read of 0.9 percent. However, within the report it showed that the inflation reading unit labor costs declined to 0.2 percent from 0.6 percent, further signs of lower inflation. Low inflation is typically good news for fixed assets like Mortgage Bonds and the home loan rates tied to them.

The week's other economic reports had little impact on markets, but the news headlines about Hurricanes Harvey and Irma, the debt ceiling and North Korea had people on edge, including investors.

The uncertainty surrounding these events pushed Bond prices up, keeping home loan rates near historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Fed members will keep a watchful eye on inflation.

Economic data releases begin on Wednesday with wholesale inflation numbers from the Producer Price Index, followed by the Consumer Price Index on Thursday.

Weekly Initial Jobless Claims also will be released on Thursday.

On Friday, Retail Sales will be delivered along with the Consumer Sentiment Index and the Empire State Index, which provides a look at regional manufacturing.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices have hovered near 2017 highs, leaving home loan rates near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 08, 2017)

Posted in Real Estate News
Sept. 5, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

INFO THAT HITS US WHERE WE LIVE... Our thoughts remain with the people of Texas recovering from Hurricane Harvey's dramatic devastation and tragic loss of life. Their acts of heroism have touched us all. Damage is estimated to be at least $35 billion, with much of it outside the Special Flood Hazard Areas identified by the Federal Emergency Management Agency (FEMA). This means only about 20% of affected homeowners are expected to have FEMA flood insurance. But the outpouring of help from across the country has been phenomenal. And relief is being offered to homeowners from Fannie Mae, Freddie Mac, FHA and mortgage servicers. Good stuff.

Pending Home Sales dipped just 0.8% in July, their fourth slip in five months. This National Association of Realtors (NAR) measure of contracts signed on existing homes is currently suffering from tight supply, not weak demand. The NAR chief economist explained, "The pace of new listings is not catching up with what's being sold at an astonishingly fast pace." He added, "the typical listing has gone under contract within a month since April." Some say rising prices are diminishing affordability, but First American's Real House Price Index reported increased affordability, thanks to "falling rates for 30-year, fixed-rate mortgages and modest wage gains."

BUSINESS TIP OF THE WEEK... Never lose sight of where you're headed. Start every project keeping in mind your overall goals--for your work, and life! Keep those goals in mind, fitting today's to-do list into your long-term plans.

>> Review of Last Week

BACK TO BREAKING RECORDS... The stock market moved up again for another week, as investors felt good enough about our economic prospects to buy up some of the bargains created by the mid-August dip from previous record levels. Spurred on by decent economic data, investors pushed all three major stock indexes up for the week, with the tech-heavy Nasdaq reaching an new all-time high. The GDP-2nd Estimate for Q2 showed the economy growing at an unexpected 3.0%. And the ISM Manufacturing index came in with a strong 58.8 growth reading for July, its highest level in more than six years.

This good news could have made Wall Street, and us, fearful the Fed would go for another rate hike. But those fears were calmed when Core PCE Prices showed inflation decelerated in July to 1.4% annually, far below the Fed's 2% target for boosting rates. August jobs data also helped, with 156,000 new Nonfarm Payrolls. This was seen by many as a "Goldilocks" report, strong enough to advance the economy but weak enough to check the Fed. Meanwhile, Consumer Confidence stays near its 16-year high, and Michigan Consumer Sentiment's chief economist reports that index "has been higher during the first eight months of 2017 than in any year since 2000."

The week ended with the Dow UP 0.8%, to 21988; the S&P 500 UP 1.4%, to 2477; and the Nasdaq UP 2.7%, to 6435.

Bond investors had a more negative take on August jobs than equity traders and pushed prices up. The 30YR FNMA 4.0% bond we watch finished the week UP .10, at $105.55. In Freddie Mac's Primary Mortgage Market Survey for the week ending August 31, national average 30-year fixed mortgage rates fell again, to a new yearly low. But the chief economist cautioned: "recent releases of positive economic data could halt the downward trend." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Experts predict that by 2025, there will be 5.2 million more homeowners in the U.S. Not surprisingly, Millennials born in the 1980's and 1990's will dominate the market

Posted in Real Estate News
Aug. 21, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

Consumers had no problem ringing up sales in July (and June, it turns out!), while new construction ground down.

July Retail Sales rose 0.6 percent from June versus the 0.3 percent expected, while June was revised higher to 0.3 percent from -0.2 percent. It was the largest increase in seven months as consumers spent on autos and discretionary items. When stripping out autos, sales rose 0.5 percent in July, also above expectations. Consumer spending makes up about two-thirds of the U.S. economy, so this report was welcome news.

New construction ground down in July with Housing Starts falling 4.8 percent from June to an annual rate of 1.155 million units, below the 1.217 million expected. Homebuilders cite many reasons for the decline, including a lack of skilled labor, lack of lots to build on and higher costs for materials. Single-family starts, which make up the biggest share of the housing market, fell 0.5 percent. Starts on multi-family dwellings with five or more units plunged 17.1 percent from June to July. Year over year, Housing Starts were down 5.6 percent.

