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Most homes sold in Las Vegas are ‘unaffordable’

Updated March 13, 2024 - 12:50 pm

More than 85 percent of the homes sold in the Las Vegas Valley in the fourth quarter of 2023 were unaffordable, according to a new study.

That means based on the median household income for the valley, which is at $83,900, the vast majority of buyers wouldn’t be able to make the mortgage without using more than 30 percent of their income, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index.

Only 14.2 percent of the homes sold in the final three months of the year were affordable, according to the study.

The current daily average for a 30-year fixed-term mortgage is 6.9 percent, essentially the same rate it was a year ago, according to Redfin.

Jeremy Aguero, principal analyst with Applied Analyst said it’s important to remember that a number of factors come into play when looking at Las Vegas Valley’s current economic situation.

“I think it is one element of the affordability picture in Southern Nevada. There are many homes below the median, which would obviously be affordable to a larger cross-section of the community,” he said. “That said, I do believe the Housing Opportunity Index highlights the escalating challenge of affordability and what it portends for homeownership. I think we would be well served to consider the implications of the drop in the index, nationally and in Southern Nevada.”

The index’s report notes this is a national trend as this is the least affordable homes have been in the nation since 2012 when the NAHB started tracking the data. Between October and December, only 37.7 percent of the homes sold the U.S. were deemed affordable to families earning the median household income of $96,300.

The Las Vegas Valley is dealing with a number of chronic issues on the housing front, including a lack of affordable housing for low-income residents, while the local supply of single-family homes on the market has been strangled by high interest rates that were brought in by the Federal Reserve to stem runaway inflation in the second half of 2022.

Chen Zhao, who leads the economics team at Redfin, said this has been the real estate market for some time now. The Las Vegas Valley did see a glimmer of light concerning February home sales.

“There have been two major obstacles for homebuyers over the last year, low inventory and high housing costs,” she said. “Now, the first barrier is starting to come down as more supply comes on the market. Housing costs are still high, but they’re likely to come down a bit as mortgage rates gradually decline through the year and price growth loses some steam. Buyers who can afford today’s mortgage rates may have better luck finding a home now than they have in the past several months, and they also may be less likely to face competition because inventory is improving.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.

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