There’s been buzz around Sparks that rental housing is increasingly getting more expensive, but why?
UNR Center for Regional Studies Project Manager Brian Bonnenfant has been conducting research and analysis in business at UNR for the past two decades. Gathering data, tracking residential development, and monitoring the
Multiple Listing Service, Bonnenfant offers some insight into the rapid rental rate rise.
According to the Johnson Perkins Griffin apartment survey for the Reno/Sparks area, the average rental rate for an apartment in West Sparks is $907 in this recent quarter (in East Sparks it’s a little bit higher at $1,176).
Bonnenfant says that a $41 increase is large from what’s normal and that rental companies/owners are probably feeding off the attention of the demand. Trailing back through the data it looks like there was a big jump in rental rates from Q3-2014 to Q4-2014, but then maintained a steady rise until now. Bonnenfant says that the rental market is outpacing inflation although the CPI is remaining flat.
“Wages haven’t kept up with that pace either and there are not enough rentals to satisfy that supply and demand,” Bonnenfant says. He noted that the City of Sparks is denying annexation of apartments in outlying areas because that means it would have to provide increased services.
When asked if Sparks’ blue collar workers are being priced out of housing, Bonnenfant says that eventually it will all come to a head.
“When housing costs are 40-50 percent of one’s paycheck, no one will move here,” he says. What results is a ‘Drive to Qualify’ world- the result of moving into a cheaper suburbia area and commuting a longer distance to work.
“If what you can afford is a 20-minute drive then you’ll do that,” says Bonnenfant. He noted that the builders will eventually catch up, but the banks won’t lend to the builders until they are sure that the demand is there. “The banks and builders need to get more confident,” Bonnenfant says. “There is a lot of residual concern from being burned the last time this happened,” he added, referring to the last housing market crash.
“Right now we’re seeing a 0.03 percent vacancy which is very low; it’s a very competitive rental market,” says Bonnenfant. For a lot of people who can’t afford a 20 percent down payment on a home or who have bad credit, renting is the only option. People in seasonal or transient types of jobs are also not likely to want to buy a property. But with the economy growing at a robust level, “it’s driving the rental market into a frenzy,” says Bonnenfant.
Dickson Realty Property Manager Charles Johns agrees that what is driving prices up is the demand for housing. “It someone was looking to buy a year ago they may have missed the window, but luckily low interest rates have kept people in the market,” he adds about the federal incentives available to first-time home buyers right now.
Just named #2 for having the happiest renters in Sparks by ApartmentAdvisor.com, The Trails at Pioneer Meadows monthly rental rates for a two-bedroom place average between $1175-$1699 in its peak season compared to $900-$1000 from three years ago.
“It has definitely jumped up a lot more due to the building industry,” says The Trails’ Assistant Community Director Brandon Ballard. He noted that a lot of people move into The Trails in a short term arrangement as they wait for their home to be built, but a lot people are simply renters interested in living in higher end properties/luxury living spaces.
“Right now there are just so many moving parts with the builders being cautious, bank lending, Tesla and the economic growth, the impact of recessions from years’ past. This is the first time in history that it’s all coming to a head,” says Bonnenfant.