Reno Nevada has Become a Buyers Market.

Mortgage rates are falling in anticipation of the September rate cut, down to 6.77 percent for the week of July 18th per Freddie Mac.

Additionally, existing home inventory has increased by 35.8 percent year-over-year as of mid-July. Dr. Rossell attributes this to a diminishing “lock-in effect.” Homeowners with low mortgage rates from previous years are now moving despite higher current rates.

However, median home prices continue to rise and new construction remains stagnant, presenting affordability challenges. 

Luxury home prices in Reno, NV have more than doubled since the COVID-19 pandemic.

The Reno housing market has seen a notable increase in luxury home prices, positioning it among the top cities in the nation for price growth. This surge is driven by several factors, including a strong influx of buyers seeking both primary and secondary residences in this vibrant city.  Reno continues to attract buyers due to its favorable tax environment, proximity to outdoor recreational activities, and a strong job market. This demand has led to a competitive market, particularly in the luxury segment.  Reno offers a blend of urban amenities and natural beauty. Buyers are drawn to the quality of life, with easy access to Lake Tahoe, ski resorts, and a burgeoning arts and culture scene.

However inventory has now grown in the Luxury Market. Montreux, a private gated community with a Jack Nicklaus SIGNATURE golf course, at present has 16 homes on the market and we have only had 4 sales this year. One actually is the highest priced home sold in Montreux at $7.50 Million. The other 9 homes that have sold are actually homes that were sold 2 years ago and had to be built  but are now completed. With inventory increasing we are now in a buyers market. Interestingly, most sales in Montreux occur in the 4th quarter, so let’s hope things will pick up later in the year.

In Reno, if we take homes that are over two million dollars, considered Luxury homes, we have 104 homes of which 90 are active with 12 under contract. 6 have been sold this year in Reno over $2 M. Once again confirming that we are in a buyers market.

Now is the time for sellers to repair, update, paint or consider lowering the price of their home.  It also appears that as this year is an election year the market is waiting to see what happens on November 5th, 2024.

Lithium – Nevada’s New Silver?

I thought I would share the highlights that we were told at a Dickson meeting on Lithium in Nevada.

