Migrating home buyers avoiding high income taxes have been driving Lake Tahoe and Northern Nevada’s luxury market upward, according to real estate agencies.
The listing of luxury homes, including the $33.9 million Rancharrah and the $6.5 million Lake Tahoe home of baseball player Ty Cobb, is a growing trend in Northern Nevada, realtors said. Most buyers of luxury homes have been migrating from California and other states with high income taxes, according to realtors. Following California’s Proposition 30, which passed last year and meant higher taxes on the wealthy, people have been buying homes in Northern Nevada to avoid high taxes, according to Melanie Stewart, director of luxury marketing for Coldwell Banker. “We’re lucky to have this tax advantage,” Stewart said. “The buyer isn’t bound by locations. They can buy homes here even if they’re based in San Francisco and the Bay Area.”
The definition of luxury homes varies depending on different markets. It’s not all based on price, Stewart said. For Coldwell Banker, luxury is considered a house built with quality materials that doesn’t need remodeling, Stewart added. The luxury market in Reno, Carson City and the Lake Tahoe area is thriving, Stewart said. More than 187 luxury properties priced above $750,000 in Reno, Sparks, Verdi and Washoe Valley are listed with Coldwell Banker. Additionally, the company is brokering 16 lakefront homes on the East Shore of Lake Tahoe and three on the South Shore in California.
Though Rancharrah and Cobb’s home are “anomalies” because of their size and price, the luxury market is moving up, according to Bryan Drakulich of DoMore Real Estate Drakulich Realty. People sell their home in California to buy bigger, better homes for a lot less. State taxes aren’t the only thing driving buyers to Northern Nevada, said Drakulich, Rancharrah‘s realtor. So why live in Reno? “Most people don’t realize that we have more ski runs a mile down the road,” Drakulich said. “So we see people who buy high-end homes or what many would call luxury homes.”
The 117.6-acre Rancharrah is listed with Drakulich Realty and has seen eight interested buyers, Drakulich said. Addition, Drakulich Realty closed more than 20 deals in just Montreux Golf and Country Club last year, he said. As of Dec. 3, 133 properties of more than $1 million were listed in Reno and Sparks by Dickson Realty. Seven of these had a sale price of more than $3 million, representing half of one percent of the market.
Uptake in the luxury market isn’t necessarily an indicator of an improving economy, according to Elliott Parker, an economics professor at the University of Nevada, Reno. “This part of Nevada has had a luxury home market since the Great Depression, and that’s been tied to not having taxes,” Parker said. “It’s not an indication of the local economy other than the overall market isn’t doing as bad as it was.” Because Nevada lost 60 percent of housing values, the market remains a bargain compared to others, Parker said. “We’re one of the handful states with no income tax, and we’ve been attracting people who are avoiding high taxes,” Parker said. Nevada real estate agencies have been reaching out to people since the 1930s, Parker added. Regardless, the local economy is slowly improving since its crash in 2010, following the national economic nosedive in 2009. “People don’t want to move to a place that’s on its way down and we’ve been slowly moving up,” Parker said.
Source: Reno-Gazette Journal