The foreclosures and falling prices in Las Vegas are not all bad:
A week-old study assessing housing affordability in Las Vegas is already well past its prime, local analysts say.
The 2008 Colorado College "State of the Rockies Report Card" found that just 18.9 percent of the Las Vegas Valley’s housing stock is attainable to workers earning the area’s median wage, which was $14.03 an hour in June, according to the Nevada Department of Employment, Training & Rehabilitation.
Affording a two-bedroom apartment at fair-market rents in Clark County required pay of at least $15.01 an hour, the report card added.
Those figures translated into a D+ for overall housing affordability in Clark County.
There’s just one hitch: The report card’s data hail from the first quarter of 2007. And given the swift blast of air hissing out of the Las Vegas Valley’s housing bubble, that makes the report card’s findings obsolete, experts say.
Jeremy Aguero, a principal in Applied Analysis, estimated the proportion of local homes affordable to median wage earners is likely closer to 36 percent, or about twice the share the Colorado College report card cited.
"Those numbers don’t comport with what our market looks like today," said Aguero, whose firm performs economic studies and research for businesses and governments. "To suggest that only 18 percent of our homes are available to local buyers is a dangerous, deceiving statistic."
Among Aguero’s quibbles with the study: It fails to consider the sheer volume of homes in foreclosure here. More than half the single-family homes sold locally in March were foreclosures or short sales, according to the Greater Las Vegas Association of Realtors. Those homes are selling at $120 to $125 per square foot — well below the $185 per square foot parts of the market averaged at its peak in 2005.
In March on this year, the median price off a home in Las Vegas was $243,169- 23% off of the $315,000 peak in 2006. That’s hardly a price that a $14/hr worker would find affordable. Still, that puts a lot more homes in the range of a lot more people- assuming, of course, they qualify for a mortgage.
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twist:
Thank you for continuing to include % off from the peak. It seems like everybody is hung up on YOY differences, but those aren’t useful as a global indicator of where we are in the bubble’s cycle.
I wonder what professionals think most people earn.Anyone that makes $14-15 an hour cant afford $150,000 home.Now throw in a couple of kids,2 dogs,4 cats,now they cant afford $80 grand.If housing is truly going to be affordable to median wage earners the prices will have to drop another 25%.I know thats alot,and might be a pipe dream,Im just saying.
“Those homes are selling at $120 to $125 per square foot — well below the $185 per square foot parts of the market averaged at its peak in 2005.”…..
This is a wonderful example of the importance of Timing. The Location is the same (Las Vegas.) Timing is a reference of Affordabilty…the peak of 2005 vrs. the down market of 2008. …….”Time is Money”
…Food for thought…
Sure Location is important…right? When you take affordabilty into account why aren’t more buyers purchasing now (Buyer’s market) especially when you consider the sheer number of homes available from which to choose ?(Supply & Location)…
What determines True Affordablity? Is Afordabilty determined by one’s monthly payment (& whatever type of loan one can get) or is Affordabilty determined by the actual price one pays for the house?
What causes more homes to be sold during a “Seller’s Market than during a “Buyer’s market? Could part of the reasoning be that properties appreciate during a “Seller’s” market and prices go down during a “Buyer’s market? Thus, during a “Seller’s” market the property becomes more desirable creating more of a Demand? Also, during a “Seller’s” market there is less inventory as compared to a “Buyer’s market. What affect does the scarcity of homes on the market have on the Buyer if any?
How much does the “Mood of the market” affect pricing? …………..Why?……If so, then what “Mood” creates the most Affordable time to purchase?
The “Media”…What affect does the “Media” have on the “Mood” of the market?
In Phoenix we are seeing a vivid picture of “before” and “after.” However, “after” isn’t over yet:
http://www.foreclosureexpert.info/2008/04/a-tale-of-two-h.html
Agreed Sandman, percent off peak tells it all.
In markets like SoCal (perhaps Vegas also?) that tripled or more, when we’ve reached 55-60% off peak, then we’ll have returned to the trend line and deals/prices may be getting reasonable, though we may follow the typical pattern of overcorrection and get even cheaper for a little while. Still, even if you miss a bit of the overcorrection part, buying at the trend line hopefully won’t kill you in the medium to long term, while buying at 30% above the trend line (where we are today) may take 10-15+ years to recover just to zero equity.