Las Vegas has been deemed one of the worst markets in the nation for first-time homebuyers, amid a rapid run-up in prices in a region long viewed as an affordable outpost.
Personal-finance site Bankrate released a report Monday on how first-time buyers fare in the 50 largest metro areas in the country, based on affordability, job market, housing market tightness, crime rates, and wellness and culture. It ranked Pittsburgh the best spot for new buyers this year, and Los Angeles the worst.
Las Vegas was second to last.
America’s casino capital “used to be an affordable alternative to California” but rising prices and a hot market have made it “less attractive to first-time buyers,” the report said.
It also noted that Southern Nevada was “dragged down by a lingering employment hangover from the pandemic,” as Las Vegas still carries a relatively high jobless rate.
Las Vegas’ unemployment rate shot past 30 percent in spring 2020 during the early chaos and shutdowns of the pandemic. The unemployment rate has since shrunk dramatically but was still at 5 percent as of April, second highest in the nation among large metro areas, federal data shows.
The buyer report further underscores Southern Nevada’s heated housing market of the past year or two, in which strong demand, tight supply and rapidly rising prices made it increasingly expensive and difficult to buy a place.
Sales totals have slid lately amid higher mortgage rates, but prices keep climbing. The median sales price of previously owned single-family homes — the bulk of the market — was a record-high $482,000 in May, up 25.2 percent, or $97,000, from a year earlier, according to trade association Las Vegas Realtors.
As of March, Southern Nevada house prices were up 28.5 percent year over year, compared with a 20.6 percent gain nationally, according to the S&P CoreLogic Case-Shiller index. It marked the 10th consecutive month that Las Vegas’ price growth outpaced the national average.
‘Definitely not alone’
Bankrate analyst Jeff Ostrowski told the Review-Journal he was surprised Las Vegas “came in so low” for its rankings. But he cited the competition for California buyers and noted it can be “really tough” for locals to go up against house hunters from pricier cities.
Markets across the United States have seen higher prices and tighter inventory, and cities once viewed as affordable, such as Charlotte, North Carolina, or Nashville, Tennessee, also are “challenging for first-time buyers right now,” Ostrowski said.
“Las Vegas is definitely not alone,” he said.
Brian Gordon, principal of Las Vegas consulting firm Applied Analysis, said first-time buyers aren’t the only ones facing headwinds in Southern Nevada, as “seasoned” homeowners also face higher prices and increased mortgage rates that have pushed up borrowing costs.
Newcomers from pricier cities can still find relative bargains here, though Gordon noted that new buyers face a tough environment. Rising home prices have outpaced wage growth, and mortgage rates have “essentially doubled” lately from record lows, he said.
Tough on local first-time buyers
Las Vegas agent LaDora Fields of Realty One Group said her first-time buyer clients are competing against investment firms and cash buyers, especially those from California, where people can sell their house, then get one in Southern Nevada for much less and work remotely.
As Bankrate’s Ostrowski said in a news release Monday, the housing boom of the past two years “has widened the affordability gap between low-priced and high-priced metro areas,” but with remote work “becoming the norm for white-collar employees, it’s possible to keep the fatter paycheck while living in a cheaper area.”
First-time buyers, by nature, haven’t sold a house and may not have a big pot of cash to roll over into a new purchase. Fields indicated that it’s harder for new buyers to boost their offers or take part in a bidding war, and that an extra $100 per month in payments can hurt their ability to save money or qualify to buy a home.
If someone is moving here from a place like New York or California, she said, Las Vegas is “perfect” for them, but local buyers are “getting beat up every day.”