Building Permits, a sign of future construction, also fell in July, down 4.1 percent from June to an annual rate of 1.223 million annualized units. This was just below the 1.247 million expected.

Meanwhile, minutes released from the July Federal Open Market Committee meeting revealed some Fed members are concerned about low inflation and expect it to remain below the Fed's target 2 percent objective longer than previously expected. Also, no indication was given as to a start date for the reduction in the Fed's $4.5 trillion balance sheet.

The dovish Fed minutes coupled with weaker-than-expected construction data lifted Bond prices. At this time, home loan rates remain near historic lows.

If you or someone you know has questions about home loan products or current rates please contact me. I'd be happy to help.

Forecast for the Week

Find out if July home sales sizzled or fizzled.

Housing data kicks off Wednesday with New Home Sales followed by Existing Home Sales on Thursday.

Also on Thursday, weekly Initial Jobless Claims will be released.

On Friday, Durable Goods Orders will be shared.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices improved recently, lifted by economic news in addition to geopolitical events at home and abroad. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 18, 2017)

Posted in Real Estate News
Aug. 20, 2017

RENO RENTERS BUCKLE FROM RECORD-HIGH APARTMENT RENT, ‘NEAR-ZERO’ VACANCY

It’s a journey that most people eventually take.

Fifteen years ago, Anne Carte decided to leave the familiar comforts of home and family to move out on her own.

For Carte, who was 20 years old at the time, moving to the Biggest Little City from San Jose, Calif., represented an exciting and crucial juncture in her life.

“I moved to Reno to grow up and be an adult,” Carte said.

The year 2002 had its fair share of memorable moments. That same year, “Star Wars: Episode II” debuted in theaters, Tiger Woods won the 66th Masters Tournament and “American Idol” premiered on television.

One thing Carte specifically remembers was the cost of rent. Back then, the monthly rate for Carte’s first studio in Sparks was only $495. For a young person who just moved out of home and landed an entry-level job at Target, an affordable place to stay was not a luxury. It was a basic necessity.

About 12 large apartment projects totaling 3,361 units About 12 large apartment projects totaling 3,361 units were under construction in Reno-Sparks during the second quarter of 2017. This is The Vineyards at Galleria apartment project on Disc Drive near Pyramid Highway in Sparks on August 16, 2017.

These days, Carte lives in a two-bedroom, two-bath apartment in Reno with her son. Unlike her initial foray into independence, the excitement of moving out has since faded for the 35-year-old. Instead, Carte says she’s just trying to survive and provide for her child.

When Carte first moved into her Reno apartment six years ago, her rent was $750. As Northern Nevada started to enjoy an economic development renaissance in the last few years, however, residents like Carte found themselves caught in the costly wake of Reno’s housing crunch.

The recent influx of new workers combined with near-zero residential development during the recession gave birth to a classic supply-and-demand scenario that saw the cost of housing skyrocket in the Biggest Little City. Just this July, the median price for an existing single-family home in Reno hit an all-time high of $387,250, eclipsing the previous record of $380,000 set in January 2006.

Apartments are no exception.

In the second quarter of 2017, the average rent in the greater Reno-Sparks metro area hit $1,194, according to the latest multifamily report from Johnson Perkins Griffin. Vacancies, meanwhile, fell all the way down to 1.17 percent. Both are all-time records for an area that has hovered among the top metros in the country for increasing rents in several national lists.

“The average rent and current vacancy rates we’re seeing are historical,” said Scott Griffin, a principal and co-founder of real estate appraisal and consulting firm Johnson Perkins Griffin.

It’s a trend that spells bad news for many residents. Not only are many tenants being squeezed by rising rents, some are also finding themselves becoming potential targets of no-cause evictions as property owners capitalize on strong demand by remodeling apartments and charging higher rent.

Carte is no exception. Last April, her rent rose once again, reflecting the realities of a multifamily market that continues to surge. Today, the same apartment that cost her $750 per month six years ago is up to $1,140 per month. Carte does not even want to think about what might happen next year if rising rents from the last few years continue to be a trend.

“My rent has been going up every year by $100 and it now takes over pretty much half of my paycheck,” the 35-year-old Carte said. “I’m getting really scared with what’s going on.”

The construction site for The Vineyards at Galleria apartments on Disc Drive near Pyramid Highway in Sparks. This image was taken on August 16, 2017.

SEEDS OF AN APARTMENT CRUNCH ‘WE CAME OFF FIVE TO SEVEN YEARS OF ZERO CONSTRUCTION.’ Reno’s rental market is a far cry from where it was just a few years ago.

After peaking in early 2006, the area’s hot residential real estate bubble popped, sparking a downward spiral that sent Nevada tumbling into the worst recession in its history.

As the overheated housing market crumbled under its own weight and many homeowners started defaulting on their mortgages, the resulting economic malaise and high unemployment caused Reno’s multifamily sector to experience its own slump as well.

