I am constantly asked when I feel the Reno housing market will hit bottom. This is not an easy question to answer with any degree of certainty. Thankfully CNNMoney.com has made things much easier for me. According to CNNMoney.com the Reno-Sparks market is forecasted to hit bottom in the first quarter of 2009. Furthermore, the CNNMoney.com report indicates our market is projected to witness a decline in the median existing single-family house price 22.4% from the peak median home price to the bottom.
Those of you who have been following my monthly medians table know that Reno’s median home sale prices peaked in July 2005 at $345,000. Lopping off 22.4% yields a projected median home sale price of $267,720. If CNNMoney.com’s projections are correct then we’ve got a ways to go. August’s median sale price was $295,000. These figures indicate that Reno-Sparks home prices will decline another 9% from current levels.
On a different note, the Downtown Makeover website is conducting a quick poll. The question is: What’s the best way right now developers and The City of Reno can counteract the volatile real estate market? Go to the DowntownMakeover.com homepage to cast your vote for one of four answers.
[where: 89505]
smarten
So when you make a listing presentation, do you intend to share copies of CNN’s “predictions;” especially with unreasonable sellers? It looks like listings are going to have to be priced at about 9% [instead of 2-1/2%] below your CMA if sellers realistically expect to sell their homes within the next 1-1/2 years. Now how many sellers do you think are going to be willing to do this? And if they aren’t, do you intend to walk away rather than take their listings?
With your permission I’m going to throw something else out here Guy [because otherwise, this thread is going to result in nothing more than a series of “welcome to the party CNN.” And I don’t know the particulars of all this but I’m sure people like Derrick can school the rest of us.
Close to a year ago I heard that the Chicago commodity exchange was going to start selling residential housing futures. The idea was to start out with some of the largest markets [like San Francisco and New York] and then expand. That way if you thought prices were going to drop, you could sell short. By selling short, a seller could offset the effect of having to sell his/her home at a lower price than what he/she could have secured yesterday. And if prices rose and our seller sold too low, he/she could offset the effect by selling his/her futures contract for a profit.
Now as I said I don’t know if this type of commodity actually exists and if it does, whether there’s a contract available for Reno. But if there is, might not this be an additional quiver to present to sellers in their quest for an overall sales strategy? Even if Reno is not one of the contracts available, if prices here are being mirrored in other markets for which there are contracts, the same net results can be secured.
Creative markets mandate creative strategies.
Tom
Such dire predictions are hardly likely to materialize; I defy the mavins making such projections to justify such long-range forecasts.
The recent rate cut by the Fed demonstrates the willingness of the government to intervene to make credit-based liquidity available to help counteract negative economic trending. That will flow into variable rate adjustments and help stem increasing foreclosures, which may percolate up through inventory of properties for sale, over time. We also have a bulge coming in the next two years of retirees in California, many of whom will not be staying put in Los Angeles or San Francisco after leaving the work force. That will have some unmeasurable but positive affect upon demand for housing in retirement target sites, and I disagree with those who have posted that Reno-Tahoe is not among those targets.
I suspect prices will continue to decline this year, but I do not expect the large declines and the long term declines as predicted in the CNN article.
Tom
Faust
Think of the bright side, Guy : we wont have to worry about Jumbo Loans failing in escrow.
::duck::
“So when you make a listing presentation, do you intend to share copies of CNN’s “predictions;” especially with unreasonable sellers?”
I don’t know about that, but I’m certainty going to include it with any offers I make.
o.O
Meanwhile, the house I’ve got my eye on was purchased in Jan ’06 for $400k and it’s for sale at $399k right now. So I should just offer $312 right now, right? eh… well, you can’t just say that houses will appreciate at a -22.4% from 06Q1 to 09Q1 and call it done.
Why?
1) Renovation expenses made
2) Realtor/Closing costs (calculated into the $312?)
3) Opportunity Costs for the dowpayment, etc
4) Tax issues (for both the buyer/seller)
I’ve been told that the time to buy stock is when every conversation you hear about the stock market is doom and gloom. The time to sell is when every conversation is rainbows and kittens. Hindsight has proven this to be right every time (for the stock market, at least) 🙂
Then again… maybe we have yet to reach crescendo on doom and gloom.
