RENO – A report released this week by the Nevada State Apartment Association (NVSAA) shows local apartment rents retreating as the coronavirus hit Northern Nevada.
The report, issued by the NVSAA based on data provided by CoStar, shows average asking rents in the Reno-Sparks metro area during the first quarter of 2020 were $1,225. That’s down from $1,232 during the same time in 2019.
That equates to a year-over-year decline in average rents of 0.5%, compared to a year-over-year rent growth of 6.5% during the same period one year ago.
Meanwhile, the area’s multifamily vacancy rate increased to 6.9% during the first quarter of 2020, up from 6.7% in the same quarter one year ago.
“The apartment market in Northern Nevada is shifting, especially since this crisis hit our state in mid-March,” NVSAA Executive Director Susy Vasquez said. “With stay-home orders in effect and many Northern Nevada residents dealing with layoffs and pay cuts, the economic engine that fuels housing momentum has stalled. We expect to see more dramatic changes to these statistics in the coming months.”
In recent years, Reno’s growing economy, strong demand for housing and record-low vacancies prompted local landlords to raise rents at some of the highest rates in the nation. From 2016 to 2018, local apartment rents rose by an average of more than 8% per year, including a peak increase of almost 11% in 2017. Market conditions changed since then as apartment construction boomed.
The report stated that “Reno’s construction pipeline is massive: 3,947 units are underway, which will increase metro inventory by roughly 10%. In fact, multifamily construction has been a frequent sight for several years. As noted, supply has increased by approximately 13% since 2016. However, this is in stark contrast to most of this cycle. In the first half of the 2010s, inventory increased by only about 1% cumulatively, and virtually no units were delivered from 2010–13.”
Remarkably, the 3,947 apartment units being built during the first quarter in the Reno-Sparks metro area was more than the number of units being built in the much larger Las Vegas metro area during the same time.
“The supply wave and rising unemployment have also put a lid on rent growth,” the report added. “Annual gains ranked near the top of the U.S. from 2015-18, but rents are now in decline.”
This report is provided by the NVSAA based on data from CoStar, a leading provider of commercial real estate information.
About the NVSAA
The Nevada State Apartment Association is the voice of the multifamily housing industry in Nevada. The nonprofit organization provides a variety of services to its 894 community, property management and business partner members statewide, including legislative support, education and community outreach. NVSAA is committed to promoting and supporting the diversity, integrity and success of its members and their industry. For more information, visit www.NVSAA.org.