Reports suggest that the Las Vegas real estate market in Nevada is closer to long-term stability than it has been in the last five years. Over those five years, the region has seen significant improvements. Current trends in the area indicate no significant fluctuations, suggesting true normalcy may be on the horizon. The city’s stimulation is due, in large part, to a heavy presence of foreign and domestic investors looking to capitalize on the buy and hold market. Subsequently, the luxury home market realized significant increases in activity over a similar period, but has begun to temper over the last year. By the fourth quarter of 2014, cash purchases were at a five-year low. Such a development was shocking to see in a city where cash purchase were once so prominent.
The Las Vegas real estate market currently boasts a median home price of $203,000, nearly $14,000 less than the national average. However, in getting there, Las Vegas had to make significant strides over the course of a year. In the last 12 months, Las Vegas homes have appreciated 11.6 percent. While prices are certainly up from this time last year, the rate of appreciation has begun to ease. That said; just three short years ago, Las Vegas homes appreciated a whopping 65.4 percent. Seeing as how Las Vegas was one of the markets most impacted by the recession, it had a long way to go in its recovery.
Three strong years of historically high appreciation have increased equity in the Las Vegas housing market. Subsequently, the typical Las Vegas real estate investment has seen spreads increase. The following highlights how much equity has been gained relative to the year of purchase:
Homes purchased in the Las Vegas housing market one year ago have appreciated by an average of $23,811, whereas the national average was $12,783 over the same period.
Homes purchased in the Las Vegas housing market three years ago have appreciated by an average of $86,153, whereas the national average was $55,406 over the same period.
Homes purchased in the Las Vegas housing market five years ago have appreciated by an average of $74,623, whereas the national average was $49,675 over the same period.
Homes purchased in the Las Vegas housing market seven years ago have depreciated by an average of $66,451, whereas the national average increased $9,474 over the same period.
Homes purchased in the Las Vegas housing market nine years ago have depreciated by an average of $67,733, whereas the national average increased $3,419 over the same period.
Zillow recently named Las Vegas as the fourth best market for first-time homebuyers. The prominent real estate valuation site based its data on income, growth in home values and the number of entry-level homes on the market. Other cities in the top five were Atlanta, Chicago, Pittsburgh and Hartford, Conn.
Most of the expected demand should come from Millennials, who’ve largely been neglected for the better part of a decade because of a number of economic factors. That said; millennials should finally get their homebuying feet wet, as rents exceed record highs and home prices stabilize. The expansion of the economy has made it more reasonable to own a home than in recent years, and millennials are aware of that. It is only a matter of time before this population joins the Las Vegas real estate market.
Were it not for a poor job sector, the Las Vegas real estate market could serve as a prominent leader in the current economic recovery. However, Las Vegas’ unemployment rate lags behind the national average. Las Vegas’ current unemployment rate is 7.1 percent – 1.2 percent above the national average. That said, just one year ago, Las Vegas boasted an unemployment rate of 9.7 percent. Without question, the job sector is heading in the right direction, as is apparent by the 2.6 percent improvement over the course of a year. Local employment growth is strong compared to other markets.
Despite an economy that has a long way to go, investors are focusing their efforts on high-end rental complexes in hopes of attracting millennials that can’t yet buy. The apartment business, or buy and hold business as investors have come to know it, is gaining popularity. Las Vegas, in particular, has taken rentals from low-income properties to one of the best preforming aspects of its commercial sector. It is because of this that investors have been searching from highly discounted properties to convert into rentals. With hat in mind, investors are responsible for buying nearly 11,700 units, at an average price of $65,000, by the third quarter of 2014. In 2010, those numbers were considerably lower, 3,000 units at $42,500. With all of the purchases, of course, vacancy rates have dropped, suggesting that investors know what they are doing.
Single-family housing permits are down more than 4 percent, whereas the national average saw a 2.3 percent increase. The drop in construction rates should limit the amount of inventory made available, allowing demand to catch up with the supply. That said; foreclosures and short-sales now have a greater impact on inventory than new construction. The increased foreclosure and short sale rate will add more properties to the market in coming years.
According to Zillow, “foreclosures will be a factor impacting home values in the next several years. In Las Vegas 8.1 homes are foreclosed (per 10,000). This is greater than the Las Vegas Metro value of 7.9 and also greater than the national value of 4.2. The percent of delinquent mortgages in Las Vegas is 11.5 percent, which is higher than the national value of 6.4 percent. The percent of Las Vegas homeowners underwater on their mortgage is 28.0 percent, which is higher than Las Vegas Metro at 27.8 percent.”
According to Trulia, the most popular neighborhoods in Las Vegas include:
Las Vegas Nevada Real Estate Market Summary:
Current Median Home Price: $220,500
1-Year Appreciation Rate: 9%
Unemployment Rate: 6.2%
1-Year Job Growth Rate: 2%
Median Income: $51,057
Author:John and Ashley Lazosky Phone: 702-281-1198 Dated: July 5th 2016 Views: 239 About John and Ashley: We are the Broker/Owners of Vegas Homes and Fine Estates. We are proud to say we have a combined 22...
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Vegas Homes and Fine Estates has over 15 years combined experience in the Real Estate industry AND have represented 100’s of buyers and sellers helping them realize their real estate dreams. As Broker/Owner of Vegas Homes and Fine Estates, I have consistently ranked in the top 1% of agents in the Las Vegas Valley. Combined with my husband and partner JOHN, we are an UN-Stoppable FORCE in the Vegas Real Estate MARKET!!! With complete knowledge of the Las Vegas marketplace and personalized client services… you can expect your home buying needs will be serviced properly and protected.
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