Smart Money
James Cramer says “just walk away” if your house has fallen 20% in value. http://www.socalbubble.com/2007/08/cramer-revisionist-proud-of-it.html Houses in Reno have fallen 20% since July ’05. I wonder what will happen to prices if people start taking Cramer’s advise and walk away from their houses?
stjoe
I live in an upper middle class/lower upper class neighborhood: primarily upper management, licensed professionals (MDs, lawyers) and owners of small businesses. The neighborhood is between 5-10 years old.
House one: already foreclosed upon
House two: asked $540K, sold for $450K
House three down the block from me: asking 600K plus, neighborhood scuttlebutt is that NO ONE has seen the house in ages.
Houses four through seven: all asking above $550K. My best recollection is that all of them have been on the market for at least nine months.
One of my neighbors in the RE business claims that another 3-4 houses will be foreclosed upon by the end of the year.
How bad will it get? NO ONE KNOWS! When will it end? NO ONE KNOWS!
Having lived through numerous other crashes my only advice is (1) cut your expenses, (2) pay off your debt as much as possible, and (3) hunker down until the hurricane blows over.
SJ
Move to Reno?
The houses that are selling offer the best quality at the lowest price per sq. ft. Probably a good number of *sellers* are not motivated and will sell only if they get their price. In RE terms, their listing will fail. What is going to drive the market prices lower on the REOs and short sales. The banks can only hold a certain amount of inventory because the carrying costs will eat they them alive. So they will keep lowering the listing price until the buyers appear.
The government is hard pressed to do anything for the existing mortgages taken out during the last 3 or 4 years because the market value of the house has dropped below the mortgage balance AND the people holding a lot of these mortgages can’t afford the house they are currently in. A second WAVE of defaults is about to appear and that will be followed by another wave in early ’08.
The California RE market has been very hard hit and it will be difficult for the retirees there to sell. If they do sell and decide to move to Reno, they will wait to buy until the end of ’08 or early ’09.
It appears to me that the only people buying right in Reno are those getting a very good deal.
smarten
Tom wrote: “Such dire predictions are hardly likely to materialize…We…have a bulge coming in the next two years of retirees in California…that will have…positive affect upon demand for housing in retirement target sites [like]…Reno-Tahoe.”
Retirees from California AREN’T going to relocate to Reno [as homeowners] because of the disparity between the cost to rent versus own, and real property taxes [I know because my wife and I are two of these retirees].
Long time California homeowners have by-and-large had their real property taxes frozen in time [since 1976] because of Proposition 13. I personally know a retired couple in a nice Silicon Valley 3BD home [probably worth about $850K] whose real property taxes run under $800 annually. The minute they sell, downsize and relocate anywhere within the 7 California counties that allow transfer of their current assessed valuations, they get to take their $800 annual ad valorem tax bill with them!
Yet if they relocate outside of California [or anywhere within the Lake Tahoe Basin (none of the California counties in this region reciprocate in the assessed valuation transfer process)] and become homeowners, their real property taxes instantly increase to current market. This will be a many, many fold increase for them, even in Reno [depending upon where] which translates into higher monthly expenses.
Now why are retirees going to do this when the whole idea of retiring is to eliminate the pressures of greater expenses with lower income? Lower housing acquisition costs you say? I don’t think so. Somersett? Compared to Lincoln Hills, Granite Bay and other California retirement communities, I don’t think so again.
One of the major reasons why my wife and I elected to become renters versus out-of-state owners was because of real estate taxes. We’re not willing to pay local government many thousands/year [with many more thousands/year guaranteed to augment these many thousands in future years] as owners, when we pay zero as renters [and please don’t tell me we in essence pay those taxes through the rent we pay our landlord because with the current depressed rental market, that’s simply not the case. Most landlords can’t even recoup their debt service and hypothetical return on their capital investment, repairs and upgrades, let alone real estate taxes].
