Caution is Best Approach to Las Vegas Real Estate
Real estate featuring existing homes saw a bit of a stall last year. Investors began pulling out and sellers were overpricing their homes, thinking that their value was much more than reality. Signs are pointing to positive news in the first half of 2015, however. Cheaper borrowing costs and an influx of borrowers who were previously unable to get a loan, could be the combination to finally get Las Vegas real estate back on the right track, but it is a long process of healing for the market. That is why it is essential to be cautious about calling the market “fixed.”
The Las Vegas real estate market is on an up swing, but buyers should still proceed with caution.
Positive Real Estate Signs
Through June, buyers purchased 15,000 single-family homes in Southern Nevada. This is up 2 percent over the same period in 2014, and is much healthier than the period before this when there was a drop of 13 percent from year to year. Additionally, the median sales price has climbed from January to June and is up 10 percent over 2014. These are all signs that we are heading in the right direction. What is causing these positive swings?
There are two types of buyers who are causing the uptick in sales. These are those who went through a short sale or foreclosure during the housing crisis and have been unable to purchase a home, and those who were outbid by the investors who focused on low-priced homes. These two groups of people are finally able to get a loan and are ready to get back into a home. Their interest and the lower borrowing costs work together to make it easier for them to do so. Borrowing costs continue to drop and lenders are loosening up on the requirements, making it a great time for these two segments of buyers.
Lower Borrowing Costs
The interest rate for a 30-year mortgage was at 3.98% last month. This is down .18% over the rate a year ago. While lender requirements are not as stringent as they were just a few years ago, they have loosened up to a degree to allow more people to get into a home.
Even with the upswing, however, the Las Vegas real estate market is still not out of danger. There are still 25 percent of local homeowners who are underwater in their mortgage and, while this is much less than in 2012, it is still the highest level amount other large U.S. cities. Nevada itself has the #4 position in foreclosures during the first half of 2015. While we are seeing some positive signs, it is a time to be cautious until we see more progress.