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December 17, 2018

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California housing problems are spilling into Nevada

Reno

Jason Henry / The New York Times

Apartments under construction are shown in Sparks, March 6, 2018. The Reno area is experiencing congestion and new tensions as California residents and businesses seek more affordable locations.

Nevada Housing

Motels on the west side of downtown Reno, Nev., March 6, 2018. Reno is among several Western cities experiencing congestion and new tensions as California residents and businesses seek more affordable locations. Launch slideshow »

RENO — A growing homelessness crisis. Complaints about traffic congestion. Worries that the economy is becoming dominated by a wealthy elite.

Those sound like California’s problems in a nutshell. But now they are also among California’s leading exports.

Just ask the citizens of this city, where growing numbers of Californians and companies like Tesla have migrated to take advantage of cheap land and comparatively low home prices. A four-hour drive from Silicon Valley, across a mountain range and a state line, Reno is finding that imported growth is accompanied by imported problems.

On a recent evening, Chance Reading, an electrician who has lived in the area for 15 years, went to the City Council chambers to speak against a proposed development near his home in Verdi, on Reno’s outskirts. He was part of a standing-room crowd that lined the back wall and spilled into the lobby. Neighbor after neighbor walked to the microphone to complain about clogged roads, overcrowded schools and a creeping sense that local residents were being overwhelmed by development.

“Our big message tonight is really about the pace of growth and trying to have a sustainable growth pattern versus a cycle of boom and bust,” Reading said before the meeting.

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Chance Reading, an electrician who has lived in the Reno, Nev., area for 15 years, at a construction site for a new development in the suburb of Verdi, Nev., March 6, 2018. Reading went to a recent City Council meeting to oppose the development planned near his home in Verdi. He said he wants the area to avoid the boom and bust cycle.

And it’s not just happening in Reno. Austin, Texas; Boise, Idaho; Denver; Phoenix; Portland, Oregon; and Seattle have all seen a huge influx of homebuyers from California, according to the real estate website Zillow. A common thread is that each of these cities faces a growing housing crisis that, while not as severe as California’s, is setting off many of the same debates.

In Washington state, the legislature considered, but ultimately killed, a bill that would let cities like Seattle impose rent control. Affordable housing has emerged as the top priority for voters in Denver, while groups in Boise are organizing to fight “irresponsible development.”

Such concerns are a far cry from those of even the recent past in Reno, where the economy has long been based on gambling and the city’s status as a small, sedate northern answer to Las Vegas.

A little under a decade ago, Reno was one of America’s foreclosure capitals and the unemployment rate was just below 14 percent. The gambling industry was skidding, tax revenue was plunging and construction companies were either going out of business or shredding their payroll from several hundred employees to a few dozen.

“Everybody was leaving and Reno was basically closing its doors,” Lance Gilman, an industrial land broker, said in a recent interview while wearing a cowboy hat, several gold rings, a gold chain and a gold watch. (This being Nevada, he is also the proprietor of a prominent brothel, the Mustang Ranch.)

Today, the city and the surrounding metropolitan area of 450,000 people are so deep into another boom that local residents are starting to wonder if the rebound has been too much too soon. For decades, one of Reno’s chief attributes has been its proximity to California. It has prospered by being a refuge for people and businesses looking for less expensive homes, land and labor, along with the added benefit of not having a state income tax.

And that is what is driving growth today. Net annual departures from California slowed to about 20,000 after the recession, but have climbed back to more than 100,000, according to the Census Bureau. “A lot of people feel like they want to get out while those markets are hot,” said Jaime Moore, a real estate agent based in Reno who is with Redfin, a national real estate brokerage firm, speaking about the high-price cities in coastal California.

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Interstate 80 in Reno, March 7, 2018. Reno is among several Western cities experiencing congestion and new tensions as California residents and businesses seek more affordable locations.

