Home values in Las Vegas jump 28 percent, highest among large U.S. cities
Las Vegas home values are rising faster than any other major metro area, though at least one analyst expects things to cool down nationwide.
The valley’s median home value in May was $146,400, up 28 percent from a year earlier, according to a new report from Seattle-based Zillow.
That was the highest year-to-year percentage jump among the 30 largest regions covered in the report. Sacramento was second at 26.1 percent.
Nationally, home values rose 5.4 percent year-over-year to $159,000 last month, and they are expected to climb another 4.1 percent by May 2014.
According to Zillow, the pace of appreciation will slow because more sellers will list their homes and builders will ramp up construction. These factors will help “ease the supply crunch” that has heavily fueled the rapid increases in home values, Zillow reported.
“Enjoy it while it lasts, because the housing market will undoubtedly look very different a few years down the road from how it appears now,” Zillow chief economist Stan Humphries said in the report.
And, in an apparent reference to flippers, Humphries said buyers who are “in it for the short term could get burned if they assume home values will continue rising as they have unabated.”
In Las Vegas, sales prices are climbing as investors gobble up cheap homes in bulk to use as rentals, shrinking the inventory of homes for sale.
The median price of a previously owned single-family home sold in Southern Nevada last month was $170,000, up 33 percent from $128,000 a year earlier, according to the Greater Las Vegas Association of Realtors.
Meanwhile, a total of 13,814 single-family homes were up for sale on the GLVAR’s listing service at the end of May, down 20 percent from a year earlier.
Practically every house listed for sale in Las Vegas — distressed or otherwise — gets multiple offers. That’s due in part to the seemingly endless appetite of cash buyers to turn cheap homes into rentals.
And it doesn’t matter what kind of house is up for grabs. The price of distressed homes, for instance, is rising faster in Nevada than in any other state.
Nevada homes that were bank-owned or headed toward foreclosure sold for an average $144,182 in the three months ending March 31, up 22.7 percent from a year earlier, according to Irvine, Calif.-based RealtyTrac.
Nevertheless, Zillow’s forecast that price appreciation will slow nationally because of more listings and more construction could hold true locally.
One reason for the valley’s limited inventory is that Las Vegas is the underwater capital of America. Many people who bought their homes at inflated prices during the boom era are now underwater, meaning their debt outweighs their home’s value. They often refuse to list their homes for sale, as they would take a steep loss on the transaction and need bank approval for it.
However, the rate of underwater borrowers has eased in the past year, thanks to the rising home values. Some 54 percent of valley homeowners with mortgages were underwater in the quarter ending March 31, compared to 71 percent a year earlier, according to Zillow.
Meanwhile, home construction plans are ramping up.
From January through April, local builders pulled about 2,460 permits, up 55 percent from the same period last year, according to Las Vegas-based Home Builders Research.