By Robert Freedman, senior editor, REALTOR® Magazine
The economic news continues to be bad but there’s one area that’s benefitting from the bad news: Elko, Nev. That’s because the town of about 20,000 is the gold mining capital of the United States, and as the economy goes bad, the price of gold goes up. It’s now at about $1,700 an ounce. With gold that high, a lot of it is being mined. That requires jobs. And these jobs are well paying ones.
The result has been something of a boom for the town, which up until a few years ago was the country’s cattle ranching capital.
To be sure, the town and surrounding area didn’t escape the recession. Home sales and prices dropped a few years ago, but within a year of the downturn’s low point, sales and prices were moving back up, and today the market is looking relatively strong. Foreclosures haven’t been an issue, helping to keep prices from sinking too low.
Sales still aren’t as high on an annual basis as they used to be, but they’re not far off the mark. Prices are in their third year of recovery.
Rental housing is and has long been scarce. That’s helping to keep the sales market pretty healthy, too.
Of course, not everything is great. Even households with good incomes are often finding it a challenge getting financing. But to a certain extent, households have contributed to the problem. During the boom, many of them relied on low- and no-down payment loans to get into housing. Although their salaries were pretty good, many of them simply didn’t save. Instead, they bought a lot of what real estate associates in the area call toys: motorcycles, boats, and RVs. So, exotic loans were the best way for them to buy a house.
It took a while after the downturn for households to tighten up their spending and improve their credit so they could buy without having to rely on risky financing. Real estate brokers and associates in the area played a role in changing households’ thinking. They used media channels to educate consumers about financial management strategies. Now, households are better at managing their credit, practitioners say.
Elko is the second in our Markets Across America video series. It chronicles the area’s transition from ranching to mining and looks at how practitioners have engaged buyers and renters since the downturn.
The first video in our series looks at San Gabriel Valley, Calif., where households from China and other Asian countries have helped keep that area strong during the downturn. Access that video.