Rents would ultimately bottom out at $822 during the fourth quarter of 2011 and first quarter of 2012, said Aiman Noursoultanova, senior vice president of investment properties for commercial real estate firm CBRE. Apartment vacancies, meanwhile, peaked at 9.63 percent. Typically, a balanced market should have a vacancy rate of about 5 percent or so, according to several industry analysts interviewed for this story.

Then the Gigafactory happened.

“We came off five to seven years of zero construction,” said Ted Stoever, senior vice president of land and investment properties for Colliers International in Reno. “Then came the Tesla announcement and everybody knows the story of the Tesla effect.

“We created immediate huge demand and supply just can’t catch up fast enough.”

The Gigafactory announcement was just one of several deals both big and small that would put Northern Nevada on the map not just nationally but globally. Almost overnight, the greater Reno-Sparks area became a data center player, boasting facilities not just by Apple and Google but also the biggest data center project in the world in the Switch Citadel.

Advanced manufacturing, logistics and healthcare growth also allowed the area to further diversify away from gaming and tourism, a development that should help soften the impact of future recessions, according to economic development advocates.

The influx of new jobs reversed the region’s ailing jobless rate from the recession. Nevada unemployment reached a historical high of 13.7 percent unemployment in November 2010, according to the Bureau of Labor and Statistics. By June this year, the jobless rate was down to 4.7 percent, with employment reaching a little over 1.34 million jobs — a record for the state. Nevada also posted the strongest year-to-date decline in unemployment nationwide as well as 78 straight months of year-over-year job growth, according to the state’s Department of Employment, Training and Rehabilitation.

The result is robust growth that sports a different profile from the boom years that led to the recession, especially in Northern Nevada, CBRE’s Noursoultanova said. Reno’s last growth cycle was fueled by an unhealthy residential and construction bubble backed by shaky loans.

“This time shows a market demographic shift spurred not just by job growth but quality job growth,” Noursoultanova said. “The primary top two growth industries are advanced manufacturing and healthcare, which are higher-paying industries that attract employees looking for attractive places to live with amenities.”

With many developers and builders still shell-shocked from the recession, however, it did not take long for the increased demand to gobble up what was left of market inventory. Add a construction labor shortage, rising labor costs and the vagaries of the permitting process and the result is a perfect storm for Reno housing.

Prior to the Tesla and Panasonic Gigafactory announcement, the best locations for the most attractive multifamily or apartment projects — designated as “Class A” — cost $4 a foot, Stoever said. After the Tesla announcement, the same land jumped between $7 to $12 a foot, sometimes even $15. Meanwhile, the “easy” land, which includes parcels that were already graded and prepped prior to being thrown in limbo by the recession, have all been accounted for since then. Finding new locations to develop from scratch within Reno’s limited “bowl” is more of a challenge from a cost and logistics perspective, even as billions of private investment dollars enter the region, according to Stoever.

“A lot of people are kicking tires and projects are going where they can,” Stoever said. “There’s no shortage of demand, there’s no shortage of capital and there’s no shortage of developers who are willing to put projects out so it’s just a matter of being able to deliver products as quickly as they can.”

Shane Whitecloud stands at the Veterans of Foreign Wars Building in Reno on August 16, 2017. An advocate for veterans' housing, Whitecloud is concerned about a spate of no-cause evictions impacting several vets in the Reno-Sparks area.

RENT CONTROL CONUNDRUM

‘I’VE SEEN FOUR VETERANS GET KICKED OUT IN THE PAST THREE MONTHS.’ For regular listeners of “Reno’s Rock Station 104.5,” on-air personality Shane Whitecloud’s radio voice is a familiar comfort.

As Whitecloud talked over the phone during a recent Tuesday afternoon, however, his trademark silky voice shook with palpable frustration.

In addition to his radio gig, Whitecloud wears another hat as a corporate outreach specialist for the Veterans Resource Centers of America. Part of that job involves helping veterans — including those with disabilities — find housing in Reno-Sparks.

In the last few months, Whitecloud says he noticed a disturbing pattern emerge in the apartment market.

“They’re basically putting no-cause evictions on people’s doors so they can get them out to refurbish the apartments and charge higher rent,” Whitecloud said. “I’ve seen four veterans get kicked out in the past three months and I’m like, ‘man I can’t believe they’re doing this.’

“It’s something I’ve never seen before and I don’t understand how it’s even legal.”

A look at how much income you need to make to afford A look at how much income you need to make to afford a two-bedroom apartment in each state without paying more than 30 percent of your income.

In each case, the veterans and families kicked out were never late with their rent and never caused trouble. One of those evictions involved a disabled veteran who had a wife and three kids and had been living in the same apartment for three years.

There is no doubt that the multifamily market is seeing a lot of remodeling activity, said Griffin of Johnson Perkins Griffin. When you have a market that is this hot, activity typically trickles down from the Class A properties to some of the older apartments as well. This is especially true with projects being purchased by investors, said Griffin, whose company tracks larger projects with 80 units or more.

“A lot of new owners and potential purchasers of apartments are looking for a value-added component … and will complete renovations if it generates higher rent,” Griffin said. “We are aware of several projects that have already undergone renovations and more are also planning on doing it.”

