Welcome to the ArrowCreek monthly property value update for a High Desert, Semi-Rural community in Washoe County, Nevada, that just happens to contain a PRIVATE Golf Course business (A.K.A. the Non-Residential Area as documented in the Articles of Incorporation, the Covenants, Conditions and Restrictions (CC&Rs) and By-Laws). Participation in the private club (i.e., HOA residents do not have a financial interest nor obligation to ‘The Club,’ which is not true for all Associations) is purely optional for all interested parties. The origins of this report were based on a heated discussion of the value of homes on a golf course versus those not on a golf course, which is likely different for other communities, and, as you’ll observe, the belief that homes on a course are worth more is a ‘belief’ not necessarily based on factual data. Our community is financially diverse having been created that way by the designer of the community and Washoe County in 1997. It consists of 506 Semi-Custom homes, typically for middle and upper middle-income individuals, and 577 Custom home sites, typically for upper middle and high net worth individuals, of which 482 custom homes have or are being built. Approximately one third of the lots are directly adjacent to the golf course. This report contains the data that was available on January 28, 2022, from the Washoe County Assessor’s Records, these records appear to be current.
During this past month the number of properties changing owners was at a nominal January rate of 3 (three) properties versus 7 (seven) for prior months. This data appears to be in agreement with national publications and local real estate and banking professionals. We did not make the list of the hottest local markets per Kiplinger, the Wall Street Journal, or the S&P CoreLogic Case-Schiller national home price index (19.1% increase), BUT our year-over-year price gain of 35.9% certainly should have qualified us for the list. These three (3) properties that changed owners over this past month had a total value of $2.8 Million! One (1) of the properties was directly adjoining the ‘golf course.’ Currently ‘non-golf course homes’ enjoy a sales price advantage of 3.6% ($15.71 per square-foot) advantage over ‘golf course’ homes, with the advantage clearly noticed, as you’ll read below, in the value of custom homes. However, it was also noted that semi-custom homes ‘on-the-course’ are showing a higher value than custom homes ‘on-the course,’ an unexpected observation. This ‘advantage’ has now spread to undeveloped land as the price, as you will also read shortly, is 4.4% higher for property that does not adjoin the golf course.
Since February of 2021 and over the past twelve (12) months:
1. Custom ArrowCreek homes appear to have established a ‘floor’ of $360 per square foot and semi-custom homes a ‘floor’ of $360 per square-foot to grow from. With only three fully financed properties changing hands this past month, there was no most active neighborhood.
On with THE FACTS:
a.) Three (3) properties were recorded sold in ArrowCreek between 7 December and 18 January (per the Washoe County Assessor). This brings the total number of properties transferred over the past rolling year to 116 or 10.7% turnover rate for our community. From a National Publication (TheHill.com) this compares to the fact that only 8.4% of Americans live in a different home than they did a year ago and in Washoe County the number is 18.4% based upon the most recent census data. The aging of the U.S. population, a lack of new housing, and increased caution during the pandemic have produced the lowest rate of mobility recorded at any time since 1948. ArrowCreek remains at a low rate that may be attributed to a general satisfaction with living in our gated community.
b.) One (1) home on the golf course (where the property boundaries actually touch the golf course, not just have a ‘view’ of it) was closed during this reporting period. The rolling average selling price for homes on the golf course now stands at $423.27 per square foot. Based upon the statistical rolling average calculation (only 16 homes are in the calculation. This creates a situation where a single sale above or below the average skews the data, which is what likely has taken place over past several months.), the price per square foot increased by $5.90 per square-foot due to the rolling year statistical calculation. The 12-month rolling average sales price decreased to $1,715,820.31, again based upon common statistical methods. No additional vacant parcels were sold and the rolling average selling price for undeveloped property on the golf course now stands at $316,949.96 per acre.
c.) One (1) home was sold that is not connected to the golf course. The rolling average selling price for off-course homes increased to $438.98 per square foot, which is up by $7.56 per square foot, based on a sample size of 58 homes. The twelve-month rolling average sales price for non-golf course homes increased to $1,562,802.95. One (1) additional vacant lot was sold, making the rolling 12-month average selling price for vacant land, not on the golf course, standing 4.4% above vacant golf course property at $331,550.34 per acre.
d.) The figure below shows the value trends over the past twelve months with the vertical scale being the cost per square foot. It should be noted that since February of 2021 prices have been steadily increasing across the ArrowCreek market and across the Washoe Valley in general. Additionally, it was noted that five years ago the nominal price per square foot was on the order of $200 as opposed to where it is today. One of the stunning features of this chart is the absolute difference between non-golf and golf related homes. An interesting observation was provided recently that may account for some or most of this difference. The observation was from a Damonte Ranch resident who belongs to ‘The Club.’ “I get all the ‘amenities’ of ArrowCreek with my golf membership without the ‘high cost’ of owning a home there.” Something to ponder, as this ‘attitude’ may cause our prices to go lower to match those ‘down in the valley.’