The onslaught of California purchasers of housing in Reno the last couple of years was fueled mostly by first time home buyers – they couldn’t afford to buy in California, but they could in Reno. This class of purchaser is mostly gone, so there won’t be any “bulge” in the next two years coming from them either.
So for all of you waiting for the onslaught of California retirees [and others] to bail out Reno residential real estate owners who’ve overpaid, I suggest you think again.
Ann
Smarten’s comments about the property taxes are thought provoking to say the least. For the past few years the explanation (or blame) for the rise in prices here in Northern Nevada has been California retirees cashing out and moving here. They have supposedly snapped up houses by outbidding locals and paying more than asking prices, and some supposedly have been able to buy more than one house here with their California profits.
In contrast to that stereotype, I think that a while ago someone said in a comment to this blog that the records show a lot of people buying multiple houses in subdivisions during the boom were locals. That jibes with what Smarten is saying.
But I suspect that some California retirees did cash out and move here without thinking about the property tax consequences until they were committed. After all, how many real estate agents are willing to jeopardize their commissions by mentioning ANYTHING that will spook a seller out of selling or a buyer out of buying? (This comment does NOT refer to Diane or Guy or any specific person.) And not everyone does his/her homework like Smarten. A lot of people make purchasing decisions based on everything but the numbers. They decide what they want to do, plunge into it, and hope for the best.
I guess the Reno owners who have overpaid will have to hope there will be a few more of the uninformed ones coming over!
2sleepy
I moved here from California and thought about the property tax, but weighed it against the 9% California state income tax I was paying and came out by a large amount. And not everyone who moves here from California weren’t in their homes long enough to really enjoy the benefits of prop 13.
However, being in a community of about 70% california transplants I don’t think any of them paid over asking price & most moved here more than 5 years ago. The newer residents in my area are young professional Reno natives who bought at the peak in late 2005 and don’t seem much bothered much by what’s happened to the value of their homes-guess they are in it for the long haul…
2sleepy
I just read that post and realize why there is a ‘preview’ button – sorry for the sucky grammer
MikeZ
RE: “We also have a bulge coming in the next two years of retirees in California”
Yeah, yeah. Bernanke will cut rates and save us, and then the flood of Californians will save us, or maybe we don’t even need to be saved because Reno is different than the rest of the universe.
Those were common cliches even before Reno prices fell 15-20%. How amusing to see them resurrected now.
This is probably where you respond with “but, we’ve hit bottom!” and “the worst is behind us” and don’t forget: “it’s a great time to buy!”
DERRICK
I’m not quite sure what smarten is talking about in respect to california property taxes. I for one watched the property taxes on my house in sonoma county go from 8k/year to 11k/year right before I sold, Oh yea did I mention that was property taxes on a mere 1/2 acre!!
My house here in spanish springs sits on an oversized 1/3 acre lot, that I currently pay roughly 2,200/year. Am I missing something here? I have saved ATLEAST 25k in property taxes in the 5 short years I have owned my home here.
Tom
Smarten questions why California retirees might decide to relocate to Reno-Tahoe, based upon their ability to retain low property taxes by staying put, or by relocating to the handful of transfer-eligible counties for seniors. Believe me, we have done that analysis, having owned our Los Angeles home for thirty years.
Do I want to stay in the traffic, in smogsville, jammed together side-by-side with over 12 million people in this county, just to save a few bucks on property taxes? No, thank you.
The participating counties allowing preservation of historical assessed values are not the nice woodsy, El Dorado County type areas. They are largely the dense, urban living areas of L.A-Orange Metro., the bay area, and San Diego. How many rural northern California counties participate? NONE. Speaking for myself and at least two other families who have lived and practiced in the big city for a lifetime, moving to another big city or suburb of the same, and more urban living is not that attractive. The idea is to change lifestyles, not to save a differential on property taxes. If squeezing a few thousand dollars of savings on property taxes is the pivotal factor, than one could go to Arkansas or West Virginia, or any number of places, and save even more on property taxes than by staying put in California.