The impact of rising rents on lower and middle-income residents and families is also causing people such as Whitecloud to bring up the need for controlling rents. Rent control was a hot topic at a Reno city council meeting in July, where Councilman Paul McKenzie demanded a legal opinion on whether the city could implement them. The city of Reno confirmed last week that it is looking into the matter but has yet to provide an opinion.

Although McKenzie remains interested in finding out what the city’s legal options are for rent control, the council member softened his tone when reached by phone on August 11. Simply broaching the subject at a city council meeting has already resulted in a couple of “unintended consequences,” according to McKenzie.

“I know that our decision just to look into rent control has caused a jump in rents from people saying, ‘OK, if they’re going to do it, then we want to get ahead of it and raise rents up now,’” McKenzie said.

The rent control discussion has also placed a chilling effect on developers looking to invest in multifamily projects. McKenzie says this includes workforce or affordable housing projects aimed at assisting tenants who need the most help in finding a place that they can actually afford.

“That’s exactly what we’re trying to prevent,” McKenzie said. “(Access to housing) is one of the No. 1 issues that we have to address right now.”

The Reno Arch during Hot August Nights 2016.

HOT MARKETS

‘THINGS HAVE FALLEN OFF A CLIFF.’

Just how tight is Reno’s apartment market?

Supply is so constrained that several Gigafactory employees are staying at campus dormsof the University of Nevada, Reno for the summer. Although the university is no stranger to renting out its space to youth groups, renting to businesses could be a more common occurrence in the future, it said.

Reno’s rising rents have yet to show signs of calming down this year.

The average rent in the area rose by $83 or nearly 7.5 percent in the second quarter of 2017, according to Johnson Perkins Griffin — one of the largest jumps that firm has ever seen. RentCafe, meanwhile, ranked Reno fourth in the nation for its 12.4 percent jump in rents year-over-year in July. Another apartment tracker, Abodo, placed Reno sixth in the nation during August, citing a 5.2 increase in rent from the previous month. The same ranking had Reno in second place for the largest swing in apartment rates nationwide in June.

Part of the issue involves a tight residential market and challenges with homeownership, a trend that is also being observed in other markets in the United States.

“Some industry experts have suggested that landlords are feeling pressured because of increased demand for units while inventory is low,” said Abodo spokesman Sam Rabdil. “With homeownership rates falling, it makes sense for landlords to continue to raise pricing on their rental units, especially in markets with tighter inventory.”

The problem is especially exacerbated in Reno. Housing supply in the greater Reno-Sparks metro area was at 1.6 months in July. The number represents an improvement over June’s record low of 1.4 months but is still far under the typical six-month benchmark for a balanced market.

Approximately 75 percent of the Reno-Sparks’ market’s inventory is also under contract while listings are down by 15 percent year-over-year, said John Graham, president of the Reno/Sparks Association of Realtors.

“Things have fallen off a cliff,” Graham said. “We’re selling more homes than we have inventory (entering) the market.”

Renters in Reno-Sparks are feeling squeezed by record-high rents and record-low vacancies. Reporter Jason Hidalgo talks to Ted Stoever of Colliers about what's driving the market. Jason Hidalgo/RGJ


The tight residential housing market is translating into the record-low 1.17 percent vacancy for apartments in the area. Of the 11 apartment submarkets in Reno-Sparks, four — Northeast Reno, Southeast Reno, Brinkby/Grove and the Airport area — have vacancies below 1 percent, according to the quarterly Johnson Perkins Griffin report.

Southeast Reno has the lowest vacancy at 0.49 percent. Apartments with two bedrooms and one bathroom posted the lowest vacancy rate in the first six months of the year. The last time Reno-Sparks vacancy rates were above 3 percent was during the end of 2014.

“Anytime you’re below 3 percent, that’s almost no vacancy because you’re only dealing with turnover at that point,” Griffin said. “Rents just keep going up and up and up … and that just tells me that (apartments) are able to ask whatever they want.”

Affordability is a big concern in Reno, particularly for tenants such as Carte who already spend half of their income on rent. Typically, 30 percent is seen as the threshold that a household can comfortably spend on housing out of its total income while still having enough money left over for incidentals and other expenditures. This threshold was established over the years as an evolution of the National Housing Act of 1937, according to the U.S. Census Bureau.

In Nevada, a household earner must earn $18.01 per hour in order to afford the 2017 fair market rent for a two-bedroom apartment in the state without paying more than 30 percent of income, according to the National Low Income Housing Coalition. This places the threshold out of reach of households with two minimum wage earners. The minimum wage in Nevada is $8.25 — or $7.25 for jobs that offer health benefits.

The problem is worse for Reno-Sparks, where the average rent is higher than it is in the Las Vegas area. The average rent in Las Vegas during the second quarter of this year was $937, according to the Lied Insititute of Real Estate Studies at the University of Nevada, Las Vegas.

Renters should not even think about depending on concessions.

“There aren't any,” Stoever said.

