By JENNIFER ROBISON
LAS VEGAS REVIEW-JOURNAL
A new report from Zillow ranks Las Vegas the nation’s luckiest city for home-price gains, with a four-year value jump of nearly 75 percent. That appreciation bests big cities in states including California, Arizona, Florida and Colorado, all of which have enjoyed healthy, recent real estate booms.
“If you look at where the luckiest homeowners in America are, it’s about a combination of being in the right place at the right time, and Las Vegas certainly has had those opportunities,” said Skylar Olsen, a senior economist at Zillow.
But not every Las Vegan who owns a home feels fortunate. For tens of thousands of local households, home equity remains as elusive as that leprechaun who vanishes into thin air just as you’re about to pounce.“We’re all feeling lucky that things have improved so much after all we’ve been through, but we need to be careful not to forget that there are still a lot of struggling homeowners in this community,” said Bryan Kyle, owner-broker and salesman with sales and management firm First Serve Realty. “They’re not feeling lucky at all. They’re feeling like they might be better off down at the local casino than being in real estate.”
If you bought Las Vegas real estate since 2012, you fared well: Annual price appreciation surged between 20 percent and 30 percent in 2012 and 2013, with another 10 percent jump in 2014 and a 9.6 percent increase in 2015, according to local housing-research firm SalesTraq. The luckiest of all, though, are the local buyers who closed in January 2012. They bought at an average price of $114,600, and now enjoy a value of $200,400 — a 74.9 percent return.
That was tops in the country among big cities, ahead of San Jose, California, at 69.2 percent; San Francisco, at 64.4 percent; Phoenix, at 61.8 percent; and Miami, at 60.7 percent.
Of course, the only reason Las Vegas offered such leaps and bounds was because it was “once the most unlucky metro area for homeowners,” Olsen said. Home values here plummeted by two-thirds, falling from a median of $315,000 in 2006 to $118,000 in early 2012, according to single-family resale numbers from the Greater Las Vegas Association of Realtors.
“The market overcorrected. It’s easier to bounce back at a high rate when you fall to such a low level,” Olsen said. “Coming from a low bottom gives you higher percentage changes.”
But it’s a small universe of locals who bought at that price nadir. About 3,600 homes were sold in January 2012, the Realtors’ association’s numbers showed. That’s less than 1 percent of the 374,800 owner-occupied housing units the U.S. Census Bureau counts across the Las Vegas Valley.
What’s more, at least half of those buyers probably didn’t purchase a home to live in. The association’s research shows that 52.5 percent of closings that month were cash sales — a proxy for investor activity.
Worst of all, the share of locals with serious negative equity handily beats the number who bought at the bottom.
“Las Vegas is still a bit of a tragic story, in the sense that negative equity is high,” Olsen said. “Plenty of people bought at the peak, and that’s one of the most painful places to be.”
More than a fifth — 21 percent — of Clark County households with a home loan owed more on their mortgage than their home was worth in the fourth quarter, according to Zillow. Include households with effective negative equity — some equity, but not enough to break even after closing and moving costs — and the rate spikes to 40.7 percent.
“Certainly, a segment of the population is still in a world of hurt, owing more than what their home is worth even after a number of years of appreciation,” said David Brownell of Keller Williams Realty in Las Vegas.
Still, negative equity is down from more than 70 percent in early 2012, when investors were scooping up homes on the cheap.
“There have been some great benefits for those who were under water and hung onto their properties,” Brownell said.
Those benefits have slowed.
Zillow forecasts a local home-price gain averaging 5 percent in 2016. That’s more than double the national projection of 2.3 percent, but it’s down from an 8.6 percent local increase year over year in January.
Kyle said he’d be surprised if appreciation hit 5 percent, partly because it remains difficult for a fair number of buyers to qualify for a mortgage. That could put the brakes on the local market.
But Kyle — whose house is worth $100,000 less than when he and his wife bought it 10 years ago — says even buyers who took it on the chin are ultimately lucky to be here.
“The main thing is, everybody wants to feel like the market is headed in the right direction,” he said. “People want to see growth. We don’t want to see distressed properties and distressed sellers. A market that’s identified as a place where you can buy a house today that’s hopefully worth a few more dollars next year — that’s the kind of market we want. We want a market where, if you have a younger family looking to buy a house for the first time, we have homes they can look at. This is the market we’re finally enjoying now — a balanced market.”
