Las Vegas Sun

March 29, 2024

LV first in housing appreciation

With just under 50 percent appreciation, the Las Vegas market had the strongest appreciation in the nation for nine months last year, the National Association of Realtors reported.

The trade association reported Monday that a record number of metropolitan areas showed double-digit price appreciation in median existing home prices in the fourth quarter, with Las Vegas leading the pack for the third straight quarter.

But one of the nation's largest holding companies said Las Vegas is overvalued by as much as 24 percent.

The fourth quarter median price of a resale home in the Las Vegas Valley was $281,400 -- a 47.3 percent increase from a year earlier, the association reported.

Many Las Vegans have benefited from local housing appreciation, enabling them to fix up their homes, pay off high-rate debt, buy a new car or pay down their existing mortgage.

Henderson resident Navid Amirhosseini bought his 1,800-square-foot house in 2003 for $205,000. Equivalent houses in his neighborhood are now listed for sale for around $400,000.

"When we found out how much our equity went up, we couldn't believe it," he said. "We decided to go out and buy a house and have that for old age."

Amirhosseini and his wife used part of their equity to buy an investment home -- and ended up buying the house next door -- a 1,300-square-foot house for $310,000. The couple plans to rent it out.

They are expecting prices to continue to increase and hope to use any profit and appreciation for retirement someday.

Following Las Vegas in price appreciation was the Riverside-San Bernardino area of California, up 34.7 percent in the fourth quarter over a year earlier. The West Palm Beach-Boca Raton-Delray Beach area of Florida had an appreciation rate in the fourth quarter of 34 percent over the year-ago quarter.

Last summer Las Vegas shattered all records in the national association's 22-years of tracking home prices with the area's near 50 percent appreciation rate.

"Some form of a spike was expected in Las Vegas because of the strong inflow of residents," Lawrence Yun, senior economist for the national association said. "Apparently it occurred in the past year."

Yun said as Las Vegas has evolved from a small town to a big city, it quickly faced problems many other metro areas have: land prices going up. California also has continued to help boost Las Vegas real estate prices, with the influx of residents and investors, he said.

"They look to Las Vegas and say, 'Wow, that's very affordable,' " Yun said. "Even at today's prices, $281,000 compared to $470,000 in Los Angeles, $570,000 in San Diego, so despite an astonishing appreciation, it is still affordable by Southern California standards."

The median price is the midpoint where half the homes sold for more and half the homes sold for less. It is often used instead of average because extremes on both the high and low end can skew the numbers.

The median resale price reported by the National Association of Realtors is higher than the median prices reported by local companies because of the metro area used. Local research firms generally track just Clark County, not including Boulder City, while the association includes Clark and Nye counties and Mohave, Ariz.

But not everyone is so sure that Las Vegas, and other metro markets, are worth the prices people are willing to pay.

Cleveland-based National City Corp., one of the nation's largest financial holding companies, reported in a study released last week that of 99 metro areas, one-fifth are in "bubblettes."

"The housing market has shouldered much of the economic recovery," Richard DeKaser, chief economist of National City and author of the study, said. "Many are concerned that housing represents an overvalued sector of the economy that will be corrected with further price declines."

DeKaser's study examines what home prices should be, controlling for differences in population density, relative income levels, interest rates and historically observed market premiums or discounts.

The study showed that Las Vegas may be as much as 24 percent overvalued. However, many housing markets in the study, mainly in the Midwest and South, were undervalued, such as Salt Lake City.

Myrna Kingham, president of the Greater Las Vegas Association of Realtors, said she doesn't think the Las Vegas Valley is overvalued. Just the opposite, Kingham thinks the market is catching up from years of being undervalued.

She also pointed out that while prices have stabilized valleywide, overall they haven't fallen.

"I think the market will stay strong and our high-rise market will stay strong," said Kingham, a real estate agent for 28 years.

Yun also doesn't think Las Vegas housing prices are overvalued.

"Many studies try to pinpoint which market is overvalued," he said.

Yun said many of those studies try to put a market into quantifiable variables, but often leave out factors that are harder to quantify, such as desire to live in an area.

Whether or not Las Vegas can continue it's reign is unknown.

"You can't stay there forever, nor do you want to," Yun said.

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