In the first quarter of 2011, more than 82 percent of apartments offered concessions such as a free month's rent and discounted deposits. In the second quarter of this year, only 2.35 percent did so, according to Johnson Perkins Griffin.

Traditionally, Northwest and Southwest Reno have been the area leaders for rent growth, CBRE’s Noursoultanova said. East Sparks, however, posted the highest average rent in the second quarter among all submarkets at $1,475. That represents a year-over-year jump of more than 25 percent compared to 16 percent for the overall Reno-Sparks market.

Noursoultanova cited proximity to Tesla’s Gigafactory, which is about 20 miles away from Sparks, as a key reason for the growth.

“For the last few years, East Sparks has been the strongest submarket,” Noursoultanova said. “You have newer properties with nice amenities but it’s also closest to the Gigafactory (among Reno-Sparks apartment submarkets) so it’s a bit of a no-brainer.”

Construction equipment are lined up at the Summit Club Apartments site near The Summit Reno mall.

A NEW NORMAL?

'PEOPLE DON’T GET IN BUSINESS TO NOT MAKE MONEY.'

Carte casually brushes back the hair on the left side of her face before catching herself midway and pausing.

She smiles nervously and lets her hair fall forward again.

“I don’t know if you were able to see it,” Carte said.

A long scar runs along Carte’s hairline from a previous brain surgery. Although the scar has started to fade, the $120,000 procedure continues to leave a financial mark on the Reno resident. Between her medical bills and rising rent, Carte has barely enough money left each month to make ends meet.

Fifteen years after moving away from home, Carte’s journey toward independence has not quite unfolded the way she hoped it would. Right now, one of her top priorities is staying in the same neighborhood so her son could go to the same school as his friends.

“He’s in special education and it’s hard for him to make friends on an everyday basis who he can hang out with,” Carte said. “I want him to be able to go to school with the friends that he’s familiar with because I worry that he might get bullied.”

If rents keep increasing, however, staying in her current neighborhood could be a problem for Carte. Given the current situation with supply and demand, rents will likely continue to go up, sources such as Griffin, Stoever and Noursoultanova agreed.

Currently, there are 12 large apartment projects totaling 3,361 units such as Sierra Vista and Summit Club that are under construction in Reno-Sparks. An additional 7,822 units are expected to be added from 19 other projects, but those are still in the planning stages and could take years to complete.

“Frankly, I’m not quite convinced that the supply in the pipeline right now will result in higher vacancies,” Griffin said. “We’re going to need more than 3,300 units at this point just based on what (the Economic Development Authority of Western Nevada) is predicting for job growth.”

EDAWN has been forecasting growth of 55,000 jobs from 2013 to 2019 for the region.

A new apartment complex is under construction at the A new apartment complex is under construction at the Damonte Ranch area on March 24, 2017.

From restaurants and construction workers to mom-and-pop operations and big companies, economic growth is something that Reno-Sparks thrives on, Stoever said. At the same time, it puts pressure on infrastructure, especially after a recession that saw little to no investment on things like housing.

With most units full and demand continuing to increase, apartment owners hold all the cards. It’s obvious that some are taking advantage of the situation, Reno City Council Member McKenzie said.

“It would be nice if landlords would think about renters before things like profit margin but that’s never going to happen as long as people are in business,” McKenzie said. “People don’t get in business to not make money.”

Critics such as Whitecloud, meanwhile, say there should be a limit to how far rent increases can go. While Whitecloud understands that apartments are a business, there’s a difference between making a healthy profit and taking advantage of a tight rental market.

Finding an apartment these days for struggling veterans on disability is already “extremely difficult” and seeing some veterans get served no-cause evictions only adds insult to injury, Whitecloud said.

“It’s horrible and I can’t stand it,” Whitecloud said. “It makes me sick to my stomach.”

Some developers, meanwhile, are also facing difficulties in introducing workforce or affordable housing as projects get pushback from residents who don’t want such facilities near their neighborhoods due to the stigma associated with them.

One such project is the Summit Club, which will be comprised of 80 percent market rate housing and 20 percent workforce housing.

Chip Bowlby, a managing partner with Summit Club apartment developer Reno Land Inc., says housing for workers is one of the top concerns he hears about when talking to representatives of companies such as Tesla and Switch. Workforce housing is one way developers such as himself are finding ways to help address the housing affordability issue, Bowlby said. In addition to its lower rents, Bowlby pointed out that workforce housing is not susceptible to the high rent increases seen in some traditional apartments because its rates need to conform to the affordable guidelines set by U.S. Housing and Urban Development or HUD.

Despite its benefits, however, workforce housing comes with challenges, too.

"Affordable housing is a word that has a negative connotation and it really shouldn't," Bowlby said.

In places where rents are skyrocketing, the people who need workforce or affordable housing are the same people in your neighborhood — teachers, clerks, restaurant workers, service workers, according to Bowlby.

Meanwhile, issues surrounding construction costs, access to labor and permitting hurdles continue to serve as bottlenecks for new development in the area. These can put a stop to developments, especially those aimed at providing more affordable options, because the projects no longer pencil out financially, Bowlby said.

