Paying cash for home

Q: I'm interested in how many local home buyers are paying cash for homes in the Las Vegas area. I hear the number of cash buyers in Las Vegas is rising. Can you share some thoughts on why that might be happening and what it says about the local housing market? -- Michael C., New York, N.Y.

A: You've definitely hit upon a trend, at least here in Southern Nevada.

First, let me share some recent statistics on this topic from the Greater Las Vegas Association of Realtors, which reports that cash buyers now account for about 39 percent of all local home purchases.

That's more than double what it was a year ago, when about 15 percent of all homes sold were bought with cash.

As you might imagine, the kind of buyers who are able to pay cash for a home are usually relatively wealthy. There may still be a small percentage of cash buyers who are rolling over the proceeds from a home they just sold. But it's clear that most of today's cash buyers are investors, buying homes in the Las Vegas area as an investment, to be used as rental properties or possibly second homes.

Given the current state of our housing market, I expect the percentage of cash buyers to continue increasing, at least for a while.

The reasons for this are all over the news lately. For starters, as I've been saying for months, it's an unprecedented time to buy a home here. Prices have never been better. Buyers can now purchase a home for the same price as a decade ago.

That's unbelievable to those of us who have been in the Las Vegas real estate business for many years and lived through the boom that spanned the middle of this decade.

Our housing inventory is starting to decline in recent months. But the number and variety of homes on the market is still vast. That great selection is attracting buyers, many of whom can pay cash, especially at today's low prices.

In addition, lenders have become so cautious with their money since the credit crisis hit that cash is a good alternative without having to worry about lending guidelines changing before closing escrow. It has become increasingly difficult to get a home loan -- especially if the home you're buying isn't going to be your primary residence.

I also think many people are seeing that real estate may be a better investment than the stock market at the present time.

I'm one of those optimists who believe housing prices are going to creep back up soon, while I've always felt that the stock market can be more volatile and speculative.

In the end, I think cash buyers are a lot like other home buyers who are helping Las Vegas approach records for how many homes being sold in a given month. They recognize that the fundamental factors that have always made Southern Nevada an attractive place to live haven't changed.

The weather is still sunny and better than most places. There's more to do here than ever before. The state of Nevada still offers a very favorable tax climate, which continues to attract significant numbers of retirees and California transplants.

The number of people paying cash for homes may surprise some residents. A few have even asked me if Las Vegas is attracting another wave of real estate speculators, a group often blamed for driving up prices during our housing boom before fueling our current foreclosure problem.

But I think this increasing number of cash buyers is generally a good thing. It tells me that more people buying homes today as an investment have more financial backing than the so-called speculators we saw buying multiple houses with little or no money down a few years ago.

For more information, contact a local Realtor or visit lasvegasrealtor.com or realtor.com

Sue Naumann is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for nearly 30 years. GLVAR has nearly 14,000 members. To ask her a question, e-mail ask@glvar.org. For more information, visit realtor.com.