Covid, Covid, Covid
By David Larson
March 2020 Covid-19 came into our vocabulary, affecting almost all aspects of our lives. Covid’s effect on the Washoe County apartment market is not what I had expected. In March I thought we would see a decline in value of small apartment complexes. Instead, the sales of existing apartment complexes continued at a brisk pace with pricing per unit and square footage going up and cap rates eroding even with banks withdrawing from the market altogether or requiring more down payment money. Vacancy rates are extremely low even with newly constructed apartments coming online. Monthly lease payments also were on the rise in the 3rd quarter of 2020. The dark side of the market, according to Johnson Perkins Griffin Appraisers, is the 8.7% of renters who are in some form of delinquency in their payment. In contrast to this Paige Hubbard, CPM, who manages around 200 rental units had only 2 renters total in arrears.
Where are we going from here? If we look to the west of us in Truckee an interesting trend is taking place that is spilling into our market. A large percentage of second homeowners from the Bay area and beyond are moving out of their city based primary homes and causing traffic on the roads and in the supper markets of Truckee. If we look at the Bay Area, rents are dropping and vacancy rates are rising because renters are leaving for a more rural environment. If you are coming from the Bay area then Reno looks like a rural market to you. Unemployment rates in Washoe County are running around 7%, which is less than half of the 15% rate in Las Vegas. With the demographic shift as well as strong job growth and job diversification, the effects of covid’s economic impact on the Washoe County apartment market has proven not to have much of a deleterious impact.
In other interesting apartment news, the apartments going up on the old Park Lane land at Virginia and Plumb just announced pricing. A studio apartment is leasing for $1,885 and up and a one bedroom $2,400. This sets a new high benchmark for our region. Everywhere you turn there is a new apartment being built. There are around 5,000 new units under construction. There are another 5,000 that were in the planning stages, most of these have been put on hold due to the uncertainty in the general economic market.
Wishing all a happy and healthy end of this crazy year!