Website forecasts hot ’16 for Las Vegas real estate, but locals only see lukewarm

A national real estate website promises a hot year ahead for Las Vegas housing, even as local experts say the market's climate feels lukewarm.

Home-sales website Trulia called Las Vegas its No. 9 "market to watch" in 2016 for "strong growth potential." The Wednesday report cited job growth, demographics and even online home-search data.

Despite the sunny outlook, at least one local real estate agent urged caution.

"Not so fast," said Bryan Kyle, owner of First Serve Realty.

It's not that the forecast is cloudy. It's just become the same every day — steady and, well, normal.

The median single-family resale price has stalled since summer at around $220,000, according to the Greater Las Vegas Association of Realtors. Sales of existing single-family and attached homes have hung at around 3,000 a month in the same period.

"We do have a more balanced market," Kyle said. "I hate to pull back on the reins a little bit. We'd love to be ranked in the Top 10. We like to be noticed and we want people to think it's a super-vibrant market. Having said that, I see factors that might lead us to take a step back."

So how did Trulia wrestle a top 10 year out of a new market normal?

The company's researchers looked at job creation, housing affordability, vacancy rates, share of millennials and online home searches.

The U.S. Bureau of Labor Statistics predicts local job growth of 4.8 percent in 2016, well above a national rate of less than 2 percent.

Also, homes are attainable: A middle-class family needs 25 percent of its income to buy a typical home here, compared with more than 50 percent in pricey coastal markets such as San Diego.

Local housing vacancies are also relatively low, at 3.7 percent. Plus, millennials are ready to buy, with a third of young adults nationally saying they plan to purchase by 2018. Nearly a quarter of locals are millennials.

Finally, there's huge interest in local housing. For its ratio of inbound to outbound home searches, Las Vegas handily beat every market. Its nearly four inbound searches for every outbound one was 25 percent higher than the second-best market of Sarasota, Fla., with almost three inbound searches for each outbound one.

Brian Gordon, a principal in local housing research firm SalesTraq, agreed job formation could spur the housing economy. Population growth will help too. Southern Nevada's population is growing at about 2 percent a year, compared with a national average below 1 percent, he said.

"The growth of the economy in Southern Nevada is heads and tails above most other markets around the country," Gordon said. "When we talk about population and employment growth as key drivers for housing demand, they have the potential to provide pricing stability, and even upward pressure on median home prices."

Headwinds could keep the market from taking big advantage, though.

Kyle, whose company also manages rental homes, said he sees many clients with credit challenges that make it hard to buy. What's more, a Wednesday report from sales website Zillow pegged the share of Las Vegans who owe substantially more on their mortgage than their home is worth at 22.1 percent in the third quarter. Those owners are tied to their homes for the foreseeable future and won't be buying another place.

Then there are the wild cards, including interest rates and land prices. Both are set to rise and make it more expensive to buy, Gordon said.

And as reliant as Southern Nevada is on consumer spending, a downturn in the U.S. economy would ripple across local job markets, though few predict a major national correction, Gordon said.

Still, the Trulia forecast could hold.

"Continued job expansion and positive overall population growth should translate into housing demand," Gordon said.

Las Vegas also has room to grow in its median price.

A Wednesday report from California research firm RealtyTrac showed a third of major U.S. cities — from Detroit and Atlanta to Denver and San Jose, Calif. — have blown past bubble-era peak prices. As for Las Vegas? It remains mired at roughly 30 percent below its $315,000 high of 2006.

"We do have a ways to go," Kyle said.

"We are seeing a lot of people with new and better jobs coming to us," Kyle added. "I think we can be happy with just some good news. I hope (the Trulia report) comes true, but I don't think things are going to get crazy."

Contact Jennifer Robison at jrobison@reviewjournal.com. Find @_JRobison on Twitter.