Real Estate in Las Vegas – Real Estate Trends in Las Vegas
Real Estate in Las Vegas and the sweet dream of home ownership has become a bitter nightmare for many Americans. The pain has been especially acute and devastating in some parts of the country, including our famed capital of non-stop entertainment and the promise of quick riches: Las Vegas, Nevada.
In the midst of all the bad news and horror stories about lost fortunes, foreclosed dream homes and temporarily or permanently damaged financial futures, interesting pieces of important information get lost. In the continuous scrutiny of past decisions and events – whose fall-out we are really coping with right now – we tend to forget to look at the present as the foundation for the future.
In many places nationally buying and owning a home is becoming increasingly affordable and in some places, such as in the hard-hit las vegas real estate market outright desirable.
Why? Let me explain. The argument holds up especially well for people entering the real estate market with a clean bill of financial and ‘real estate’ health either as newcomers or as prudent experienced homeowners with wisely purchased and financed properties (i.e. properties that were not purchased at vastly inflated prices with flimsy or outright crazy mortgage financing choices).
Las Vegas homes have not been this affordable for the last 15 years. Affordability of a Henderson NV home or a Summerlin house exists not just on a historically relative basis: it holds based on real economic analysis, too. The availability of favorably priced houses together with low interest rates makes it possible for people with reasonably good credit ratings and stable job outlooks to purchase a brand new 3 bedroom Henderson NV home with a down payment of around $40,000 and monthly housing payments of just above $1,000 including taxes and insurance. That kind of a monthly housing payment is easily affordable on the median Nevada household income of just below $50,000.
At the current home prices and mortgage rates, cost of home ownership is also starting to compare favorable to the rental option. While during the boom years of the real estate markets, renting was the cheaper option in most places in the United States, including Las Vegas, this trend is about to change. As many homeowners are forced to exit the market and become renters, home prices decrease, but rents increase. People who can choose between renting and buying will start making the economically more reasonable choice of buying.
While the emerging trends of affordability will surely be noticed soon, their full impact on buying decisions may continue to be somewhat muted by the lingering fear and uncertainty about how farther – in terms of timing and pricing – the bottom is. The monthly roller coaster of gains here and losses there, seemingly occurring randomly across time and geographies, does not help. Las Vegas is the one that has been falling for the longest time and has fallen the most. Ironically, it is feasible that the market will start noticing affordability once it actually moves away a bit from its own peak: that is when prices already moved away a little from the bottom and stabilized. While at that point affordability will be somewhat less favorable than at the bottom, only then will the market’s atavistic fear about further devastating price collapses evaporate.
While temporary dips may remain a possibility going forward, long-term buyers driven by affordability should worry less about this risk provided that their horizon is several years, which should put them outside of the period during which the markets will remain exposed to temporary or medium-term contamination from past maladies.