In some cases, something as seemingly simple as fire hydrants can put a snag on new housing developments. During the recession, investment in public infrastructure took a hit as city and state coffers came under financial pressure.

Many existing water lines, for example, do not have the capacity to support additional fire hydrants, said Mike McGonagle, a principal with MAC Associates, Inc. New transformers and their required clearances also occupy valuable ground space, he added.

"Our public infrastructure has not been maintained with the capacity that would allow cost effective dense infill housing projects," McGonagle said.

Even if a project moves forward, timing could still be an issue. Depending on size and complexity, new projects can take anywhere from 18 months to 20 months to make it from contract to completion in Reno, Stoever said. That is “lightning fast” compared to bigger cities but still is not fast enough to quickly make a dent in Reno’s apartment shortage, Stoever added.

Others noted that the whole equation could change depending on where Reno’s growth goes from here.

“If this growth is sustained and becomes prolonged, then this type of demand might become the new norm,” Noursoultanova said. “It’s hard to say but whether this becomes the new normal or not remains to be seen.”

For people like Carte, that’s bad news. Carte would prefer to stay in Reno but is looking at all her options. One option is to go full circle on the journey she started 15 years ago.

“If my rent starts taking three-quarters of my paycheck, then I’m screwed,” Carte said.

“I’m almost 40 and I can’t afford to live on my own. I might just go back home.”

Posted in Community News
Aug. 7, 2017

REAL ESTATE - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

With unemployment at a 16-year low, it's safe to say there are a lot of people putting in an honest day's work, and job growth continues.

Employers added 209,000 new jobs in July, the Bureau of Labor Statistics reported, well above expectations. Revisions to May and June yielded 2,000 more jobs than previously reported. Employment growth has averaged 184,000 new jobs per month this year, in line with the average monthly gain of 187,000 new jobs in 2016. Wage growth was 2.5 percent over the last year, and the unemployment rate fell to 4.3 percent from 4.4 percent in June, the lowest since March 2001.

Home price gains continue. Data analytics firm CoreLogic reported that home prices, including distressed sales, rose 6.7 percent from June 2016 to June 2017, due in part to the continued theme: limited homes for sale on the market. On a monthly basis, prices were up 1.1 percent from May.

Inflation remained tame in June. Personal Consumption Expenditures (PCE), which measures price changes in personal goods and services, is a favorite inflation gauge for Federal Reserve members. Core PCE, which excludes volatile food and energy prices, was in line from May to June at 0.1 percent. Year over year, Core PCE was 1.5 percent, below the Fed's target range of 2 percent.

Remember, inflationary pressures reduce the value of Bonds, like Mortgage Backed Securities. When Bond prices worsen, home loan rates can too. The reverse is also true, meaning low inflation typically benefits Bonds and home loan rates.

At this time, home loan rates remain just above historic lows.

If you or someone you know has questions about home loan products or current rates please contact me. I'd be happy to help.

Forecast for the Week

Wholesale and consumer inflation hasn't been sweeping the nation. Find out where inflation landed in July.

Second quarter Productivity will be released Wednesday.

On Thursday, wholesale inflation from the Producer Price Index will be released along with weekly Initial Jobless Claims.

The Consumer Price Index will be delivered on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices improved recently on the heels of tame inflation news, but a strong Jobs Report stopped momentum. Home loan rates are still in historically attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 04, 2017)

Posted in Real Estate News
July 24, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

After three straight monthly declines, Housing Starts jumped in June. Building Permits did too.

Housing Starts surged 8.3 percent from May to an annual rate of 1.215 million units, the Commerce Department reported. This is the highest level since February. Single-family starts, which represent the largest share of the residential housing market, rose 6.3 percent. The multi-family dwelling sector soared as well. Housing Starts also were up 2.1 percent from June 2016.

June Building Permits, a sign of future construction, also rose 7.4 percent from May's revised figure to an annual rate of 1.254 million.

While the increase in Housing Starts and Building Permits is positive news, both have some ground to cover. Inventories for existing and new home sales are still running below what is considered the normal six-month supply. In addition, higher prices for lumber and shortages of workers and land space could be potential hurdles to jump in the near future for new homebuilding.

At this time, home loan rates remain just above historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Fed monetary policy could be the cherry on top of this week's five-layer data cake.

Housing data kicks off on Monday with Existing Homes Sales, followed by the S&P/Case-Shiller Home Price Index on Tuesday and New Home Sales on Wednesday.

Consumer Confidence will be delivered on Tuesday while the Consumer Sentiment Index releases on Friday.

Though not an economic report, the Federal Open Market Committee meeting begins Tuesday and will end on Wednesday at 2:00 p.m. ET with the release of the monetary policy statement.

Durable Goods Orders and weekly Initial Jobless Claims will be delivered on Thursday.

And last but not least, the first reading on second quarter 2017 Gross Domestic Product will be released on Friday along with the wage-inflation-reading Employment Cost Index.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices have edged higher in recent days leaving home loan rates in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jul 21, 2017)

Posted in Real Estate News
July 24, 2017

BUYER, BEWARE: 5 HOME-BUYING NEGOTIATION TACTICS THAT CAN BACKFIRE

There's no denying that buying a home is a costly endeavor—in fact, it's likely the most expensive purchase you'll ever make.

