Transplants Helping Drive Housing Demand in Nevada
Beyond the glitz and glam of Las Vegas, Nevada has so much to offer potential homebuyers, from the relatively low cost of living — thanks in part to its lack of income tax! — to year-round sunny weather and a thriving economy. Anecdotally, Nevada has been drawing a large number of out-of-state transplants in recent months. For example, at an open house in March, 80% of potential buyers were not residents. However, skyrocketing prices have made it hard to break into the market.
As of April 2022, the typical home value in Nevada sits at $445,515, and the state has seen a 31.1% increase in value in the last year. The cities with the highest home value appreciation in the past 20 years — Genoa, Wells, Battle Mountain, Austin, and Ely — span virtually all regions of the state. As a result, Nevada homeowners have experienced significant increases in equity — with the average homeowner gaining $80,000 in equity in 2021 alone. Well over half of Nevada residents (55.6%) own their homes, but the recent rises in appreciation have presented significant challenges for those looking to buy as they’re frequently priced out due to bidding wars and offers well over asking price.
While 34% of homes in the state were built in 2000 or later, the majority (55.2%) were built between 1970 and 1999. And like in many cities across the country, inventory is down — with new construction slow to move forward due to widespread supply chain issues that have continued into 2022.
“You can work with delays — in person or online — but when you can’t get stuff, you can’t get it,” Nat Hodgson, CEO of the Southern Nevada Homebuilders Association, told The Las Vegas Sun. “I feel so bad for the builders. The supply chain problems won’t change a lot this year. It’ll be another long year.”
Nevada Regions See Hot Housing Markets
In certain regions, like Southern Nevada (which includes Las Vegas), the market has been much more competitive than experts originally predicted. In September of 2020, CoreLogic predicted with 70% certainty that home values would fall 7.8% by July of 2021 — but instead, the median price increased 14% after they declared it the riskiest market in America. Home values reached $450,000 as of February 2022 and in March, 82.8% of houses in the area sold within 30 days. A recent report published by the Las Vegas Realtors trade group also found that nearly one third of all home sales in the region in March of 2022 were paid for with cash. It’s not just single-family homes, either: condos and townhomes in the southern portion of the state set a record with a median price of $270,000 in March 2022 — a 39% increase from the same month in 2021.
In the northern Nevada region, which includes cities like Reno, median prices jumped 29% from January 2021 to the same month in 2022, with the city of Reno reaching $600,000 for the first time ever. For comparison, the median sales price in 2017 was just $300,000.
No End in Sight to Soaring Prices (Yet)
More recently, CoreLogic has also stated that Las Vegas is among the 65% of markets across the U.S.that are “overvalued,” along with major cities such as New York, Miami, Seattle, and Dallas. However, this doesn’t foretell an imminent drop in home values — and in fact, nearly every industry report predicts that values will only continue to go up in the coming year. Still, experts acknowledge that there will eventually be a peak.
“Local home prices can’t keep going up this fast forever,” said Brandon Roberts, a longtime Nevada realtor. “The increases we’ve been seeing in the last year or so are just not sustainable. It remains to be seen how much higher these prices can go and when we might start to see the market stabilize, as many national experts have been predicting. Either way, I seriously doubt you’ll see home prices more than triple again in a single decade.”
If you’re a Nevada homeowner looking to cash in on your home equity without selling, whether your goal is to pay down debt, buy another property, or fund a business, you can do so with a home equity investment from Hometap.
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