Alaina Brox, 26, tours a home with her real estate agent, Michael Albrecht. Photo by Clint Karlsen.

The opportunity to become a homeowner in Las Vegas has widened greatly, observers say, as investors bail out of a cooling market, leaving inventory at a record high and forcing sellers to lower prices by as much as $50,000 in some neighborhoods.

It's a new game in a changing market, and old rules no longer apply, said Jason Braford, district director for ZIP Realty in Las Vegas.

Homes are staying on the market longer. In May, 43.1 percent of homes sold within 30 days, compared with 48.4 percent in the same month a year ago, the Greater Las Vegas Association of Realtors reported. Meanwhile, the median price increased only 3.3 percent to $310,000.

Some sellers probably are wondering whether to cut their price now or hold out for more. Some prospective buyers might be wondering whether they should take the plunge or continue to rent. They might be asking themselves, "Is it time to go for a bigger house or a smaller one?"

Don't try to predict the market, Braford said. If you're looking for a home to live in for at least five years, short-term fluctuations are not important, he said.

"Just because you're seeing stories about homes sitting on the market for months or years, if the house you like is in a coveted neighborhood or is a special property within an area with scarce supply, all the old rules still apply," he said. "In other words, multiple offers and the need to move fast."

First-time buyer Alaina Brox, 26, recognizes that Las Vegas has become a buyer's market but thinks prices will continue to rise. She was looking at a four-bedroom, 1,230-square-foot home near Lorenzi Park listed at $235,000. "I've got two kids, so I need something big. I like the big yard. I don't know if I have enough money to fix it up," she said.

Michael Albrecht, a real estate agent with Century 21 Barrett, said the buyer's market does not apply at the entry level because not much is available for less than $250,000.

Braford said it really comes down to what a buyer is trying to accomplish. "Do what's best for you, not your neighbor," he said. "Potential buyers sometimes feel safety in numbers and think that millions of buyers can't all be wrong. This herd behavior is what lured a lot of people into overpriced houses in the first place."

Home Builders Research President Dennis Smith said Las Vegas is very much a buyer's market for long-term investment. He counted 3,714 existing home sales in April, the latest month of available data, which means that the current inventory of 19,132 homes will supply the market for the next five to six months.

"It's not a doom-and-gloom scenario because we still have some of the best job growth in the country. Any economics professor will tell you that's the key to a housing market. People are still moving here," Smith said. "Las Vegas still looks pretty good when you compare it to other markets."

Smith is traveling to Boston and New York later this week to meet with hedge fund investors and analysts at Lehman Bros. With home builders' stocks taking a beating, they want to know what's on the horizon for housing, he said.

Based on Thursday's closing prices, KB Homes stock is down 40.4 percent for 2006; Pulte Homes stock is down 31.4 percent; MDC Holdings, which does business as Richmond American Homes, is down 19.7 percent; and D.R. Horton is down 32.6 percent.

"Most of the large institutional investors all think the long-term outlook for Las Vegas is excellent," Smith said. "It's going to take a year or two for the inventory to shake out from all the investors."

With rising inflation and interest rates, the pin that could pop the hyped real estate bubble is the poor credit of potential buyers, said Tom Piecenski, vice president of Nationwide Advantage Mortgage in Columbus, Ohio.

A consumer survey by the mortgage company showed that 63 percent of renters in Las Vegas plan to buy a home within the next few years, but they're hesitant about buying because of credit and financing concerns, Piecenski said.

Seventeen percent of respondents cited bad credit as a primary factor preventing them from buying a new home. Higher mortgage rates are also responsible for discouraging prospective home buyers, with 35 percent of pollees saying that the current rate of 6.5 percent is too high.

Piecenski said he had to laugh at that finding.

Home shopper Brox knows mortgage rates aren't as low as they were five years ago, but said her 7 percent rate is "still pretty decent."

A majority of those surveyed in Las Vegas said they lack the financial knowledge to take the plunge into home ownership, Piecenski said. More than one-fourth admit to having little or no understanding of mortgage fees, and almost 40 percent don't understand how points affect mortgage and closing costs.

A lender might offer a low rate, but the actual borrowing cost could be significantly higher if the lender charges high points and fees, including loan origination costs, application and credit fees and appraisal costs. The best way to compare offers is to look at the annual percentage rate.

Piecenski said renters shouldn't be daunted by home-buying but should arm themselves with information. The more they know about mortgage lending, the less likely they will fall into a situation that they can't afford, he said.

Consumers today are carrying nearly triple the debt they were three years ago, Piecenski said. "People have a misconception about their credit rating or credit agencies," he said. "More than half the time people are pleasantly surprised that their credit is not as bad as they think."

Typically, lenders will look at a borrower's creditworthiness as measured by their credit history, value of their assets, their capacity to repay the debt and the amount of money available for a down payment, closing costs and incidental expenses.

On the other side, sellers need to update their thinking, Braford of ZIP Realty said. Many of them are setting their list price based on information six months to nine months old. They tend to underprice their home in a rising market and overprice in a falling one.

"Owners typically don't seriously consider a wide enough range of potential housing market outcomes, including the possibility of a steep decline. That leads people to take more risks than they should," he said. "Don't follow the market down. If you follow the market down, you may never manage to sell because the price is always just a little too high. Price your home according to the changing market."