ELKO – Housing is still a hot commodity in Elko and Spring Creek and available housing can’t keep up with demand, but rising mortgage rates during this time of high inflation threaten to impact the market.
“Rates are climbing, but we are still dealing with a low inventory. They can’t get built fast enough,” said Kaci Lynch, owner of Coldwell Banker Excel and president of the Elko County Association of Realtors. “The second a home comes onto the market it sells pretty quickly. We are seeing multiple bidders.”
She said the mining industry is still hiring and trying to recruit people into the area, but the shortage of houses and apartments creates problems.
“What we’re seeing with interest rates rising is people are in a different price range now, and there are not that many lower priced homes,” Lynch said.
Higher mortgage rates mean higher mortgage payments, so potential buyers will need to purchase houses priced lower than they would have had to buy when interest rates were lower.
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The 30-year fixed rate for a mortgage on April 29 was 5.357%, according to Bloomberg. The rates are rising with inflation, market concerns and the Federal Reserve’s 0.25% percentage point hike in interest rates in March, after mortgage rates were in the low-to-mid 3% range in January.
“That’s a pretty steep increase in just four-plus months,” said David Battany of San Diego, executive vice president of Guild Mortgage, which has an office in Elko.
He said “definitely the number of people looking for homes has dropped a little,” pointing to a couple reasons: potential buyers cannot qualify for a loan with the higher interest rate, or they are “just burned out” from bidding and losing on houses and experiencing “emotional frustration.”
Battany said a lot of market investors are thinking that mortgage rates now are possibly close to the peak, but that will depend upon the Fed’s actions when it meets May 3-4, and on inflation and the war in Ukraine’s impact on fuel prices.
“I think that because the Fed waited too long to raise rates, they will do a higher rate increase in May,” he said, reporting that the markets are expecting a half-percent hike, and if that is the case, “mortgage rates will stay about what they are.”
NerdWallet reported on April 28 that a 30-year fixed-rate mortgage interest rate was 5.17% and a 20-year fixed-rate was 4.861%. The annual percentage rate, or APR, that includes interest and costs such as closing fees is 5.256% for 30 years and 4.95% for 20 years.
A 30-year Federal Housing Administration loan had an interest rate of 4.375% and an APR of 5.148%, while a Veterans Administration mortgage for 30 years has a 4.464% interest rate and 4.83% APR rate, according to NerdWallet.
Lynch said house prices “are increasing with labor and material costs,” reporting that average home prices in Elko are up 9.9% from last April, and houses in Spring Creek now cost 14.3% more than last year.
According to Multiple Listing Service figures for April 22, the median house price in Elko was $345,613, the time on the market was an average of 31 days, and 110 houses had been sold this year as of April 22. The median price was $311,379 in April 2021, the days on market averaged 44 and there were 119 houses sold in the year up to April 22.
In Spring Creek, the median price is $357,309, compared with $306,279 in April 2021. The days on the market averaged 21, compared with 32 last year, and there were 114 houses sold, down from 120 in last year.
The figures show that in Elko city there are 53 active listings, 29.8 closings per month and a 1.8-month supply, while in Spring Creek there are 15 active listings, 30.9 closings per month and a half-month supply of housing.
For all areas of Elko County covered by the Multiple Listing Service the median house price on April 22 was $344,763, up 13.5% from $298,155 last year, and the days on market average 29 now, compared with 42 days last year. There have been 253 houses sold in 2022, compared with 264 houses last year in the same time period.
The Multiple Listing Service shows 91 active listings for the whole covered area, 68.5 sales closed per month and a 1.3-month supply.
Tammy Bawcom, a broker with Bawcom Realty in Spring Creek, said “we are short on properties to sell, especially in the lower price range. With the market so good and the prices of construction materials climbing and climbing, it pushes house prices higher.”
In turn, there is an effect on existing home prices as the market climbs, she said.
“The market is still good but there is a little bit of a slowdown” with the higher prices. “Something that is clean and priced right is still selling pretty quickly,” Bawcom said.
She said construction continues but Spring Creek within association borders is running out of lots, so developers are looking at properties adjoining the association lines, picking up properties and “spreading out.”
As mortgage rates climb, the market will slow because the higher mortgage rates will make home payments too high, she said, recalling when the rate was 10% many years ago. “If it hits 7%, people will say it’s horrible.”
Battany said the mortgage rate was as high as 18% in the early 1980s, however.
Sandy Wakefield of Sandy’s Castles manages rentals but also sells houses, mainly those she had managed as rentals, and she said that “anything $400,000 or under is selling quickly.” She cited as an example a house in the tree streets of Elko that needed a lot of work and was listed at $180,000. There were 13 offers as high as $235,000, she said.
Although mortgage rates are affecting potential buyers, with the current tight market Lynch recommends that buyers “come in with their strongest offer first. It is your best bet in this market.” Potential buyers also should be pre-approved for mortgages.
Cathy Hambre at Nevada Bank & Trust said the bank doesn’t handle mortgages but works as an intermediary with Crescent Mortgage to help bank customers navigate the mortgage steps “to smooth the process.”
Michele Rambo, development manager for the City of Elko, provided a list of developments in different stages, including Colt Drive Townhomes on Colt Drive that will offer 19 units and is under review, and two that are approved but not under construction yet.
The two approved but not under way are Copper Trails Phase 2/Unit 2 at Copper Street and Mittry Avenue, 10 units; and Cedar Estates Phase 3 at the north end of Daisy Drive and Primrose Lane, 34 units.
Projects under construction now include: Jarbidge Estates (townhomes) on North Fifth Street at Rolling Hills Drive, 18 units; Aspen Heights on Celtic Way, nine units; Cambridge Estates, Celtic Way, 35 units; Copper Trails Phase 2/Unit 1, Copper Street and Mittry Avenue, nine units; and Ruby Mountain Peaks on Mountain City Highway and Jennings Way, 41 units.
Other homes under construction are Townhomes at Ruby View at Indian View Heights and Griswold Drive, 10 units; Mountain View Townhomes Unit 1 at North Fifth Street and Mary Way, 10 units; Tower Hill Phase 3, 27 units and Tower Hill Phase 4, five units, both at the south end of Stitzel Road; Zephyr Heights Unit 1, top of East Jennings Way, 18 units; Humboldt Hills on Jennings Way, 26 units; and Great Basin Estates Phase 3, Opal Drive, 38 units.
The City of Elko Building Department’s report for April showed there had been permits issued for 20 single-family dwellings year to date, down from 26 for the same time period last year. There were 100 houses built in all of 2021.
Next week: Rentals tough to find in Elko area.