Last year the United States housing market saw default numbers fall to the lowest levels since 2006. However, this was not the case for Nevada real estate. The housing market in Nevada had its housing distress statistics actually increase in 2015, and real estate market agents in the state expect more of the same for 2016. This is nothing new for the Silver State. For the past ten years Nevada has been in the top five nationally for default activity, with the only Florida, Maryland, and New Jersey ranking higher. But this is not to say that it’s all doom and gloom for Nevada.
Since its foreclosure rates were at its highest in 2010 the default rate in Nevada actually dropped the third most of any state in the country in that five year span. So despite foreclosure activity increasing from 2014 to 2015, between 2010 and 2015 foreclosure activity decreased 84.4%. Only Arizona (-88.7%) and Montana (-85.3%) saw sharper drops. Proof can be seen of improvement in the market for Las Vegas real estate. For a long time the city has been a hotbed for foreclosure activity, but according to Trulia Las Vegas currently has only 1.5% of its homes in default. Las Vegas ranks seventeenth among large metro areas when it comes to foreclosure activity. Atlantic City is number one with nearly triple the foreclosure rate of Las Vegas at 3.4%.
One positive note is that lenders in the state made significant progress in completing foreclosures in 2015. While those homes that began foreclosure proceedings increased 14%, or about 10,300 filings, home sales for bank owned properties rose 52% to nearly 6,200 closings. This means that although homes are entering foreclosure, a majority of them are being sold shortly after the bank takes over the distressed property resulting in fewer vacancies. Realtor Tim Kelly Kiernan expects the 2016 housing market to be about the same as last year. “The banks still are in no rush to foreclose on the thousands of homes that are in delinquent and foreclosure status,” he says. While foreclosures went up last year the overall trend is that lenders are more willing to work with homeowners of distressed properties.
A rise in short sales will also aid in cutting into the state’s default rate. When lenders permit homeowners to sell their homes for less than they owe on their mortgage, foreclosure rates will drop. Short sales decreased after 2014 when the Mortgage Forgiveness Debt Relief Act expired, leaving homeowners on the hook for income taxes on forgiven home loans. In September of last year short sales made up 6.8% of the Nevada market, a drastic drop from the 10.4% reported in September of 2014. Luckily at the end of last year President Obama extended the Mortgage Debt Relief Act through December 31, 2016. The extension also retroactively covers mortgage debt cancelled last year. This is a huge boost to owners of distressed properties who are already facing financial burdens and will help those who have been forced to foreclose have an opportunity to get back on the path to homeownership faster.
The market for Nevada Real Estate is not leading the nation in terms of growth but there is progress being made. “It’s a solid market, a normal market. This is not a sexy, staggering market. Basically, the stability of the market is the story,” says David Tina of the Nevada Association of Realtors. One concern that realtors have more than foreclosures is inventory. There’s a small supply of homes on the market and a high demand. As a result the market is seeing year over year price increases. And some sellers are beginning to take advantage. Overpricing is now one of the major problems for Nevada. Sellers seem to think that their homes are worth much more than they are. But the minute the home is priced right it sells.
Read on to find out key factors for the Nevada’s housing market predictions, and for a look at some of the state’s more desirable places for homeownership and investment.
Influencing Factors for the 2016 Nevada Real Estate Market
- Median home values for the Nevada real estate market are around $214,300. The national median home value is $184,600.
- RealtyTrac reports that homes in Nevada that are at some stage of foreclosure increased 6.6% from 2014 to 2015. This equates to 16,533, or 1.4% of all homes, which is more than double the national rate. Foreclosure activity for the rest of the country fell 3%.
- Despite the low inventory of homes for sale, rental units are easily available and owners are getting top dollar for them. Rental costs average $1,252, over $100 less than the national average.
- Nevada has no state income tax. Compare this to neighboring California, a state that levies a 13% state income tax rate. Many Californians have begun to move to or invest in the Nevada housing market.
Best Places to Live in Nevada
Las Vegas is the leading housing market in Nevada. But Las Vegas also shares another title in the state, and that is for the highest foreclosure rate. And 2016 has not been kind thus far. Last year Las Vegas ranked seventeenth in the country in foreclosures but in January of this year Las Vegas was fifth. A large portion of Nevada’s population resides in the Las Vegas area so the city has represented the worst of the real estate boom and bust the past decade. Reflecting how high home values were during the housing bubble and how badly they dropped, home values in Las Vegas are still 34% below levels at their peak. In comparison, national home values are 5.9% below their peak. Las Vegas’ housing woes have eased over the past few years but the area is still recovering from the recession. According to chief economist Svenja Gudell for Zillow Las Vegas is seeing a healthy return to normalcy. “The fact that… markets are still off by double-digits may not mean those markets are far from being recovered. It just highlights how extraordinarily inflated home values had been during the housing bubble.”
These facts aside, Las Vegas has a number of positive attributes and opportunities. The median home value in the Las Vegas metro area is currently $201,900, up 9% from the same time a year ago. Home-builders are seeing a positive start to the year. Builders closed on 3.5% more new-home sales compared to a year ago, and new-home permits were up 26% over the same time span. Rental units are not only available but the prices are reasonable for both the owner and the tenant. For example, on Craigslist Las Vegas 3 bedroom homes are renting for well under $2,000. To the southwest of the city Henderson NV real estate has seen increased interest due to its accessibility to Las Vegas without the hustle and bustle.
Two areas of great interest are the Carson City and Reno real estate markets. The western half of Nevada has benefited tremendously from the overpriced housing market of California. Not only are Californians looking west for homes, but business and tech companies have also expanded into the Nevada desert, creating a boost to the state’s economy. Carson City real estate has seen a dramatic increase in home values in the past year. The median home value is $236,800, up 16% from a year ago. The city limits extend west to the California state line in the center of Lake Tahoe. This grants Carson City residents access to water recreation activities, and it is also located close to several ski resorts. It is a popular vacation destination for tourists and residents alike.
Reno has seen a large influx of tech companies, with Tesla, Apple, and Switch announcing that they would be locating within the city limits in the upcoming years. This means that Reno is expecting a flood of workers over the foreseeable future. As such, home values have also been on the rise. Today the average home is valued at $283,300, over $100K more than the low values Reno saw in 2010 when the average home was $167,000. Things don’t look to slow down anytime soon as the Nevada Association of Realtors expects around 50,000 people to arrive in the area in the next 5 years. Those looking to work in downtown Reno but avoid the higher home costs can look south to the neighborhood of Dayton where home values are averaging just under $200,000. And it’s not only residents buying homes in Reno. Many Bay Area residents are looking to purchase a vacation home in Reno. Its small size is attractive for getting around town, and its accessibility to recreational activities makes “The Biggest Little City in the World” a hidden gem.
Northern Nevada has had an incredibly small supply of homes for sale with inventory consistently below six months and sometimes even below four months. The Economic Planning Indicators Committee report produced by the Economic Development Authority of Nevada is forecasting that 50,000 new jobs will become available in the next few years. A few markets that offer great investment opportunities are the Winnemucca, Carlin, and Elko real estate markets.