by April Corbin Girnus, Nevada Current
An ambitious proposal to track, and limit the influence of, corporate investors within Nevada’s strained housing market passed out of a Senate committee last week with bipartisan support.
Senate Bill 395 would have the secretary of state’s office create and maintain a public registry of the corporations and limited liability companies that purchase or own residential real property in Nevada, and it would limit corporate investment to 1,000 housing units per year.
Businesses would have to register with the secretary of state’s securities division before purchasing residential real property. Deeds, which are maintained by county recorder officers, would have to clearly list the corporate owner and state that the property is not used as the owner’s primary residence.
The idea behind the proposed registry, says state Sen. Dina Neal (D-North Las Vegas), is that Nevada needs to know “who is playing in” its real estate market and making it more difficult for residents to secure homes for themselves.
The registry would provide concrete data on the impact of corporate investment within the residential real estate market. Existing data relies on estimates and has limitations.
A Stateline analysis of data from real estate analytics firm CoreLogic found that nearly a quarter of all single-family homes sold in 2021 were purchased by investors. In Nevada, the same analysis found, the share of investor purchases increased from 18% to 30% from 2020 to 2021.
Only two states — Georgia and Arizona — saw more action from investors.
As part of her work on SB 395, Neal turned to Shawn McCoy, who conducted local research as an individual but whose day job is director of the Lied Center for Real Estate and an associate professor of economics at the University of Nevada Las Vegas. McCoy scraped Clark County Assessor data and conservatively flagged 9.4% of all transactions as likely or potential investor purchases.
McCoy’s preliminary data aligns with previous research put forth by analysts. It also tracks with personal anecdotes from residents looking to buy homes.
“I am meeting young people who make $78,000 and they cannot find a home,” said Neal “They cannot bid (against investors). They don’t have the money. The market is so out of their price range. Who wants to pay $3,000 a month for their first home? Nobody. It’s unsustainable.”
State Sen. Ira Hansen (R-Sparks) said his children have experienced similar issues while trying to buy homes in the Reno area.
“Ten percent of the market,” he added. “That’s huge.”
Neal acknowledged in a Senate Judiciary bill hearing on April 7 there may be legal questions about the state’s authority to restrict the housing market in this way.
“The central public purpose of this bill is to allow families to purchase homes without having to bid against investors,” she told the committee. “The idea is to limit the amount of transactions that happen within a year, to free up property, so that individuals can actually go and purchase property. We currently know we are in a housing crisis.”
Neal argued states have the ability to enact such legislation because it is related to a legitimate state purpose. She likened it to the state requiring construction companies to employ a workforce made up of at least 50% Nevada residents.
SB 395 received relatively little opposition during its Senate Judiciary hearing on April 7.
The Henderson Chamber of Commerce is opposed to the bill, writing in a letter that the registry is “overreaching and burdensome” and will “materially affect economic development and freedom within the State of Nevada.”
The Nevada Home Builders Association also opposed the bill as introduced over fears it would unintentionally apply to the raw land bought by home builders. An amendment approved by the committee before the bill was advanced out on April 11 seeks to address concerns by excluding from the 1,000 limit any transactions where the sell date and construction date are the same.
Family trusts and the Nevada Housing Authority would be exempted from the registry.
The secretary of state’s office would be authorized to charge “a nominal fee” to cover the administrative costs associated with the registry.
SB 395 will need to be approved by a supermajority in both houses. In its Senate hearing, it received yea-votes from all of the committee’s Democrats and two of its three Republicans. State Sen. Jeff Stone voted against the measure but suggested an openness to changing his vote on the floor.