Here’s how much you need to make to afford a Las Vegas home

The Las Vegas Valley is the 27th most affordable metro in the country when home prices are compared to income, according to a new study.

The median household income in the valley is $75,065 while the median house price is $449,000, which means to buy the average house with 20 percent down, a household would have to have a yearly income of $113,839, according to a new study from Clever Real Estate, which uses data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. To buy a house in the valley with no money down, the average household would have to have an annual income of $138,826.

Robert Little, an associate at Re/Max Advantage in Henderson, said a number of factors have pushed the valley into new financial territory.

“Affordability remains a real concern in the Las Vegas housing market, especially with today’s higher mortgage rate. That said, we’ve seen a softening in prices this year, and the market has shifted slightly in favor of buyers, which offers some relief,” he said.

Inventory has been flooding the local market, however prices remain close to record highs.

Little said it appears there is a correction starting to take shape.

“Depending on how a home is priced relative to the competition, it’s not unusual for buyers to negotiate a price reduction, have closing costs covered by the seller, or use concessions to buy down their mortgage rate,” he said.

Little added new homes for sale are also being impacted by the recent market pressures.

“Builders are also stepping up with aggressive incentives—often covering all closing costs or offering significant rate buy-downs to attract buyers,” he said.

Inflation, recession worries

Worries of inflation or even the possibility of a recession have peaked lately given the Trump administration use of tariffs as a negotiating tactic with various countries. Freddie Mac has the 30-year fixed rate mortgage at 6.8 percent as of May 20.

Matt Hennessy, a Las Vegas-based mortgage adviser, said volatility continues to be the name of the game when it comes to the economic outlook for the country.

“With 15 minutes left in the trading day (last Friday), the ratings agency Moody’s announced a downgrade of the U.S.’ credit rating. This has happened before, typically when Congress is in the middle of debating the debt ceiling, a government shutdown, or in this case, the budget bill,” he said. “Due to limited past examples, there’s no telling if this will still be impacting markets by the end of this week.”

Only two cities in the country, Detroit and Pittsburgh, were deemed affordable, according to the Clever study of the 50 biggest metros. All the other metros have an income gap needed to afford the median home in that city with a 20 percent down payment on a house.

Only one state was deemed affordable: Iowa, according to the study. The study outlined how not only home prices, but other costs, are driving up the cost of owning a home in the U.S. The report called America’s overall housing market “bleak.”

“Although home prices remain the most significant factor in housing affordability, the differences in property tax and insurance expenses are growing in influence, creating wide gaps in necessary income between states with similarly priced homes,” read the study. “To afford the median-priced U.S. home of $438,000, homebuyers would need a household income of $123,226 — but are only making a median of $77,719, a difference of $45,507.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.