It’s no secret that Las Vegas housing prices are on the rise.
But is it sustainable, or is this another housing bubble?
Las Vegas is the most overheated housing market in the country, according to a recent report by Fitch Ratings.
The research and data company determined that housing prices are 15 percent overvalued by comparing Las Vegas’ home prices, rising prices, unemployment and population to other metropolitan areas.
“Right now you’ve got limited inventory and increased buying, and those factors are keeping prices overheated,” Las Vegas Review-Journal reporter Eli Segall told State of Nevada.
Segall said Las Vegas isn’t the only state experiencing a limited inventory; it’s been happening nationwide for six to eight months.
In Las Vegas, low inventory can be explained by increased demand, underwater homes and investor-owned rentals.
Segall said 15 to 20 percent of borrowers are still underwater, so they can’t sell without doing a short sale, which are lengthy and inconvenient. On top of that, many homes are owned by investors, who aren’t selling in great numbers.
In 2013, Las Vegas also experienced a bubble when housing prices rose 30 percent year over year because investors were snapping up houses. Back then, homes that would be normally valued at $200,000 were selling for $50,000.
Normal growth is 3 to 5 percent, Segall said.
He said people are right to fear a bubble, but he doesn’t think we’re in one now.
“I don’t see a lot of signs out there that the housing market is careening towards some disaster,” he said. “I’m not saying it can’t happen again, because it could, but at least for now, I don’t see it,” he said.
Eli Segall, reporter, Las Vegas Review-Journal