I think our fellow commentators may focus too much on `limited choice’ buyers in the comments I have read on this blog site. There are many people who have had successful careers who have options, and I doubt that the difference between a $2,000 annual property tax bill and a $8,500 annual property tax bill will be a determinative factor for them. These same families by avoiding state income taxes on investment income, interest, and other non-California source ordinary income, can save more–even after tax-affecting those sources for the federal deduction of the state taxes–than the property tax differential. More importantly, with the onslaught of special fees and assessments, and the constant attempts to modify Prop. 13, this historical level of taxation cannot be relied upon and projected into the future. The social needs and costs in Los Angeles County, for example, are way too great for this to continue, and the voting base is changing.
I suggest that an analysis focused so much upon property tax differentials would perhaps be more applicable to retirees of modest circumstances, who do not have other economic factors to include in their decision-making. For those retirees, probably a few thousand dollars of difference in property taxes would be a substantial impediment. I agree that they will look elsewhere or stay in their present homes. But I can assure you that I have seen among my own clients, a significant number of professionals in their early 60s who have the ability to make choices, and for them, the property tax differential is outweighed by income tax benefits, open space, outdoor recreational opportunities, and the idea of living in neighborhoods where they feel safe and comfortable. Maybe some of you have not spent much time in public places in Los Angeles County lately; it is not at all like it was twenty years ago. What do you think it will be like ten years from now?
The families I refer to have told me they are seriously looking at Reno-Tahoe, but up the Mt. Rose Highway and into the woods, not down in the meadows or in town. So there will be some of these, I predict, moving your way, although certainly not in huge numbers, statistically speaking.
Thanks for reading my comments.
John
Speaking of the Mount Rose area does anyone think that Montreux is immune to price decreases? They have a lot of inventory of new and existing homes that is not moving. I am considering relocating to that area of Reno and Montreux is very nice but it seems very overpriced. Any advice would be appreciated in terms of expected decreases in prices there and when the bottom may occur. Is it feasible to be offering 10-20% below asking at this point in hopes that someone caves in, or better to wait for the real bottom at Montreux as the new homes continue to sit, and more existing homes come on the market from sellers wanting to get out before things deteriorate further.
smarten
I wanted to raise the issue of property taxes and I’m glad this thread seems to be moving in that direction. So let’s talk about real estate taxes in the real world.
Does anybody REALLY know how real property taxes are actually determined in Nevada [I’ve attempted to discover the answer and to date, have been unsuccessful]? From my understanding, it’s supposed to be based upon CURRENT assessed valuation [“A/V”] and not supposed to exceed 3% of that A/V [for you non-Californians, ad valorem taxes in California cannot exceed 1% of A/V]. Yet current Washoe county A/Vs seem to be substantially below [like 50% or more] real world resales, and the taxes based thereupon appear to be far less than 3% of those A/Vs. My experience has been that if the law requires properties to be regularly reassessed, then an assessor would be derelict in his/her duties in not regularly reassessing.
In any event, in California a buyer’s acquisition cost becomes his/her/its property’s A/V and that A/V cannot exceed 102% of the previous year’s A/V. In Nevada, there’s no cap on future years’ A/Vs. Moreover if the Assessor were doing his/her job, A/Vs would be redetermined every year. Although this practice apparently isn’t currently occurring, I don’t understand why not. As local government’s appetite for increased revenue becomes more glutonous [and believe me, it WILL], I don’t expect the current non-diligent reassessment practice to continue.
What appears to be the “norm” is that A/V is redetermined in Washoe County every 4 or so years. And since it’s so behind the curve, when A/Vs are redetermined, they and the property taxes which are levied based thereupon seem to double.
So let me give you a real world example we discovered while searching Incline Village properties. There’s a particular condominum complex we were interested in. So we assembled a survey of past sales in this complex going back 5 years. It seems that real estate taxes back then [based upon then resale prices of about $800K] were running at about $4,200 annually. Then 4 years ago [when resale prices were running at about $1.1M], real estate taxes doubled in this particular complex to over $9K annually. Current sales are running anywhere from $1.6M-$3M. Although real estate taxes are still running at over $9K annually [because there hasn’t been an A/V reassessment in the last four years], it’s time for a reset and when it happens [which I fully expect to take place throughout ALL of Washoe County (meaning Reno) within the next fiscal year], I fully expect ad valorem taxes in this complex to increase to $16K or more annually.
