Las Vegas Named Most Overvalued Housing Market: Why Southern Nevada is Still a Good Move
Las Vegas was recently named as the most overvalued housing market in the U.S., according to Forbes. While the population is quickly increasing and rent is relatively stable, purchase prices on homes and condos around the Valley have increased by 11 percent, which the Case Schiller Home Price Index indicates is far too high. In Las Vegas, Henderson, and Paradise, home prices are 21.3 percent above fair market value. This means that current buyers are paying too much for homes in the Valley when income growth has only gone up 2.46 percent.
In a sense, homebuyers are putting more of their income towards homes without a boost in their paychecks to help them make the payments. Yet these numbers don’t indicate that all homes in the Valley are overpriced, just that the market as a whole may have gotten ahead of itself when employment and income have not yet caught up.
Interestingly, of the 400 markets tracked, 72 of them are valued 10 percent above what they should be according to population, income, and rent. And five of the most overvalued markets are in the west. So why move to Las Vegas when home prices are higher than they should be?
Las Vegas has seen significant growth since the Recession. The downturn may have slowed down the city, but the sheer number of master-planned communities in the Valley bodes well for the future of Las Vegas. Several communities, including Cadence, Inspirada, Mountain’s Edge, and Skye Canyon, made the top 50 best selling new homes list in 2017.
Lake Las Vegas, an area that also suffered during the Recession, is also on the upswing with several new communities planned for the area over the next few years. These numbers indicate that more residents are moving to Las Vegas and taking a chance on the newest master-planned communities in town, regardless of price point. Also, with the increase of supply on the market in Henderson, Summerlin, and North Las Vegas, it’s quite likely that home prices will soon track with other areas of growth.
Plus, these rankings only consider Las Vegas, Henderson, and Paradise when there are many other unincorporated areas of the Valley that are not only considered part of Las Vegas by locals, but are also close enough to the city that buying a more affordable home on the edges of town is possible. It’s possible that Nevada’s newest city will create a different precedent, especially when Nevada home prices remain below pre-Recession levels.
The latest median home price in Las Vegas may be $266,800 according to Forbes, but prices range more widely across the Valley. In Historic Westside, the median sale price is $150,000, and in Sunrise Manor it’s $172,000. In other words, it’s quite possible to buy a home below the median sale price and still end up with a good deal. It really just depends on the home values in the neighborhood and what other sellers are currently offering in the marketplace.
Simply put, Las Vegas is an up-and-coming city with all the hallmarks of a major metropolitan area without many of the penalties in other cities. Sales tax may be high at 8.1 percent, but property taxes hover around 0.96 percent, which is below the national average. Also, while home prices are increasing, the overall median sales price is still favorable when compared to other real estate markets.
For many reasons, Las Vegas is a great place to live. With 300 days of sunshine a year, access to a near-endless range of activities and entertainment, and a hockey team enjoying an epic season, this city is still a great choice for those who want to live in the west without paying top dollar.