Nevada contains enough lithium to meet the growing demand for 100+ years!
Extracting minerals from the many mines in Nevada is at least 3 years away.
The BLM has approved the mine at Thacker Pass. Geologists says the area hold the
largest lithium deposit in the world. It’s estimated there is $3.9 billion worth of
recoverable lithium.
The Silver Peak Lithium Mine in Clayton Valley is only active lithium production site in
the United States. They are working to expand their output.
Lack of infrastructure and workers in rural areas where the mines are located is a
concern. There are also issues of NIMBY in some rural areas that are fighting the
mines.
The various companies in the “lithium loop” are working with TMCC, WNC and EDAWN
to train a skilled workforce.
The Nevada Mining Association is working with rural communities, the Nevada
Homebuilders, and other industry groups to address infrastructure needs.
The Nevada Battey Coalition is advocacy group working to inform the public and private
sectors of the economic, environmental, and national security issues associated with
the battery supply chain in order to strengthen Nevada’s position as a leading battery
center in North America.
Detailed Notes:
Lithium is a lightweight mineral that stores energy. Thus, lithium batteries are ideal for
portable devices and electric vehicles. (There is a primer about the mineral at the end of
meeting notes.)
Geologist Rick Kern explained that Nevada contains enough lithium to meet the
growing demand for 100+ years! Nevada had a lot of volcanic activity that created salt
flats that are rich in lithium. The mineral is also found in brine solutions that are
produced as a byproduct of geothermal energy production.
The biggest challenge the mining industry faces is getting permits approved to begin
extracting the mineral. It can take up to 6 years to get all the approvals needed to start
mining the mineral. Capital is also an issue. The minimum investment is $10 million to
get from feasibility to extraction.
The other challenge is that the mines are located in rural areas where there are few
workers and little infrastructure and housing to accommodate the construction and
mining workers that will move to the area.
The Silver Peak Lithium Mine in Clayton Valley is only active lithium production site in
the United States and has been in operation for decades. We are at least 3 years away
from any other mines coming online. (Thacker Pass is probably the closest.)
The Nevada Mining Association is working with local communities now to develop trust
with local leaders to address their concerns. They are also working the Nevada Home
Builders to see how to address infrastructure needs.
Finding skilled workers is another challenge. That is something that EDAWN is working
on with the various industries, along with TMCC and WNC.
Denis from Dragon Fly Energy explained how his company is making lithium batteries
for RV’s, called Battle Born Batteries. They have a proprietary dry electrode battery
manufacturing process that has a significantly smaller manufacturing footprint and
consume notably less power than traditional methods.
Denis says the missing link in the lithium life cycle is the processing, which is being
done primarily in China. That is a critical component that Nevada needs to grow.
Steve from Aqua Metals explained that they are a sustainable battery recycling facility
at TRIC that is recovering saleable quantities of the full suite of valuable metals and
minerals contained in spent lithium batteries. Aqua Metals is producing lithium
hydroxide, nickel, cobalt, copper, and manganese dioxide, and is scaling production at
the pilot facility to 75 tons per year of battery materials recycled.
More than 6.5 million tons of lithium-ion batteries from EVs are expected to be available
for recycling by 2030. That is why the “recycling” of these batteries is such a growing
segment of this market.
Jimmy from NV Energy explained that lithium batteries are needed to store the solar
energy that they create during the day. NV Energy is working to power Nevada with
100% renewable energy, and lithium is a critical to making that happen.
NV Energy’s Greenlink is critical to providing the power needed at the rural mines,
which is why NV Energy is a member of the NV Battery Coalition and is working with the
mining industry. Carolyn Barbash explained the status of the project that is bringing
power to many rural communities. Greenlink West will be a 525 kV transmission line
that spans approximately 350 miles from Las Vegas to Yerington. Greenlink North will
be a 525 kV line that spans approximately 235 miles from Ely to Yerington.

Tesla to Expand Nevada Factory

Tesla, run by billionaire CEO Elon Musk, intends to produce high volumes of semitrucks and make enough cell batteries for 2 million light-duty vehicles annually in Nevada. They will be investing over $3.6 billion more to continue growing Gigafactory Nevada, adding 3,000 new team members and two new factories: a 100 GWh 4680 cell factory (with capacity to produce enough batteries for 1.5 million light duty vehicles annually), as well as the first high-volume Semi factory.  The details of any potential tax breaks for Tesla’s $3.6 billion expansion of its Nevada factory will remain secret until late February, under a nondisclosure agreement that state officials signed with the electric carmaker

Why did Tesla choose to build its Gigafactory in Nevada. States without sales tax were topping the list of preferred sites. Nevada estimates a tax base of $1.9 billion over 20 years. After sticky negotiations, Tesla chose the TRIC as the location of the Gigafactory mainly due to speed and a State of Nevada incentive packages.  

The factory which is located less than an hour from Lake Tahoe, Gigafactory Nevada is one of the world’s highest volume plants for electric motors, energy storage products, vehicle powertrains and batteries—producing billions of cells per year. Why is it called a Gigafactory? The word gigafactory comes from the notion of gigawatt, or one billion watts.  And one billion watts is enough energy to power 700,000 homes for an entire year! So technically speaking, a gigafactory is a battery factory capable of producing more than 1 gigawatt (GW) of continuous power per year. Will the gigafactory be solar powered?  Musk tweeted Tuesday that the company expects the factory to eventually be “almost entirely solar-powered.”

Is Nevada rich in Lithium? In northern Nevada, a place called Peehee Mu’huh – or Thacker Pass -is sacred indigenous land and also potentially the largest deposit of lithium in the US. The largest producer of lithium in Nevada is a company called Albemarle.  Albemarle operates the only active lithium mine in the U.S., located in Silver Peak, Nevada.  One has to ask if the mining of lithium is harmful? According to a report by Friends of the Earth (FoE), lithium extraction inevitably harms the soil and causes air contamination. As demand rises, the mining impacts are “increasingly affecting communities where this harmful extraction takes place, jeopardizing their access to water,” says the report.

