by Dana Gentry, Nevada Current
Almost all of the apartment units constructed in Reno (94%) and Henderson (93%) during the last decade are categorized as luxury units, according to an analysis of data compiled by the market research firm Yardi Matrix, a finding that stands in stark contrast to Nevada’s ranking as the state with the fewest low-income units per low-income households..
In Reno, 5,703 of the 6,059 units built in the last decade are luxury apartments, while in Henderson, 7,190 of 7,726 of the apartments built in the last ten years are considered luxury, the report says.
Henderson Mayor Debra March and Reno Mayor Hillary Schieve and other city officials did not respond to requests for comment on their cities’ respective failures to bridge the gap for residents in need of an affordable place to live.
The National Low Income Housing Coalition says Nevada has 18 low-income units per 100 extremely low-income households, resulting in a shortage of just under 80,000 units. About 20% of Nevada renter households, more than 97,000, are extremely low-income.
A household of four can earn a maximum of $26,200 a year to count as extremely low-income. Renters must earn $45,416 to afford a two-bedroom unit at HUD’s Fair Market Rent.
“We have to figure out a way to solve this issue (of affordable housing),” Henderson Councilman Dan Shaw said at a meeting in January 2020. “How many affordable housing units did we build in Henderson last year? I don’t know if we did any.”
Applied Analysis, a high-profile Nevada consulting firm, told Henderson officials at the time that 30% of the city’s residents were housing cost burdened, meaning they spent more than 30% of income on housing.
“Across Nevada, there is a shortage of rental homes affordable and available to extremely low income households (ELI), whose incomes are at or below the poverty guideline or 30% of their area median income (AMI). Many of these households are severely cost burdened, spending more than half of their income on housing,” says the NLIHC. “Severely cost burdened poor households are more likely than other renters to sacrifice other necessities like healthy food and healthcare to pay the rent, and to experience unstable housing situations like evictions.”
Reno ranks 14th and Henderson ranks 17th among the 20 cities that built the swankiest apartments in the last decade, according to Yardi Matrix and Census Bureau data.
Renters are staying put longer, given the high cost of buying, according to the analysis, and developers are responding to the call for high-end units with more amenities.
A luxury unit in Reno has 999 square feet, compared with 769 for a standard unit.
Henderson’s luxury apartments average almost 1,000 square feet, compared with 855 for a non-luxury unit, and include amenities such as resort-style pools and spas, electric vehicle charging stations, and co-working spaces.
A one-bedroom, one-bath apartment at the View in Henderson rents for $1,676, according to its website. Rent at Aspire at Sunridge Heights begins at just under $1,900.
The number one spot for luxury apartments is Gilbert, AZ, where 100% of the units built in the last ten years are high-end.
Nevada cities, unlike those in some other states, do not have inclusionary zoning provisions that require developers to either include an affordable component to their project, or contribute to a fund that allows the municipality to provide low-income housing.
In 2019, lawmakers grappled over a bill intended to clarify that local governments in Nevada have the authority to impose affordable housing measures such as rent control and inclusionary zoning. The measure died.
Build-to-rent
With home prices climbing, the American dream of home ownership is on ice for millions in the U.S.
Las Vegas, where a median home price of about $470,000 has priced thousands of working people out of the home buying market, is one of the most popular locations in the country for build-to-rent neighborhoods, a housing alternative for people who want the amenities of a house, but can’t afford it.
Southern Nevada has 3,260 build-to-rent (BTR) units, the sixth highest number among U.S. metro areas, according to an analysis from Fixr.com based on surveys of industry experts as well as Yardi Matrix data. Phoenix is first, with more than 6,000 units.
Fixr says there are 13,910 BTR units under construction nationwide in 2022, up from 4,180 in 2018.
“For many, buying a home is out of reach, leaving renting as the most viable option. Yet, many families would still like the benefits of living in a larger, traditional single-family home, but without the burden of a down payment, high interest mortgage, and unmanageable maintenance costs,” says the analysis.
“It’s basically giving up on the American Dream for an awful lot of people and I refuse to do that,” Gov. Steve Sisolak said at a recent rally supporting a rent control ballot initiative in North Las Vegas. “I would absolutely not support that. The fact that they’re coming in and building developments with the intention of making them all rentals – first of all, it’s not right for the people who live near there. … And they’re going to raise rents until they hit the ceiling.”
Clark County Sheriff Joe Lombardo, a Republican who is challenging Sisolak, did not respond to requests for comment.
Investors are flocking to BTR projects, says Trevor Koskovich, a broker involved in the recent sale of a Las Vegas build-to-rent development in the northwest.
“We are seeing a massive development pipeline because the product has fared well operationally across the U.S. It [single family built to rent homes] has proven to be the more desirable rental option in comparison to traditional multifamily,” Koskovich told Fixr. “There was also a tremendous amount of capital raised in the space and developers are deploying that money aggressively. I think there has been a demographic shift and tenants really prefer this type of product.”
Sarah Cunnigham, Owner of Ethos Design + Build | Remodel in Idaho, warns build-to-rent projects do not address the long term hazards of the housing crisis.
“They are designed for long-term renters, but they are also creating housing stock that is not designed for home ownership and continues to make it difficult for first-time buyers to find a place to live,” she told Fixr.
Couples with kids make up the greatest demographic seeking build-to-rent homes, according to a survey of construction experts, followed by childless couples, retirees, and singles.
Much of the demand is from millennials, who, as they begin to have children, want to live in the suburbs. So do millennials who have pets, rendering dog parks a popular amenity of BTR neighborhoods.
The concept is said to be popular among baby boomers, because “it allows them to monetize the home that they may own free and clear and to move to a fixed cost of living,” according to Fixr.
Student housing providers are also getting into the build-to-rent market, building off-campus single family homes, according to a story from Student Housing Business.
Yardi Matrix, a commercial real estate data company, estimates that investors have plunked more than $10 billion into the sector in recent years.
Rents range from about $1,000 to more than $3,000, depending on the market and the size of the unit, according to Yardi Matrix, which tracks rents and occupancies.
The average monthly rent for a San Diego unit in 2021 was $3,293. Occupancy is 95% or above.
“I question if build-to-rent is truly a desirable alternative for anyone in the long run,” says Cunningham, who lives in Boise. “Build-to-rent makes great economic sense for investors but it’s bad for communities. It’s making it harder for people to access homeownership. When that opportunity is taken away, like it is in communities like mine where there’s already low housing stock, it’s harder for people to create personal and generational wealth.”
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