I recently returned from a trip to the Reno Lake Tahoe region where I met with a number of builders and architects active in this region. Following are some comments and observations that I found during my trip.
I consider myself a glass ½ full type of person, but this sense of optimism was put to the test when finding the positives in the Reno market. Reno has one the highest foreclosure rates in the United States and when you couple this with the 3rd steepest decline in residential housing values in the country, you can see why the market here is in the tank.
The headline in the Reno Nevada review newspaper reads “Here’s how to save your house — but why would you want to?.” Many homes here have lost up to 50% of their value, placing many home owners in a negative equity position. If they lose their job and cannot make their mortgage payments they are forced into default and many are walking away from their life’s investment. A tough situation indeed, and one that will continue to effect this market for the considerable future.
As for the positive, there still is residential and light commercial construction taking place in the Reno and the Lake Tahoe region. The market segment that seems to have experienced a slight up tick is the high end secondary or vacation home market.
In Reno, I spent time touring a residential construction site with Doug Auer. The build on this project is valued at $4.5 million and presents numerous opportunities for BC Wood members in the millwork and finished products sectors. The General Contractor on the project, Mike Clarke, commented that currently he is busy with 3 projects and has another 2 ready to start in the next quarter.
In Lake Tahoe, I visited a few construction projects that were idle for the past year which are now starting up again. The Mardis Camp development north of Lake Tahoe has 4 projects currently underway with expected completion in the summer of 2010. In speaking with the developers, the general consensus was that these restarts show that confidence is starting to return to the market. Note that these projects are financed primarily by the owners that own money with little, if any, direct involvement from the banks.
So is the glass ½ full or ½ empty? I guess it depends on who you speak to and more importantly what sector of the market that you target. There is work out there; it seems it just takes more work to find it.
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