So it makes sense to try to negotiate where you can. Save a few bucks here, get a few things thrown in there, right? We hear ya—we're all about making a smart offer that doesn't leave you house-poor.

But when it comes time to negotiate, there are a few strategies you should avoid, lest you risk offending the seller and losing your shot at your dream home. This is especially true in a red-hot seller's market, where the seller might have a number of tempting offers and is looking for anything that breaks the tie.

Of course, the key to smart negotiating is having the right team in place to advocate for you without alienating the other party. Sellers (and their agents) might be reluctant to deal with you if your agent is perceived as being difficult or—worse—shady, says Cara Ameer, a Realtor® in Ponte Vedra Beach, FL. And if a seller is dealing with multiple offers, that could be enough to get you sent to the bottom of the pile. So find out the word on the street about your agent by talking to people you trust.

And then help your agent help you into a great home by not trying to pull off one of these misguided maneuvers.

1. MAKING A LOWBALL OFFER

How low can you go? That seems to be the game some buyers play, assuming that if they start really low, they’ll end up getting the house for a song.

Gary Lucido, president of Chicago-area firm Lucid Realty, says that buyer’s agents commonly dissuade their clients from this tactic because they fear it will “insult” the seller. But the problem might be bigger than just hurting someone’s feelings.

“The real issue in starting well below the market value is that it costs you credibility,” he says. “The seller either thinks you don’t know the market or you are looking to take advantage of someone, and in either case, they don’t want to deal with you.”

The bottom line: The seller has a number in mind, and whether you start at $1 or $300,000, it only matters if you can hit the seller’s lowest target selling price.

“You’re not going to lower their target by starting at a lower number,” Lucido says.

2. ASKING FOR A BUNCH OF ADD-ONS

You’ve found a place that's within your budget. What's more, you've fallen in love with the home—and everything in it.

You might be feeling emboldened to ask for more than just the house, but you should resist that temptation, says Ameer. She’s seen buyers who think it’s a good idea to ask for furniture or appliances to be thrown in for free, or expect that the sellers will just leave their patio furniture because it “goes so well” with the house.

Apparently the adage “it doesn't hurt to ask” doesn’t apply in this situation.

“Sellers become totally offended when you keep asking for more, and you risk alienating them,” Ameer says. “Even if they don’t like their patio furniture anymore, they’d typically rather sell it on Craigslist than leave it for a greedy buyer.”

Of course, you can always ask to buy their stuff—in that case, they'd probably be flattered!

3. USING THE INSPECTION AS A RENEGOTIATION TOOL

So, your offer was accepted, but then you start to get cold feet and you subconsciously (or consciously!) start searching for flaws that you could use as leverage to lower the price.

“Most inspectors are going to find something to recommend—such as adding gutters, improving the drainage, or upgrading all the smoke detectors—but those aren’t repairs that the seller is responsible for,” Ameer says.

If the inspection turns up something major (like a cracked foundation), by all means that should be discussed. But you shouldn’t demand that the sellers fix every minor thing or lower their price.

“You can’t expect a perfect house,” Ameer says. “If you’re constantly nickel-and-diming the seller, they might decide you’re not someone they want to do business with.”

Mind you, the sellers generally can't just back out because they're unhappy, but if both parties are unable to come to an agreement regarding repairs, they can both decide to abandon the deal.

Remember how much you have already invested in the process, in terms of time and money, and be willing to let the little things go.

4. NEGOTIATING WITH INCREMENTAL AMOUNTS

Nobody wants to pay more than they have to for a home—why offer $350,000 when you could have it for $325,000? But if you engage in too much back-and-forth, you'll risk alienating the seller. When buyers insist on making incremental counteroffers, they're just giving sellers a chance to move on to the next buyer, says George Theodore, a senior real estate adviser in Miami.

So, for example, if you’re ultimately willing to go up $8,000, don’t make four additional offers of $2,000 each.

“This tactic just tires out both sides and prolongs the transaction since you usually give each party 48 hours to reply," Theodore says. It "actually gets you nowhere tactically or psychologically.”

5. MAKING A 'ONE-WAY OFFER'

Just as the seller has a target price in mind, you probably have a point at which you'll be unwilling to budge. But one of the worst things you can do is advertise this to the seller.

Ameer calls this the "one-way offer," where buyers dig in their heels and state right off the bat, "This is our offer, you have X amount of time to respond, and if you don't take it, we're moving on."

"This just puts the seller on the defensive and usually is a path to a dead-end offer," Ameer says.

It seems like an obvious no-no, right? Well, even in this red-hot seller's market, Ameer has seen buyers push for this tactic despite her warnings—especially if the buyer is offering all cash, or if the property has been on the market for a while. She calls it the "seller-is-lucky-to-have-me syndrome."

"Sometimes buyers have to try this tactic themselves to see how it really ends up before they decide to get with reality," Ameer says.