Finally, which Sate has the most Tesla’s dealerships?  California has 62 (28%) with a population of 39.51 Million people. Texas is 2nd with 23(10%) with a population of 29.00 Million.

Rents Surge in Reno

Rents in the Reno-Sparks area have once again in the fifth quarter in a row increased. The average rent for an apartment reached $1,6o7 during the second quarter of this year, a record-breaking trend that has continued since the second quarter of 2020. Due to the strong demands of renters who are already struggling to find affordable homes in this market, this is bad news. The single family home in the Reno-Sparks area remain at a record high of $530,000 in September, according to the Reno/Sparks Association of realtors.  I personally have seen some leveling out in the past couple of months but it still remains a sellers market if the home is not overpriced.

Most of the new renters, about 40% are coming from the California area. Mainly to get away from California  and Reno being  more affordable.  Vacancies are below 1% in 3 areas in Reno. The Northeast, Southwest and West Reno.

“Just over 4,000 apartment unites are currently under construction in the Reno – sparks market, with over 5,900 unites in the planning stages,” the Johnson Perkins Griffin report said.  “Due to the Covid-19 pandemic, it is likely that development of planned unites will be delayed in the short term, until the ultimate impact of the pandemic is know.”

The big question is to buy or not to buy? Where in the past if something came on the market it would virtually disappear right away and there would be multiple offers on the table. People where not doing inspections and willing to pay above appraisal value.  However today inventory is slightly higher but not as intense as it used to be and not as many multiple offers on the table. It might be a good time now for buyers to once again start looking.  Interest rates a still low, however there is talk that in the near future they will be going up.  Inflation could become a concern as the costs of goods and gas continue to increase, the Feds might raise interest rates to counter act this.

I have seen homes in the luxury market sitting longer than usual on the market. I do believe this is due to the fact that many are over priced and due to the holidays sales will decline a little,however  in the New Year will once again surge… what with Nevada being a tax friendly state and our incredible outdoor life we have here.

THE HOUSING MARKET IS BACK

Perhaps we are all wondering why with a Pandemic, recession and protests across the country, the housing market isn’t at a stand still? With the crippling and ongoing coronavirus pandemic, millions out of work, a recession, a national reckoning over systemic racism, and  a presidential election just around the corner, the residential real estate market is staging an astonishing rebound.

“The housing recovery has been nothing short of remarkable,” says Ali Wolf, chief economist of Meyers Research, a national real estate consultancy. “The expectation was that housing would be crushed. It was—for about two months—and then it came roaring back.”

Why is this so?  There is a severe shortage of homes for sale.  Mortgage Rates have never been lower and there are tons of buyers.

There’s an awful lot of pent-up demand from buyers who were stymied by the novel coronavirus in the spring. These are the folks who were forced to postpone their searches in March, April, and May. Some are first-time buyers with growing families who need the extra space pronto.  Additionally, many home buyers will perhaps never see interest rates at such a low point in their lifetimes. The average mortgage rate fell to 3.03% for 30-year fixed-rate loans in the week ending July 9, according to Freddie Mac. That’s the lowest they’ve been since Freddie began tracking rates in 1971.

Buyers are now back in force, competing with those who had planned to buy in the summer—along with the city folks suddenly seeking a single-family home of their own, a more spacious abode with a home office (or two), and outdoor space.

“They’ve been at home for months, and they’re going, ‘If I’m going to spend the next six to 12 months working out of my house, I need a bigger house,'” says mortgage broker Andrews. About half of remote workers  polled by Gallup recently, 49%, would prefer to continue working from home even once their offices reopen.  Not to mention those who are tired of the big cities and now want to move out to smaller communities.

Reno with it’s No State Tax and close proximity to California has had an influx of buyers, but beware, future buyers shouldn’t expect deep discounts during this recession—at least not yet.