In any event, in my little example you can see how the long time homeowner in this particular Incline Village complex will soon see his/her/its property tax bill increase by 400% in a period of 6-8 years. And BTW, what sort of income tax benefit does this homeowner realize insofar as Nevada state income taxes are concerned [according to Tom in a 9% California state income tax bracket, the loss of $1,440]? ZERO!
Now what would have this hypothetical homeowners’ ad valorem tax bill been in a comparable California community? Assuming even a 2002 acquisition price of $800K [although my earlier comments to this thread assumed this particular homeowner had owned since 1976 with a more likely acquisition cost of $60K (resulting in an annual real estate tax bill of $600 or so)], annual ad valorem taxes in 2002 would have totaled a maximum of $8K. What would they been in 2003 [when A/Vs were redetermined]? A maximum of $8,080 [because of the 2% annual cap (thus comparable ad valorem taxes in California would have been LESS than in Incline Village)]. What will ad valorem taxes be in 2008-09? A maximum of $8,960 [because of the 2% annual cap (thus comparable ad valorem taxes in California will be 44% LESS than in Incline Village)]. If you haven’t recognized it yet, real estate taxes in Nevada are going to become a nasty little by-product of the recent real estate boom.
Tom talks about Los Angeles transplants concentrating their search for new housing in the “woodsy” area off of Mt. Rose Highway. O.K., that’s Montreux, Galena and St. James Village. What are those properties currently selling for in Reno’s “depressed” residential real estate market? How do their current A/Vs compare to these asking prices? What are these properties’ annual real estate taxes based upon unrealistic A/Vs? And what do you anticipate they would be WHEN [and not if] A/Vs are redetermined? I guess if you currently call $9K or more annually inconsequential, then I guess they’re inconsequential. But if you share my view that A/Vs are about to reset for ALL of Washoe County, you’re going to see ad valorem taxes in this portion of Reno increase to $15K-$20K annually. Still inconsequential [especially to the “modest” California retiree]? I don’t think so.
Derrick recounts how his former Sonoma real property taxes increased 37-1/2% [from $8K-$11K] presumably in one year notwithstanding the benefits of Proposition 13. First of all, we have to all remember “this is Derrick” and his facts aren’t always factual. Notwithstanding, if true I can’t tell you how this happened without looking at Derrick’s property tax bills. But I’m betting the reason is straightforward: Derrick paid more for his Sonoma home than $800K and as a result, it was retroactively reassessed to 1% of what he actually paid.
Tom also talks about incestuous special assessments adding to ad valorem property taxes in California. Although he’s absolutely correct, do you think Nevada is immune from this practice? Although maybe not as pervasive as California, Nevada has learned to extract the same kinds of “add-ons” from its property owners. In fact, at least in Incline Village [I don’t know about Reno], local officials are even proposing an excise tax on the transfer of real property.
So bottom line, the cost of secured real property taxes is a very real issue to many California retirees. In fact in Santa Clara County [one of the seven California counties that allow inter-county transfers of a homeowner’s current A/V], the local Board of Realtors has estimated that if this “benefit” were eliminated, 47% of sales involving purchasers age 55 and older would be eliminated. Now while Santa Clara County may be able to absorb this loss in sales volume, Washoe County cannot.
Tom asks who wants to retire in overpopulated Los Angeles? I can’t disagree with him. But that doesn’t mean there aren’t some very pleasant places to retire to in California [even Los Angeles County itself]. So why come to Reno [NOT the Reno-Tahoe area (I understand why people come to Incline Village or Tahoe City), but Reno proper]?
Whatever your answer [other than avoiding $250K in California state income taxes], now throw into the mix that if you purchase real property in Reno that’s likely NOT to appreciate in value within at least the next 1-1/2 years, and more likely not within the next 3-5 years; and you end up paying more each year [compared to California] in secured real property taxes; and the allure of Reno beings to diminish rapidly.