Posted in Buying a Home
July 10, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

More Americans were headed to work, but take-home pay stayed about the same.

Employers added 222,000 new jobs in June, well above expectations, the Labor Department reported. April was revised up from 174,000 to 207,000, and May was revised up from 138,000 to 152,000 jobs. With these revisions, employment gains in April and May combined were 47,000 more than previously reported. The unemployment rate was little changed at 4.4 percent. Employment growth has averaged 180,000 per month in 2017, in line with the average monthly gain of 187,000 jobs in 2016.

However, average hourly earnings showed just a 0.2 percent gain from May and 2.5 percent gain year over year. May's reading was revised lower to just 0.1 percent.

Also of note, the minutes from the June Federal Open Market Committee (FOMC) meeting were released. While investors were looking for a signal to when the Fed might start trimming its $4 trillion balance sheet, the minutes showed a divided group on the timing. Mixed economic growth and tame inflation remained central to FOMC discussions as the committee crafted monetary policy. Strong economic news and rising inflation can negatively impact Bond prices and the home loan rates tied to them.

A big market mover this week came courtesy of the Fed's equivalent overseas, the European Central Bank. Positive economic outlook catapulted yields in Europe.

For now, home loan rates here at home remain in attractive territory.

Please contact me today if you have any questions about home loan rates or loan products. I'm here to help.

Forecast for the Week

Inflation and Retail Sales numbers are the ones to watch.

Although not an economic report, the Fed's Beige Book releases Wednesday, giving anecdotal information on business and economic conditions across the country.

Thursday brings wholesale inflation via the Producer Price Index as well as the usual weekly Initial Jobless Claims.

The Consumer Price Index, Retail Sales and Consumer Sentiment Index are scheduled for Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds buckled under some pressure from positive economic news out of the European Central Bank recently. Home loan rates remain attractive.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jul 07, 2017)

Posted in Real Estate News
July 10, 2017

SIERRA SOTHEBY'S RELEASES Q2 LAKE TAHOE MARKET DATA

2nd Quarter | Lake Tahoe, Truckee & Surrounding Areas

Lake Tahoe, Truckee and surrounding area real estate market trends can vary dramatically from neighborhood to neighborhood. Sierra Sotheby’s International Realty compiles quarterly micro market statistics from four different multiple listing services to help you better understand values, identify opportunities and make informed real estate decisions. Follow the links below to review regional Micro-Market reports drilled down by specific neighborhoods.

If your community is not listed or you’re unsure what the data means for your situation, please don't hesitate to contact me.

CLICK ON THE LINKS BELOW TO ACCESS YOUR AREA OF INTEREST

EAST SHORE | INCLINE VILLAGE | NORTH & WEST SHORE | RENO | SOUTH LAKE | TRUCKEE

Posted in Market Updates
July 3, 2017

REAL ESTATE AND MORTGAGE RATES - LAST WEEK IN REVIEW AND FORECAST FOR THIS WEEK

Families may find themselves living on love as they invest more on increasing home prices.

The S&P/Case-Shiller 20-City Home Price Index saw another gain of 5.7 percent from April 2016 to April 2017. Price increases are due in part to limited supply of housing in many areas across the nation. Plus, low home loan rates are inspiring people to purchase homes or upgrade their homes, taxing limited inventory.

The overall economy performed better than previously reported in the first quarter of 2017, according to the Commerce Department. The final read on first quarter Gross Domestic Product came in at 1.4 percent, above the second read of 1.2 percent, and well above the first read of 0.7 percent. Consumer spending, which accounts for nearly two-thirds of all economic activity, got a nice boost, rising 1.1 percent from 0.6 percent, though this is still a low level.

Consumer inflation remained tame in May, as the Core Personal Consumption Expenditures (PCE) was in line with expectations at 0.1 percent. The Core PCE reading excludes volatile food and energy costs. Year over year, Core PCE fell to 1.4 percent, well below the Fed's target range of 2 percent. Inflationary pressures can reduce the value of fixed investments like Mortgage Bonds and worsen the home loan rates tied to them.

At this time, despite a volatile week in the markets, home loan rates remain just above historic lows.

If you or someone you know has any questions about the home loan process or current rates, please contact me today. I'd be happy to help.

Forecast for the Week

The Jobs Report could launch fireworks in an otherwise quieter week. Stock markets close at 1:00 p.m. ET and Bond markets at 2:00 p.m. ET, Monday, July 3. Markets will be closed Tuesday for the July 4th holiday.

The ISM Index will be released on Monday followed by the ISM Services Index Thursday.

Though not an economic report, the June Federal Open Market Committee (FOMC) meeting minutes will be released Wednesday and could spur volatility.

The onslaught of employment data begins Thursday with the ADP National Employment Report and weekly Initial Jobless Claims.

Look for the June Jobs Report on Friday, which includes Non-farm Payrolls, the Unemployment Rate and Hourly Earnings.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds lost ground in recent days heading into what should be a quiet holiday trading week.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jun 30, 2017)

Posted in Real Estate News