Nevada's housing market is expected to keep climbing through spring. How long can it last?
Home prices across Nevada continue to skyrocket. The median price of a home in Las Vegas in February is about $100,000 more than it was a year ago. In Reno, the median is about $600,000.
Part of the increase is due to a serious demand for homes; part of it is people moving to Nevada from California with wads of cash because they sold their homes in an inflated market.
How long can this last?
People do worry: The housing crash was only 13 years ago, and we’re seeing things like raffles just to get the chance to bid on a home like they did back then. Back then, experts said the market would only continue to keep going up. We hear similar things now.
This has all happened as interest rates—, while still very low, have doubled in about the last year. But on Wednesday, the Federal Reserve raised interest rates for the first time in three years. More rate increases are expected this year.
The move was made to stop inflation, which is also another consideration for people have when they think about buying a home.
Why is the demand happening?
Jon Gedde says it goes back to the financial crisis in 2008. “Too many houses being built. And there was a lot of phantom demand because you didn't really have to qualify for the mortgage you we're getting, it led to a collapse in the market. After that, for about the next decade, the builders did not build nearly enough homes to keep up with just annual average demand.”
He said they’ve been seeing “pretty crazy activity” in Nevada’s housing market.
“The 20% annual appreciation is not sustainable,” he says. “So at some point that will level off. There are folks out there that believe a crash is coming. And I absolutely believe that that is not going to happen.“
The housing market hasn’t been equal through the pandemic.
Shanta Patton-Golar, the director for the National Association of Real Estate Brokers, says since the pandemic shutdown, white, Hispanic and Asian homeownership didn’t decline, but Black homeownership did.
“Although we are making some strides here in Southern Nevada with our Make Homes Possible coalition, we are still putting people in homes, specifically Black people in homes. But we are definitely seeing the discouragement out there,” she said.
On the topic of discrimination in housing, caller Oscar shared frustrations as a veteran using a VA loan to purchase a home.
“I remember raising my right hand and sacrificing my life for my country. Don't you think it's time for our country to sacrifice for us?” he asked. Tom Blanchard, president-elect of Nevada Realtors, told him it’s a “known battle.”
“There's a lot of misconceptions that VA loans are harder to get if you're a seller, that cost you more if you're a seller, and it just doesn't happen that way. So it's a hard battle. It's an uphill battle. But it's a battle that's known. And it's a battle that we are working on behind the scenes,” he said.
In Reno, Eugenia Larimore with Ekay Economics calls their housing problems the result of “the Tesla effect.”
“We had in the last few years, we have grown our employment in the manufacturing, the logistics and the professional services areas, those jobs pay enough for maybe not a single worker, but if you have, on average, 1.8 workers per household, you can afford these prices, you can afford to purchase a home in Reno,” she said.
Larimore said the average homebuyers in 2019 in Reno were between 20 and 29. She said they can afford to rent, but the problem is finding the home amid a housing shortage.
Jonathan Gedde, CEO of SimpliFi Mortgage, chair of Nevada Mortgage; Tom Blanchard, president-elect, Nevada Realtors; Shanta Patton-Golar, director, National Association of Real Estate Brokers; Eugenia Larmore President, EKAY Economic Consultants