Since Tom talks about the state income tax savings in Nevada that supposedly more than make up for higher real estate taxes, I’ll address the issue. Remember, we’re talking about the supposed influx within the next two years of California retirees who are presumably living on lower fixed incomes. These people AREN’T paying huge sums to California in the form of state income taxes and certainly no where near the 8.6% maximum [rather than 9%] State rate. I’ve said it before and I’ll say it again; I know very, very few Californians actually paying the State much more than $4K annually in income taxes. Consequently, I can’t imagine many retirees choosing to relocate to Nevada in order to save several thousands of dollars in state income taxes.
So the point of all this is that if locals expect California retirees are going to sell their $1M+ homes that they’re paying a couple of thousand dollars annually in deductible [for California state income tax purposes] ad valorem property taxes; purchase a comparably priced Montreux, Galena or St. James Village homes with the very real prospect of $15K-$20K annual property tax bills; living on lower fixed incomes; with the idea of downsizing their lifestyles in their golden years; then I’ve got a house in Spanish Springs South you may be interested in purchasing at below market value!
If you expect Californians of NON-modest means [those like Tom who are willing to pay $15K-$20K in annual real property taxes] to purchase homes in woodsy Montreux, Galena and St. James Village because of the state income tax savings [which offset higher real property taxes], I submit: you don’t have to be a “retiree” to fit into this category; and, what about the rest of Reno which ISN’T so woodsy [what my wife calls “Barren Hills”]? Just look at Somersett. Where are all the Californian retirees [or is it your belief they’ll be pouring in within the next couple of years]?
Tom
Here are a few further thoughts on property and income taxes:
First, any differential in property taxes is in part paid for to the extent of the owner’s federal tax rate, by the government, since the property taxes are deductible on the federal return. Thus reduce the difference caused by the relocation by roughly 35%, for a taxpayer in that bracket range.
Secondly, reduce that difference still further by sales tax deductions, since taxpayers in states having no state income taxes to deduct on their federal returns, are allowed to deduct sales taxes paid. This might add up to $2,000 per year if just simple records are kept, more if big ticket items are bought.
Third, there is a fairly-new program, of sorts, providing some predictability in the matter of Nevada property taxes. I agree with Smarten that this is a complicated and difficult subject area; in fact, there has been litigation with local assessors over this subject, particularly in the Incline area in recent years.
I have discussed this subject with a deputy assessor from Washoe County and with an attorney licensed in Nevada. I am just a California-licensed attorney who has had an interest in investigating the subject area.
Nevada AB 489, adopted in 2005, was designed to prevent property taxes from increasing more than 3% annually on single-family, owner-occupied homes–IF the owner elects to put qualifying property into this program. I am informed that putting the property into this elective program will most likely trigger an immediate reassessment, and that may be a big trade-off, requiring an opportunity cost calculation. Otherwise, the property won’t get reassessed until the next regional project, every few years as Smarten noted. So the savings until that time might exceed several or many years of limited taxes if the property were reappraised sooner rather than later, in order to become tax-limited qualifying property. But once in the Program, thereafter the property taxes should be predictable under this periodic formula increase. They will go up 3% per year, so an $8,000 tax bill in year #1 could become $8,240 the following year, and then more the next year, using the 8,240 as a base, etc. So in ten years, the compounded effect might be 35%, so the taxes might become $11,000, as an illustration. But that is probably better than taking a guess/risk on what periodic four or five-year regional reappraisals might cause to happen, because the property could increase dramatically in value during such a period, resulting in a $16k or $17k tax, in this illustration. The tax litigation has concerned view properties, lake/waterfront, other special value properties. In my opinion, this Program makes the taxes predictable and manageable.
As to California’s transfer of tax base rules, one must purchase a replacement property costing less than the property sold, to qualify. Thus most Californians who have owned their homes for a long period of time, may find they need to either down-size or move to a cheaper area, if they want to retain any of the sales proceeds; otherwise, to stay in the same area or in the same sized house, they would have to pay the same or possibly more than their sales price for the existing home. This is a further problem with these transfer rules. Some of us don’t want to downsize or move to Lancaster just to stay within the L.A. County limits in order to move the tax base.
