103°F
weather icon Clear

Lied Institute to hold housing seminar April 12

EDITOR’S NOTE: The Lied Institute for Real Estate Studies will host its annual homebuyer seminar on April 12 at noon. The event will feature a panel of local housing experts who will cover the ins-and-outs of the homebuying process. The institute also publishes a monthly housing market update, which provides easy-to-understand information to everyday consumers. The February report can be found at unlv.edu.

When the housing market began its decline in 2006, and then came to a deafening crash two years later, Las Vegas found itself at the center of the crisis.

The city has since rebounded and is flourishing with an influx of new residents and jobs, increased commercial development and professional sports teams. But with this prosperity comes rising home prices, and all eyes are on Las Vegas again: Are we about to enter another housing bubble?

Not quite, says Vivek Sah, director of the Lied Institute for Real Estate Studies at UNLV.

“It’s not a bubble, but there is likely going to be a correction because prices have appreciated so much,” Sah said. “I believe we’ve become a little bit unaffordable now, especially at the entry level, where there’s a big mismatch between median income and the price of an entry home.”

We caught up with Sah to get a glimpse into the current housing market, and the key factors that any soon-to-be homebuyer should consider when searching for a permanent place to call their own.

Q: What does the current housing market look like in Southern Nevada?

A: I think the biggest concern right now in Southern Nevada is that we’re progressing from a city that was affordable to one that’s less so very quickly, within the last two years. Income is around $60,000, but the median new home price is close to $500,000. That is a concern because it will decrease home ownership especially among first-time homebuyers, or among those who are between the ages of 30 and 40.

Over the next few months I think we’ll see a modest increase in home prices, but there is no concern right now about a housing bubble. A housing bubble is controlled not only by demand, but also supply, and currently supply is very, very low. Homebuilders have been able to slow down the process of delivering in the market because they saw what happened when they flooded the market with a lot of supply back in 2007.

Q: Should you buy a home now?

A: The decision to buy a home is a long-term and emotional process; therefore there is no right time or wrong time to buy. Housing markets move in cycles and, overall, they are very difficult to predict. If the choice of the neighborhood and home is based on strong fundamentals, then timing of purchase least impacts your decision.

The cities where you reside also matter to a degree. Cities on the West Coast, for example, are in a perennial housing boom and prices will continue to flourish.

No matter where you live, it is recommended to buy as soon as households have financial resources to do so.

If you have no constraints in terms of moving, buying a home in the winter might be the best option because home prices nationwide are 6 to 7 percent lower in December and January. People usually don’t move during those months because of holiday vacations and winter breaks. Moving is usually linked to the school year. Therefore, summertime prices are much higher. In July, home prices peak, and are 4 to 5 percent higher than the rest of the year.

Q: Are interest rates predicted to increase?

A: The cost of borrowing may change based on what the Federal Reserve does in the next few quarters; however, they recently announced that they won’t increase the rates this year. At present, mortgage rates are still relatively low and that could be an advantage to the buyer. How those rates will move up or down is very difficult to predict and will depend on the economy and other macro factors.

Q: What data should homebuyers consider when making a purchase?

A: Follow the local housing market reports offered by real estate associations and universities to examine the strength of the market, and to gauge zip codes in your area where prices have appreciated the most.

Soon-to-be homebuyers should examine the fundamentals that are driving economic growth, which largely dictate the housing markets. Some common indicators are job growth, wage growth, expanding sectors, net-in migration, and housing supply.

Homebuyers should also consider the quality of the school or school district in their preferred neighborhood, amenities in the community, crime rate, new construction supply, average new home price vs. average resale price, growth in home values, and owner-occupied to rental home ratio in specific neighborhoods they are interested in.

Q: What should I consider when financing a home?

A: Banks and lenders prefer 20 percent down, which also allows a homeowner to avoid paying for private mortgage insurance. There are unconventional loans that allow for very low down-payment amounts, but qualification standards differ.

