For the first time since the Great Recession, home prices fell last month in Las Vegas. Is the sky next?
Real estate company Zillow said prices dipped a tiny 0.2 percent April, with a median price of about $280,000. It was the first decline after 76 straight monthly gains.
“The fact that Las Vegas home values fell in in April for the first time in nearly seven years will turn heads. But it’s too early to say if the area has hit another peak,” said Skylar Olsen, Zillow’s director of economic research. “Month-over-month numbers are volatile, and Las Vegas is still seeing some of the highest year-over-year growth in the country.”
Olsen said the main reason for the slight dip in prices is affordability.
“We think this is much more linked to demand having to pull back less than it’s a sign of a recession to come or any kind of wage problems or any kind of job issues,” she said.
Olsen said the sky is not falling in Las Vegas, and instead called the pullback in prices "a market correction."
Las Vegas was ground zero during the housing meltdown of a decade ago, with Southern Nevada leading the nation in unemployment, foreclosures, and real estate price declines. Zillow’s median price bottomed out at $120,000 during the Great Recession.
That is less likely to happen now because one of the big changes to come from the recession was banks tightening up their rules for lending.
Pinnacle Lending Group loan officer Crystal Schulz said banks no longer allow borrowers to use 'stated' income, which was what potential buyers said they made.
Now, banks verify all kinds of financial information before they lend money.
Schulz also believes the valley's housing market is in a steady position. She believes the biggest problem is affordability.
"They are wanting homes under $300,000 and they're not necessarily qualified," she said, "We're having a problem with affordability."
She said a double-income family, where both people are getting around minimum wage, that also has a car payment can't afford to buy a home. She also said that people making a much higher salary are struggling with affordability because of the burden of student loans.
Schulz said lower mortgage rates, which have unexpectedly fallen from 5 percent to about 4 percent since the start of the year, has brought out potential buyers.
“A slightly softer market and low rates is probably the best environment buyers can ask for when the overall economy remains strong,” she said.
Vivek Sah is the director of Lied Institute for Real Estate Studies at UNLV. He said one of the biggest problems is the price of new homes. He said the median price for a new home in the valley is $400,000, which is pricing many first time homebuyers out.
"That is the problem," he said, "It is affordability at the starter homes and most of the starter homes are new homes because these are priced at such a high cost, because of the land, because of the labor, because of everything that has been priced today versus what it was priced a few years back."
(Editor's note: This discussion originally aired May 22, 2019)
Skylar Olsen, director of economic research, Zillow; Vivek Sah, director, Lied Institute for Real Estate Studies at UNLV; Tom Blanchard, president-elect, Greater Las Vegas Association of Realtors; Crystal Schulz, loan officer, Pinnacle Lending Group