Searching for homes in Las Vegas has become a sport. It’s as competitive as the NFL or a UFC title fight at the MGM Grand between two opponents that hate each other. Getting an offer accepted is like making it to the playoffs. Actually, closing the deal is like winning the championship!
To succeed as a homebuyer, you should know the market, know your competition and have an experienced Realtor to guide you through the process. Knowing the market starts with basic statistics.
The median sales prices in the Las Vegas Valley:
■ Single-family home: $430,000, or $232 per square foot for a three-bedroom, three-bath home.
■ Condo: $215,000, or $217 per square foot for a two-bedroom, two-bath condo.
■ Town home: $310,000, or $219 per square foot for a three-bedroom, three-bath town-home.
Homes stay on the market for an average of 11 days before an offer is accepted.
In December, more than 3,800 previously owned properties sold. At the time of this article there were only 2,400 properties available for sale.
Here is a categorization of December’s buyers.
■ 28 percent are cash buyers.
■ 53 percent are conventional buyers.
■ 6.9 percent are Veterans Affairs loan buyers.
■ 9.7 percent are Federal Housing Administration buyers.
In December, 28 percent of buyers purchased real estate with cash. Cash buyers, unrestrained by appraisals are taking an open-minded approach and are willing to pay, today. Inflation is a concern, and with the dollar losing its value, hard assets like real estate are extremely attractive.
It can be difficult for the first-time, low-down payment homebuyer.
I listed a home in North Las Vegas on a Wednesday, the sellers needed to organize a little and weren’t allowing showings until Saturday, but prior to any showings we had 11 offers and four of those offers were cash buyers, willing to pay above list price. Three of the cash buyers were from billion-dollar public and private REITs (real estate investment trusts) who own tens of thousands of homes throughout the valley and the country. They plan on purchasing these properties and renting them out. Some of the most astute real estate professionals still see the value in Las Vegas real estate and are willing to pay top dollar.
Other cash buyers include:
■ Deep-pocket neighbors from California and other parts of the world relocating and investing in Las Vegas.
■ Sellers downsizing, and reaping equity from their current home and purchasing another with cash.
■ iBuyers, or instant buyers that use technology to make an offer on a home instantly. They then purchase for a discount and resell for a profit.
If a buyer isn’t paying cash, they are most likely obtaining some sort of traditional financing. The most wildly used is either a conventional, VA or FHA loan. With all three loan types, income requirements are nearly identical.
According to Marlena Holloway with Celebrity Home Loans: “The key is keeping your DTI (debt-to-income) ratio at 45 percent or less, save money for down payment and closing costs, and keep your credit shining. A household monthly income of approximately $6,000 can qualify for a purchase price at the Las Vegas median price of $430,000.”
Currently the FHA loan max in Clark County is $420,680.
Tips for the buying a home in today’s market:
■ Make the highest offer depending on your budget. Today’s home is selling at tomorrow’s prices. The feeling of over paying will not last long because the market may catch up with and eclipse what you pay. I’m sure you can think of a property you should’ve purchased that has now gone way up in value. Historical comparable sales from months ago are just that, history.
■ Do you have the right representation? Just like home values and rent prices, the number of Realtors in 2021 has hit record high levels. Experience matters.
Questions you should ask your Realtor:
■ Are they full time? Can they give you their attention throughout the process when you need it?
■ How can they help compete in this market and against multiple offers? Does the Realtor think outside the box combined with strategies and proficiency?
■ Have they contacted the seller’s agent to know what sellers are looking for in an offer?
■ Can your Realtor talk about the current state of the market? Does your Realtor know up-to-date data?
There are those who say: “I’m going to buy when the bubble bursts,” while giving their theories on why values will drop.
Unfortunately, for them home prices appreciated nearly 20 percent in Las Vegas in 2021. With inventory at record lows and demand still high, don’t anticipate prices to come down. We may not see record appreciation like in 2021, but I’ve seen forecasts between 7 percent to 14 percent.
Real estate is probably the best hedge against inflation because property values over time tend to stay on a steady upward trajectory. Real estate investments can provide potential recurring income for investors and can keep pace or exceed inflation in terms of appreciation.
Nothing worth having comes easy. Be competitive, understand the market and buy Las Vegas real estate.
Shannon Smith is a broker/salesman with Realty One Group, Inc.