There are “nice” areas in Ventura and L.A. Counties, to be sure, Calabasas, Thousand Oaks, Agoura, for example, but there are trade-offs there, also. Those places are over an hour from the airport, at least, whereas your Reno airport is very handy to desireable residential areas. Try to get your out-of-area friends and family to fly into LAX then drive an hour to your new home in the fringes: NOT. Easier to get them to fly to Reno, less congestion at the airport, and an easy trip to your new house from there.
The comments on the site are interesting and provoke analysis. I would be interested in reading the experiences of anyone who has elected to put their home into the property tax cap program.
DERRICK
Smarten dont give me your sh!t on my posts not being truthfull, especially in regards to the property taxes I paid while living in sonoma county. I was only trying to understand your thought process that property taxes were cheaper in california. And that californians had little to gain by moving here.
If my house here (reno) were to be picked up and set in sonoma county where I lived before it would almost certainly be assessed at 800k or more. which was another benefit to me and many other california folkds moving here, Not only did MOST of us save ALOT in property taxes but we didnt have to give up our quality of life and home size.
Yes certainly prop13 does help out some area’s it hardly effects the majority of homes in california, therefore on average property taxes AND insurance rates are higher in california.
I would hardly consider saving 25K and just as much in income taxes the last 5 years a wash… considering I got a home just as beautifull here if not more beautifull with great amenities and good schools. 3 hours is hardly a pain to drive If I ever wish to visit.
I’m sure I ecko the thoughts of many californians who have moved here.
Gina
Census stats for the period 1995-2000 show that 200,000 Californians moved to Nevada. Nevada was Californians’ most popular migration destination – then AZ, TX, WA, OR, CO and FL.
I couldn’t find numbers on how many of those 200,000 went to the Vegas area and how many to Reno. Also couldn’t find figures (if they exist at all) on how many of the emigres were retirees.
I did find some interesting info – for what it’s worth – that 95% of retirees do not migrate out of their home state. And that the bulk of actual emigres are older (ages not specified), affluent, married and healthy.
Numbers don’t seem to be easily available from any source for the period after 2000.
I CAN give you my personal motives and the stories of friends who have left Cali. My husband and I own a business and are affluent. If and when we leave here – possibly to relocate to Reno, we will be keeping our current beach home as a rental, gaining immediate income and write-offs.
We will save on state tax, corporate tax (and dividend taxation) and various other taxes. We hope to gain more house, newer house, less crowds, less traffic, clean air and the beautiful western landscape we both love. Our employees will gain the ability to buy their first home and start families, instead of delaying that indefinitely. We’d also like to be able to buy more income property, in Reno, in the future – including commercial properties.
Friends who have already moved to Reno are affluent, own their own businesses or are high-level consultants working from home and happy to have a nice, uncrowded airport nearby. They have also kept their Cali real estate as income properties. One couple who moved to Arrowcreek has found 5 out of 6 families on their street to be other affluent Cali refugees – with only one household on the street being retirees. The friends have already purchased and rented out a Spanish Springs home and a condo in South Meadows.
As fas as the tax savings – yes, it is a big deal to us. It’s a bigger deal when you are making more money. Especially when you are the business owner and all California ever does is come at you with more and more taxes, hands out and picking your pocket every step of the way, when it is you who are creating the jobs and growing the economy. When Nissan relocated it’s corporate HQ from L.A. County to Tennessee last year – and no one cared. When you start feeling like you are living in a socialist state – it gnaws at you and your sensibilities.
GreenNV
Taxable Property Value in Nevada is not tied directly to property sales price. It is based on the Assessor’s annual valuation of the fair market value of the land, plus the fair market replacement cost of the improvements less depreciation. Properties are not reassessed on sale.