2. Winter has definitely arrived, and the housing market continues to be barely alive. For those desiring a secure, safe environment to raise a family or to have abundant recreational opportunities and peace of mind, ArrowCreek should not be over-looked.
Do keep in mind that everyone’s selling price is based upon his or her own set of circumstances and the above picture/figure is hindsight, not necessarily foresight. From the volume of property transfers during this reporting period it is clear that the demand for a secure property environment has remained fairly constant. A balanced marketing approach focused on our amenities should go a long way toward creating a better environment for all homeowners and buyers.
Continuing with the commentary from previous months: the author received queries about Semi-Custom and Custom homes both on and off the golf course and their relative selling prices with respect to those found in Reno and Sparks. The following chart portrays the trend lines for Custom and Semi-Custom homes within this broader community. From the chart it is clear that home values have been steadily increasing since January 2021. Furthermore, values of Custom homes within Truckee Meadows, especially those in Reno and on the ArrowCreek golf course, have managed to exhibit nearly the same values along with ArrowCreek Semi-Custom homes, no matter the immediate environment they are located within. Also, the value of Semi-Custom homes, of comparable home and land size, indicate that both Reno and Sparks offer greater value per square foot than ArrowCreek from a pure price perspective. ArrowCreek’s value appears to lie in our gated security, quality of adjacent schools and our other amenities which amounts to a premium of about $70 per square-foot for our Semi-Custom homes. Obviously, this is not true for our Custom homes as we enjoy the same ambience, but there is little price difference.
- Semi-Custom On-Course: $440.18 per Square Foot
- Semi-Custom Off-Course: $419.67 per Square Foot
- Custom On-Course: $410.12 per Square Foot
- Custom Off-Course: $468.36 per Square Foot
- We also received a request from one of our readers for a comparison of the ArrowCreek values with those in D’Andrea (Sparks market), Somersett (Reno market) and Saddlehorn. Having obtained the appropriate reports from the real estate community, here is what was learned. (Data extracted from altosresearch.com Chase International)
- Reno market ‘in general’ – Custom homes in Reno are selling, on average, for $431.88 per square foot (Median price $2,224,000). The average days on the market was 84 days. As noted from above, you can see our ArrowCreek comparable golf course Custom homes are selling in the same price range without a lot of differentiation from those in Reno, both custom and semi-custom. Data for separate ArrowCreek average time on market was not available. Reno homes comparable to ArrowCreek Semi-Custom homes are selling for $322.98 per square foot (Median price $864,500) with a time-on-market of 42 days. Median prices rose across the Reno market by 23.3% during the comparable past year, as you can see from the chart, while ArrowCreek combined average prices were 35.9% higher.
- Sparks market ‘in general’ – Recently, some homes in Sparks have been identified as qualifying for ‘custom’ designation. These homes are definitely comparable to those in ArrowCreek from both a square footage and lot size perspective. The current average selling price for these homes is $274.00 per square foot (median price of $888,660) with a time on market of 91 days. The Sparks Semi-custom market actually compares with the Semi-Custom homes in ArrowCreek. The average price for these Sparks homes is $264.71 per square foot (Median price $672,500) with an average of 28 days on the market. Median prices rose across this market by 20.5% during the comparable past year. For the ArrowCreek community, the Semi-Custom homes have risen 54% over the same time period.
- Saddlehorn – In reviewing the records for this development, the sample size was too small to obtain meaningful information.
Commentary: ArrowCreek Custom homes continue to be in the top two quartiles of Reno and the Semi-Custom homes are in the top quartile of Reno and Sparks. In addition, the data suggests that the ‘private’ golf course (a.k.a. The Non-Residential Area of ArrowCreek) has little or a negative impact on prices because ArrowCreek homes are selling at roughly comparable non-gated community homes in the Truckee Meadows based upon real estate advertising and the data compiled in this report. Also, the ArrowCreek Homeowners Association does not, repeat does not, have a financial or any other fiduciary interest in ‘The Club at ArrowCreek.’
Some owners of ArrowCreek believe they reside in a ‘golf community.’ Those words appear to emanate from those who have chosen to belong to the ‘private’ golf club. In their minds, it may be true; however, in fact, the truth is that only a third of the homes and lots are on the golf course and 39% of owners are actually members of ‘The Club.’ Yes, we have a private golf club within our gated community that is not an HOA amenity, but we also enjoy the freedom to belong or not.
Two initiatives that are currently being considered by the ACHOA Board of Directors are an enhancement to landscaping along the entry to our community, requiring a ’loan’ of half a million dollars and a second more insidious effort to raise dues to fund reserves at a 70% level. Both of these initiatives can impact fixed income residents residents more heavily than those who continue to be employed. The community should be managed to maintain our high desert look and feel and not to impose a burden on fellow residents who enjoy our current environment. From the data in this report, neither of these initiatives will enhance our home values.
The ‘value proposition’ for our unique community should continue to focus on attracting professionals who value security, good schools, and recreational opportunities. More people will come to ownership in ArrowCreek as Nevada businesses gather top talent with competitive salaries.
By Ron Duncan
February 3, 2022
For previous postings of the ArrowCreek property value updates: click here.