Overall, it is always a good decision to save for the down payment and then buy the home. The larger the down payment, the lower the risk and the lower the monthly payments. A down payment lower than 20 percent is a risky choice, because it means that you may be overextending yourself by borrowing more.

A larger down payment also allows you to apply for a shorter-term loan (15 years vs. 30 years), and will help you pay off the loan earlier.

Homebuyers should shop as much for a loan as they do for the home itself, which can minimize upfront costs. For example, homebuyers are generally not aware that in most cases, if they shop around, a lender will waive their application fee.

Another misconception is that banks are the only financial institutions that provide home loans. However, buyers have many more options including mortgage brokers, mortgage companies and credit unions.

Q: Are there any hidden costs to consider?

A: Homebuyers need to consider not only the down payment and their monthly mortgage, but they should also be mindful of property taxes, home insurance, maintenance costs and homeowner association fees. Many of these additional costs do not exist while renting, and it’s important to be prepared before you buy.

If you provide a down payment that is less than 20 percent of the price of the home, you will also need to factor in the cost of private mortgage insurance, which may add upward of $200 to your monthly costs.

Established in 1991, the Lied Institute for Real Estate Studies is part of UNLV’s Lee Business School and was created to foster real estate education and research, and to advance real estate knowledge in Nevada. The institute produces relevant and timely real estate research, supports educational programs in real estate for students and professionals and provides community outreach. This includes a monthly Nevada housing market report, which provides zip code-specific housing data and tracks market trends statewide on home prices, sales and foreclosures.

Don't miss the big stories. Like us on Facebook.
THE LATEST
Tanager in Downtown Summerlin welcomes first residents

Las Vegas native Roberto Orellana has lived in Summerlin nearly all his life. A graduate of Bishop Gorman High School who left Nevada briefly to attend San Diego State University, the 26-year-old is now a business development executive for Aristocrat Technologies Inc., a global gaming giant that also calls the master-planned community home.

Room to grow at Cirrus

These young ladies joined their fathers, James and Justin, both employees of Pardee Homes, for the grand opening Aug. 10 of the builder’s Cirrus neighborhood. All three girls appear perfectly at home in the playhouse in the backyard of the Plan Two model.

REAL ESTATE ON THE MOVE

■ Blue Heron, a design/build firm led by founder and Las Vegas native Tyler Jones, has announced that Ryan Thompson has joined the company as chief marketing officer. Thompson will be an integral part to the growth strategy for the company, overseeing the evolution of the Blue Heron brand, strategic vision, marketing strategy and media across all platforms.

Toll Brothers’ Concord at Cadence to celebrate grand opening

Toll Brothers has announce the opening of its newest model homes at Concord at Cadence in Henderson. The professionally decorated models will open for tours during the grand opening event Aug. 17 from 11 a.m.-2 p.m.

Luxury awaits at One Las Vegas

Located on the South Strip, minutes from the developing Raiders football stadium; the bustling T-Mobile Arena; world-class shopping and dining on the Strip; and nearby Town Square, One Las Vegas, the iconic twin-tower high-rise, is showcasing its White Throne Mountain floor plan — residence No. 622.

Summerlin awards college scholarships to students

The Summerlin Children’s Forum, a nonprofit organization established in 1997 by leaders of the Summerlin master-planned community and its developer, The Howard Hughes Corp., recently awarded college scholarships to three outstanding recent high school graduates who are residents of the community.

Teams form for Candlelighters Superhero 5K

If anyone needs a superhero on their side, it’s children battling cancer and their families. They’re not only dealing with the disease’s physical effects but also with treatment, emotional impact, financial considerations and potential out-of-state travel. The biggest hero to these vulnerable kids and families is the Candlelighters Childhood Cancer Foundation of Nevada, which provides support in all these areas.

Skye Canyon to unveil five model homes

Food, fun and prizes are in store as Skye Canyon unveils five appointed models at the First Look: Northglenn and Madera by Century Communities.