What Nevada's Hot Housing Market Means For Buyers, Sellers
Home prices across Nevada continue to soar.
In Reno-Sparks, the median home price is up 16 percent and Las Vegas is up about 13.8 percent from a year ago.
In January, the median home price in Reno was nearly $450,000, and in Las Vegas, it was $350,000.
Real estate experts agree that the rise in prices is due largely to a supply and demand issue. Both areas of the state continue to grow but the supply of houses still lags, said Jonathan Gedde, CEO of SimpliFi Mortgage.
"We have a housing shortage and specifically, an affordable housing shortage," Gedde said, "And that kind of dates back to the post-Great Recession period when homebuilders simply didn't build any houses for a couple of years."
He said that trend continued for several years, and the valley got "a little bit behind the eight ball."
Brian Bonnenfant is the project manager for the Center for Regional Studies at the University of Nevada, Reno. He said the same thing is happening in the Reno-Sparks area.
"It's all about that supply," he said, "We need builders to build. We're adding over 5,000 units a year in the last couple of years, which puts us right at that level that we need to be, and if we could continue that for a couple more years, I think we could see our way out of this."
He does not expect another housing crash like the state saw during the Great Recession when homeowners lost thousands of dollars in value in a few months.
Gedde also doesn't believe there will be a crash. One of the main reasons for their optimism is the changes that were made after the recession.
"The primary reason I am not concerned about a crash is lending standards today," Gedde said, "There is really no comparison between the lending standards of today's environment and the lending standards in 2006."
Before the Great Recession, all someone needed to get a home was "a heartbeat and a credit score that wasn't abysmal," he said.
Now, lenders are required to have documentation from the buyers that prove they can afford the home now and into the future.
Aldo Martinez is the president of the Greater Las Vegas Association of Realtors. He also doesn't believe there is a housing bubble that will burst, but he is concerned about a couple of trends in the market right now.
The first is the price of new homes. He said the appreciation of new homes is concerning.
Martinez said he had a client that was shopping for a new home in February, and by the time they got it in April, that price had gone up $132,000.
"That is so unrealistic to me and my mindset for an appreciation on a home," he said, "That hyperinflation on the new home is really concerning to me."
He believes when Las Vegas returns to full employment people who have stayed out of buying and selling because they've been unemployed will return to the market, softening it.
"I think that the biggest blow to homeowners is going to be those who bought new homes during this period of high appreciation," he said.
His second concern about the market is the number of people who are ignoring good bids on the homes they're selling to jack up the price. He said of the more than 8,000 homes that moved from being active on the market to being under contract in the last 30 days, more than 1,600 moved back from under contract to active.
"That means that 20 percent of the buyers that are winning the bids after all that frenzy are getting some type of buyers remorse, once that offer is accepted, and they're backing out," he said, "Or they're making multiple offers on properties at the same time, which is not a recommended practice."
While it is a strong sellers' market, Martinez said there are opportunities for people to buy homes.
Elias Benjelloun, who is with Homie Helps Las Vegas, which is a real estate brokerage firm that has partnered with the city of Las Vegas to increase homeownership in the Black community, agreed and he doesn't want people looking to buy a home to get discouraged.
"First of all real estate is cyclical and I don't want to take hope away from people," he said, "People who think the real estate market is stacked against them should know that there are resources available to help them."
He said people can get help with understanding the process of buying a home and help with down payments. Benjelloun said a friend of his was able to buy a home with just $700 down because she got help with the down payment.
"I think it is really important that folks don't feel like it's impossible," he said, "That is why Homie has backed the Coalition to Make Homes Possible to help people get on that path towards homeownership, because once we can get them locked in there and help them keep their home, we can help people start building wealth that can last for generations."
Aldo Martinez, President, Greater Las Vegas Association of Realtors; Brian Bonnenfant, Project Manager, Center for Regional Studies at UNR ; Jonathan Gedde, CEO, SimpliFi Mortgage; Elias Benjelloun, Head, Homie Helps Las Vegas