As a result, the Reno housing market has gone from moribund to scorching. As of February, the median home price in the metropolitan area was about $340,000, more than double its recessionary trough of about $150,000, according to Zillow. The inventory of homes for sale was down 22 percent from a year earlier, according to Redfin, and sales were happening at a much faster clip. The typical home for sale was under contract in 55 days, 24 days faster than a year earlier.

In Reno and elsewhere, one distinguishing feature of the recent migration is that it is not limited to retirees who sold their home with plans to funnel the profits toward a cheaper and lower-tax retirement. There is also an influx of young professionals like Brian Quon, an automation engineer at Tesla.

Quon, 37, moved to Reno last year, mostly for professional reasons. He bought a house for $400,000, about a third of what his home in San Jose, California, was worth, and he said Reno was friendlier and had a slower pace. He said he was not really aware of the debate about growing pains, because he was extremely busy at work and almost no one he worked with was from Nevada.

“As the kids grow up and go to school, I’m sure we’ll be more involved in the community,” said Quon, who is married and has two children under 3.

In contrast to their counterparts in the Bay Area, where the term “gentrification” is used carefully and with regret, Reno boosters and real estate agents boast about how blocks of rundown weekly motels are just months away from gentrifying. Come back soon, the message goes, and all this stuff will be torn down and gone.

Today the typical Reno rent is just under $1,700 a month, up about 30 percent from five years ago, according to Zillow. One result has been a surge in Reno’s homeless population. The city’s shelter, just a few blocks past a bus station, is overflowing with residents and recently added a propane-heated tent to accommodate all the extra people.

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Motels on the west side of downtown Reno, Nev., March 6, 2018. Reno is among several Western cities experiencing congestion and new tensions as California residents and businesses seek more affordable locations.

On a recent chilly morning, with a snowstorm bearing down, Aria Overli, went door to door through a motel just off the downtown strip. Overli, an organizer with Actionn, a housing advocacy group in northern Nevada, passed the sounds of saws and renovations, knocking on doors. Many residents who answered said they were on the verge of being evicted.

For the past year Actionn has been organizing tenants in Reno’s weekly motels, many of whom are one step removed from homelessness. The group has been taking residents to City Council meetings, where they speak out against new local ordinances — like a requirement that motel rooms have small kitchens — that they fear will push rents higher. The group has also been pushing for financing for affordable housing and for requirements that developers include subsidized units in new projects.

“This rapid economic growth that has come with a housing crisis,” said J.D. Klippenstein, Actionn’s executive director.

Gilman, the broker and brothel owner, has been at the center of Reno’s evolution. He arrived in 1985 after reading a report titled “10 boomtowns you can count on for the ‘90s.” He and a group of business partners went on to buy and sell various plots of land for housing and commercial development that was primarily marketed toward the kinds of retirees and second-home owners who had sought out Reno in earlier migrations from California.

Two decades ago, the group bought several hundred thousand acres outside town and, after adding roads and other infrastructure, turned it into a vast industrial park among buff-colored mountains that was initially used mostly as a center for warehouse and logistics operations for big retailers like Walmart.

The park expanded as consumers did more of their shopping online, but its growth took off three years ago as Reno started to rebrand as a technology hub, and Nevada offered a $1.3 billion incentive package to bring in Tesla’s Gigafactory.

As the park and its tenants have prospered, the Reno airport has added flights connecting it with tech hubs like Austin. Hotels are marketing themselves as smoke-free and, in place of casinos, have added diversions like bocce courts and climbing walls. One newly revitalized retail strip has a yoga studio, a gastro pub, a marijuana dispensary and a bubble tea cafe on what was once a used-car lot.

Since helping to woo Tesla, Gilman has reached deals with various other tech companies, including Google and Switch, which runs data centers. A mysterious cryptocurrency company called Blockchains LLC recently bought about 67,000 acres, which was just about everything Gilman had left to sell.

“I’m out of work,” said Gilman, who noted that he had planned for it to take two decades for the park to sell out the rest of that land.