RENO — Reno has become one of the top 20 least affordable housing markets in the U.S., with cost-burdened households needing to spend nearly half of their income to afford a median home, according to a monthly report by a real estate website.
RealtyHop put the northern Nevada city 18th behind Denver and San Jose, California, in its September ranking of housing markets based on median price and area incomes.
“Homebuyers in major West Coast cities have been eyeing surrounding markets that are more affordable,” Shane Lee, a RealtyHop data scientist, told the Reno Gazette-Journal.
“Reno, specifically, has been absorbing the outflow from California over the past couple of years,” Lee said, “and now, as companies continue with their remote working policies due to COVID-19, there’s less of a reason to stay close to major hubs, making Reno an even more desirable location for professionals looking to own a home.”
Los Angeles, Miami, New York and San Francisco lead the RealtyHop September ranking of the 100 largest cities in the nation with least-affordable housing. Las Vegas ranked 48th.
The index uses U.S. Census and RealtyHop data measuring median household income, median for-sale home listing prices, local property taxes and mortgage expenses based on a 30-year mortgage with a 4.5% interest rate and 20% down payment. It factors in Nevada’s lack of state tax.
Reno also ranked 18th in January, the Gazette Journal reported, although housing now in the Biggest Little City has become less affordable.
The median home price in Reno jumped to $439,900 from $425,000 at the beginning of the year, according to RealtyHop, and the study concluded that a homeowner with a median household income of $52,100 needs now to spend 47% of their earnings to afford it.
In Las Vegas, the median home price was $325,000, meaning a homeowner with a $53,129 income spends 34.3% on housing.
Both exceed the 30% threshold used by the federal government to identify households a cost-burdened by the amount spent on housing.
Housing affordability has been a concern in Reno since the Great Recession. Median home prices have jumped in the last few years due to high demand and limited supply, the Gazette Journal said.
At the beginning of 2017, the median home price for an existing single-family home in the city of Reno was $320,000, according to the Reno/Sparks Association of Realtors.
By July 2020, the figure hit a new high of $459,900 and nearby Sparks topped $400,000 for the first time.
The average rent also reached a record $1,369 per month in Reno-Sparks during the second quarter of 2020.
Questions remain in the apartment sector, where vacancies were low at just 3.3% in the second quarter of 2020.
Industry watchers expect vacancies to increase as people exhaust unemployment benefits and the state’s eviction moratorium expires Oct. 14.
The COVID-19 pandemic knocked Washoe County from an unemployment rate of 2.6% at the end of 2019 — just above the all-time low of 2.5% set in 1999.
By April, the Washoe County unemployment rate hit a record 20.4%, as the entire state faced mandatory closures of non-essential businesses. The rate improved to 8.6% in June.