For almost all of us, the biggest buy in our lives will be a house. Almost nothing else compares in expense.
And for most people, it’s an investment. You get to live there, but later in life sell it to create a little nest egg to rely on as you age.
But more and more people are questioning the reliability of that nest egg. During the recession, prices tumbled. The last few years, they’ve skyrocketed. Now, they are fairly stable but remain high.
And this is what’s happened to our thinking: 30 years ago, a federal mortgage association survey found 80% of renters would rather own a house.
Today?
RealPage found just 56% of American renters would rather own a house. And for Gen-Zers, it’s only 49%. So, what's going on?
In 2023, the median home sale price in Nevada was $435,900, according to real estate website RedFin. Ten years ago, the median home sale price was under $150,000. During the pandemic, home prices along with inflation skyrocketed, and caused many to question their ability to afford a home.
Jerry Abbott, a Las Vegas realtor with Summit Properties and owner of the successful Las Vegas real estate YouTube Channel Las Vegas Living, said Wall Street companies are partly responsible for Nevada's low housing stock and high housing prices.
"I think the cancer of this industry is Wall Street," said Abbott. "An article came out just last week; they bought 264 more homes all in one shot for $90 million. Wall Street has been destroying the residential market for the average consumer just because they have billions and billions of dollars, and consumers can't keep up with that. So, inventories are massively depressed, especially since the pandemic."
But, Abbott doesn't just think it's Wall Street's fault. He thinks the onus is also on inflation and consumers not putting their money where their mouth is.
"It irritates me because people just spend with reckless abandon," said Abbott. "I keep telling people, just boycott, don't go and buy all these $100,000 cars and $500,000 homes. You don't need to do that. And right now because of where rates have been, it's a hell of a lot cheaper to rent than to buy in, but people are not listening, they want to just keep spending."
Abbott thinks the housing market will eventually course correct and that home prices will come down dramatically.
MORTAGE RATES
The federal government's decision to raise mortgage rates in recent years to curb inflation might come to an end after officials predicted that rate cuts are likely in 2024. What's more is that rates are already better than they were in 2023, at about 7% for a 30-year fixed loan, and it's already causing some to move out of the sidelines and buy a home.
Jonathan Gedde, founder and CEO of SimpliFi mortgage, said that while mortgage rates are in line with the historical norm and are looking better, the more important issue is the lack of housing stock.
"If you look at the total number of housing units built, both apartment complexes and single family houses, over the last 50 years, it's usually fairly consistent with household formation," said Gedde. "We built a few more houses than the number of households we created every year. But in 2008, we under built and are still under building housing units. We've been doing that for the last 15 years and essentially created a housing shortage of about two and a half million housing units nationwide."
Gedde also said he thinks home prices will continue to go up, especially as housing inventory remains low and mortgage rates continue to go down.
THE FIRST TENANTS UNION IN NEVADA
Though Northern Nevada also deals with skyrocketing home and rental prices, another issue they're trying to address is the relationship between landlords and tenants.
Elizabeth Walsh is the organizer for the Reno-Sparks Tenants Union; it was formed in May 2023 and is thought to be the first tenants union in the state. Walsh says tenants not knowing their rights and landlords abusing that is a big issue in Northern Nevada.
"We have members of our union who have had flooding," said Walsh. "Their landlords won't repair holes in the roof, won't repair things like bedbugs, mold, all those things. And there's really not much protections in the state of Nevada to help out tenants."
Since the union is in its infancy, much of what it does right now is inform the public on tenant rights and focus on membership. But if a tenant goes to them for help, they can point them to the right direction.
"There are tenants unions (in other states) that help buildings organize and then guide them to talk to their landlord about remedying problems," said Walsh. "In more extreme cases, you get to things like rent strike. We are not legally qualified to help take someone to court, but we can point a tenant to resources for taking your landlord to court if it becomes that extreme."
According to real estate website Redfin, the median home price in Reno is $525,000, higher than Southern Nevada. The median rent price is $1,780 compared to Las Vegas’ $1,925.
Guest: Jerry Abbott, realtor, Summit Properties; Jonathan Gedde, founder and CEO, SimpliFi Mortgage; Elizabeth Walsh, organizer, Reno-Sparks Tenants Union
