Editor’s note: In this new rotating column, a writer will explore a topic of relevance to Southern Nevada in six installments. Our first Writer in Residence is T.R. Witcher, who’ll devote his six columns to housing.
The cranes are back on the Strip. The wood frames of single-family homes are rising again in our neighborhoods. For those of us who bought a home at the height of the market — before the vertiginous descent into utter oblivion — being in Las Vegas these days feels like coming out of a deep fog, or like finally lifting a demoralizing weight off our backs.
Housing prices are up, homes that were underwater are now right side up. The good times have returned. Unemployment in Nevada was down to 4.0 percent this May. (It peaked at 13.7 percent in 2010, according to the Bureau of Labor Statistics). The local economy is strong. Credit is available, and lenders have gotten more disciplined about whom they’ll lend to. And, hey, the Raiders are coming.
But no matter how sunny it looks, the scars of the recession linger. Even amid the hoopla of new sports teams and new restaurants, you can’t get too comfortable. Check your rearview mirror. When’s the next bubble? Sell now? When’s the next recession? Refi? What’s my Zestimate? How’s the world going to end this time?
It may not end in a bang of recession, but rather in a whimper of unattainability. Housing is slowly growing unaffordable again. And its impact won’t be solely economic. It will hit uncomfortably close to the core of the Las Vegas version of the American Dream.
But first, the numbers. Three data points in particular determine affordability: The cost of housing, the median income, and the supply of housing.
Between 2012-2019, home prices in metro Las Vegas rose a stunning 89 percent. According to the National Association of Realtors, the median price for a single-family home is currently $298,900. We’ve been seeing year-to-year increases of 7 and 8 percent, though those percentages have fallen in the last six months or so.
But income isn’t keeping up with rising prices. The median household income in Las Vegas is $53,159. In 2009, it was $54,327. Housing supply isn’t keeping up, either. According to the Southern Nevada Home Builders Association, a net of 48,347 people moved to Las Vegas last year. At the same time, we’re building about 11,000 new houses a year. “Eleven thousand isn’t going to cut it,” says Nat Hodgson, CEO of the association. We should be building closer to 15,000.
But if you’re expecting developers to simply build more housing, don’t hold your breath. “There’s no incentive for them to do that,” says Vivek Sah, director of the Lied Institute for Real Estate Studies at UNLV. For homebuilders, it’s preferable to provide a little less housing than the market needs — thus ensuring built units get sold — than to risk oversupplying the market.
Meanwhile, homebuilders are facing their own cost pressures. Before the recession, Hodgson says, turning an acre of land into single-family homes cost builders about $100,000. Now it costs more than $500,000, because of the price of land, labor, and regulatory fees — also, the tariff war with China has driven up prices of copper and steel.
Housing prices are not likely to go down. And what does that bode for Las Vegas’ claim to fame as a place where the American dream of home ownership is available to cooks, housekeepers, and valets whose wages and benefits are driven by a world-class tourism and convention business? Already, developers are turning to less expensive attached housing (think townhomes). Three years ago, just 1 percent of new housing in town was attached, according to Hodgson. This year, the figure will hit 13 percent. Next year, 20 percent. Single-family homes may give way to townhomes or condos, or apartments — just drive the 215 near IKEA to see the mushrooming of rental properties for a growing community of (as Sah puts it) “forever renters,” those unable to save up the money for a down payment.
Affordable housing is a big part of the enduring identity of Las Vegas — and that may be a casualty of the market’s new reality.
After all, it’s the cheapness of housing that imbues Las Vegas with honesty, with a lack of pretension, with optimism, with tolerance of tourists and tolerance of greater diversity among our own. Everybody can get a decent tract home somewhere, and they’re all about equally as good as any other. No need to be a poser here. Relax. Do you. Enjoy the ride. For those who live here, Las Vegas is not about making it big. It’s about simply, honorably, making it. That’s the glue that ties us together.
But our affordability, and the live-and-let-live ethos it encourages, will come under greater pressure if wages can’t keep pace, or if we can’t find a way to build more housing. “Affordable housing means providing affordable homes in the same community as anyone else, so they can have access to amenities: green spaces, libraries, schools,” says Sah. Commuting in from Pahrump or Kingman or Coyote Springs isn’t the answer.
Living smaller, living denser, co-living, and rediscovering the center of the city may be a path forward. Otherwise, the fantasy of wealth and exclusivity that Vegas sells may become an uncomfortable reality right in our own backyard.