Fewer people paying cash for homes in Las Vegas
Cash buyers may soon be a thing of the past as the housing market in Las Vegas slowly returns to normal.
Forrest Barbee, corporate broker for Berkshire Hathaway HomeServices, said that while 30 percent of homes are now sold to cash buyers , that figure doesn’t come close to recession levels, when as many as 60 percent of sales were paid in cash.
“You couldn’t compete (during the recession) if you didn’t have cash,” he said. “Now we have a healthy market in terms of financing so cash isn’t the factor it once was.”
Barbee added that he expects cash sales to continue to decline.
“I think it’ll shrink a bit, both on the residential and commercial side, as we see the amount of financing increasing over time,” he said. “There wasn’t a lot of money available for loans in the past, but that’s not the case anymore.”
Gordon Miles, president and chief operating officer at Berkshire Hathaway HomeServices Nevada Properties, said the demographic of cash buyers is across the board.
“We’re seeing retirees, international buyers and investors; though not as many in the past, there are still some running around,” he said. “As we return to a normalized marketplace, there are a lot of people who can afford to buy a property with cash.”
Miles said a cash buyer carries more weight than one seeking financing.
“It puts you at the top of the pile, especially if you’re dealing with multiple offers,” he said. “Cash is solid and tangible, so someone paying cash will be looked at first, which is odd when you think about it because the seller will be getting cash anyways even if it’s a loan.”
Miles said he foresees cash sales hovering or dipping below the existing level of 30 percent.
“I think it will stay where it is or drop even more as investors continue to drop out of the market even more, but we’re running pretty standard right now,” he said. “Las Vegas is still one of the least-expensive places to buy a property and get a decent return on rentals.”
Home Builders Research President Dennis Smith said the amount of new-home cash buyers throughout the valley varies depending on the project.
“A two-story project won’t have as many cash buyers as a one-story project because as people get older and approach retirement, they’ll be looking at one-story projects,” he said. “They’re more likely to pay in cash or make a substantial down payment.”
Smith said Las Vegas has always been an attractive destination for retirees because of the Silver State has no state income tax.
“Baby boomers and soon to be retired consumers have been a huge factor in the number of cash sales that have taken place because of financing,” Smith said. “Millennials are having a more difficult time obtaining financing due to student loan debt or because they haven’t saved.”
Another aspect impacting cash sales, Smith said, is the fact that there hasn’t been much recovery in the new-home entry-level housing market in Las Vegas.
“Builders are building more expensive houses and they can sell them because we have the demand and the buyers. However, there aren’t nearly as many (new home) builders pricing under $250,000 as before,” he said.
Smith added that the price of land is one of the main causes.
“Entry-level housing has always been a staple of Las Vegas, but high land and development costs are factors that builders are dealing with,” he said. “Builders are selling single-story houses for the over-50 buyers and while we have a good supply of those, we still haven’t seen a resurgence of the entry-level marketplace and I don’t know when that will happen.”
— Contact reporter Ann Friedman at afriedman@reviewjournal.com or 702-380-4588. Follow @AnnFriedmanRJ on Twitter.
