Housing costs remain level in LV for ‘96

Friday, Oct. 24, 1997 | 11:10 a.m.

The ability of a potential home buyer to afford a house in Las Vegas remained about the same in 1996 as 1995 as a rise in wages kept up with an increase in the price of a home.

A report by U.S. Housing Markets, a Canton, Mich.-based research firm specializing in residential construction, says Las Vegans paid 15 percent of their monthly income on house payments in 1996, the same level they paid in 1995. While the median home price in Las Vegas climbed from $113,500 in 1995 to $118,500 in 1996, the median income level increased the same 4 percent, from $4,890 to $5,100 a month.

The researchers took their data from statistics provided by the Federal Housing Finance Board on mortgage and home prices and from the U.S. Department of Commerce and the Census Bureau on household incomes.

Based on a national survey of metropolitan markets, Las Vegas would rank high among the most affordable cities in the United States. Pittsburgh and Philadelphia ranked most affordable among 31 major metropolitan areas in the survey, with a monthly percentage of household income required for home payments at 14.2 percent and 15.2 percent, respectively.

The least affordable market: the Portland, Ore., metropolitan area at 27 percent.

The report listed a typical Pittsburgh resident as making a monthly payment of $730 a month in 1996 based on a conventional, fixed-rate, 30-year mortgage with 20 percent down. The report said Las Vegans under the same conditions pay $780 per month.

Dennis Smith, president of Home Builders Research, which analyzes the Southern Nevada housing market, said home prices are staying in check because of the highly competitive market.

"I can't speak to how that compares with the rest of the nation, but it's fair to say this is a very competitive market," said Smith.

He said Las Vegas is now experiencing a more consistent and stable growth.

"It's not the type of runaway growth that you read about in the papers (in the past year)," said Smith.

The Las Vegas area ranked ninth nationally among the least affordable resale housing markets with a 15.3 percent home price-to-income level. The least affordable existing home market: Orange County, Calif., at 21.3 percent. The most affordable existing-home market was listed as Fort Myers-Coral Gables, Fla., at 10.6 percent.

Statewide, the statistics aren't nearly as glowing, but Nevada still ranks high in affordability in the West.

While the price of a home climbed 10 percent from $149,400 to $164,500 in 1996, the median income went up 4 percent from $5,180 to $5,390. The share of income necessary for a home went from 19 percent to 20.1 percent, ranking Nevada 30th in the nation in housing payment affordability.

While the percentage Nevadans pay is nearly 5 percent more than No. 1 Iowa (15.2 percent), the state stacks up well against other states in the West. Only Idaho, which ranks No. 29 with 19.9 percent of income devoted to housing, rates ahead of Nevada. The rankings of Nevada's other neighbors: Arizona 36th (21.3 percent), Utah 41st (22.1 percent), Oregon 47th (23.8 percent) and California 49th (25.9 percent).

In a separate report on housing, Las Vegas is close to the national average in the ratio of jobs created to the number of new single-family permits authorized.

The Bank One Economic Outlook Center at Arizona State University reported in its Western Blue Chip Economic Forecast that there were 2.3 jobs created for every new house permit approved. The national ratio is 2-1.

The report's authors say the statistic is critical because cities with high job-to-permit ratios will see home prices climb.

"Economic growth in the western states is often characterized by cycles of job creation, in-migration and construction," said the report. "Sometimes these waves of activity are not perfectly synchronized, and when this happens, there can be shortages of labor or housing that drive up wages or prices."

Nevada continued to lead the nation in job growth in July, with 6.2 percent more jobs in that month than in July 1996. The number of jobs increased in all seven categories with the largest a 12.8 percent jump in construction jobs.

The state ranked first in job growth in construction; trade; and transportation, communications and public utilities, and second nationally in the services and government jobs categories. Nevada was seventh in the nation in growth of manufacturing jobs and eighth in the finance, insurance and real estate category.