The Assessed Property Value is 35% of the Taxable Property Value. The tax rate is established by the Nevada Tax Commission annually based on the operational budgets of each juristiction (city/county, schools, fire protection districts, etc.). 2007 tax rates are 3.1202 for Washoe County, 3.5167 for Sparks, and 3.6462 for Reno. These rates may vary somewhat in areas with special assessments. Taxable Value x .35 x Tax Rate = Annual Property Tax.
Since 2005, Annual Property Tax is abated if the tax due is more that 103% of the previously years tax. Yes, you have to declare that you are eligible for the abatement program, but that is a formality – it does not trigger a property reassessment.
Washoe County is divided into 5 assessment districts. Each year, one of the districts gets a thorough review of assessed value. The other 4 years out of 5, your Taxable Property Value is basically last year’s amount times a factor the Assessor works up.
The major assessment reviews do factor in resale values as one of the metrics. The improvement values can adjust based on increases in replacement costs, but this is balanced to a degree by the depreciation factor. In times of rapid appreciation, it is the taxable land value that skyrockets.
Reno Wannabee
I’ll tell you why we’re planning to buy in Reno. Our state has a confiscatory estate tax and anyone who has assets that they wish to protect from the greedy clutches of the state have been advised to move to states that have no estate tax, no income tax, etc. Nevada fits the bill. I’m not sure about the property taxes but my feeling is that they are lower in Nevada as well. Plus the Reno airport is smaller & convenient, the climate for most of the year is good (we spend winters in S. California anyway), there is a university and other cultural attractions plus outdoor activities are close by.
We are closly watching the real estate market in the Reno/Tahoe area and will be buying when we find what we want at a price that seems reasonable.
Allen Murray
Smarten, that sure was a long winded justification for not purchasing property based on future property tax increases. Obviously you chose not to buy here based on that, but what struck me was your Incline Village analysis. You say 5 years ago these condos were $800K, 4 years ago $1.1M, and now $1.6 to $3M. I personally would be happy to double my property tax bill every 5 years if the value of my house doubles. Secondly, the other criteria that 200,000 Californians looked at when they moved to Nevada over the past 10 years obviously out weighed property tax concerns. You must be on a very fixed income. I’m happy to say as a lifelong Nevadan, that I wish that you stayed in California.
Grand Wazoo
DERRICK says:
“I’m sure I ecko …”
The clock says he’s not surfing in the wee hours, half in the bag.
So we can’t blame it on booze anymore.
donna
Tom, I enjoyed reading your post. Very articulate, and I feel you are right on.
We are under the Nevada version of prop 13, and will be moving in the next year or two, despite the increase in property taxes for many of the reasons stated in your first post.
I also think many people just want what they want, and whatever the price/costs are, they just pay it as long as it’s not overpriced. If they can get it on sale, that’s just a bonus. Not everyone is looking for a bargain, just some.
BanteringBear
Donna posted:
“I also think many people just want what they want, and I also think many people just want what they want, and whatever the price/costs are, they just pay it as long as it’s not overpriced. If they can get it on sale, that’s just a bonus. Not everyone is looking for a bargain, just some.
This is a gem of a quote. I have a sneaking suspicion that when you say “many people” you are referring to yourself, and the circles you run in.
“…many people just want what they want…”
Yes, when they are hopelessly materialistic, and driven by greed and an I, me, mine attitude. Hopefully, this doesn’t constitute the majority of Americans.
“…whatever the price/costs are, they just pay it as long as it’s not overpriced. If they can get it on sale, that’s just a bonus. Not everyone is looking for a bargain, just some.”
I don’t agree with this statement as it pertains to the general population. Most people ARE on a budget, and need spend accordingly. Price is ALWAYS important. Only some of the very wealthy can afford to spend while paying little to no attention to price.
donna
You completely misunderstood my post, though it was simple to understand. 🙂
Perhaps you can try offering something positive to the board instead of playing village antagonist/pathological offender.
And don’t bother responding, I seldom read your posts anyway.
DERRICK
I dont think Bantering Bear had his grumpy pills today.
Scott
TOM,
I currently have a new home in Montreux for sale. Shoot me a email re rental or purchase if you are interested. Montreux is not immune as I have lowered the price $80K+ Thanks, woodsybear@gmail.com