BluefoxToday blog : Las Vegas near the top for most undervalued housing markets

Las Vegas near the top for most undervalued housing markets

Let's go right to it. In the 10 Most Undervalued cities Las Vegas placed third, according to IHS Global Insight. The firm put the report together by analyzing household incomes, historical prices and housing densities and then arrived at statistically normal home prices which were subsequently weighed against actual values of a city. The difference either placed the area in the overvalued or undervalued category.

In this study, Las Vegas median home price was determined to be $140,000, meaning it is 40.9% undervalued. That is a high number.

It's hard to say if this is good news or the other kind of news. On the good news side would be the fact that homes here now are fast becoming, actually already are, nice and affordable again. Specifically the lower half of the market is beginning to align well with Southern Nevada's average annual income. That is generally considered a healthy environment, supported by recent upbeat existing home sale figures.

On the other hand, on the bad news side, values have dropped so far that many existing homeowners are increasingly upside down, effectively disqualifying them from any mortgage refinance or moving up or even allowing them to leave town. Those who've bought property in the last five years are really vulnerable here. Under their circumstances to do any of those would require they bring a wad of money to the closing table and that is today an unlikely scenario in most cases. Who has an extra $30,000, or $80,000, or whatever, to plunk down just to close a deal. Practically nobody. This development is rather unhealthy for the real estate market in Las Vegas. It is going to take many years before this massive imbalance will correct itself.

_______________________________________________________________________________

Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 4 commentsEsko Kiuru • June 04 2009 09:56PM

Comments

Esko, yep that is a really catch 22.  Great for first time homebuyers but not so good if you are on the selling end.  Hopefully if enough sales start to happen, price will increase the the blow to the seller will lessen.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 9 years ago

George,

The market here is truly out of alignment for now.

Posted by Esko Kiuru over 9 years ago

Thanks for this very useful post Esko, I checked out your link to the CNN article and will definitely be recycling this information. I also own some homes in Las Vegas. Fortunately I got in fairly early, but it looks like my long-term investment is going to be just that.

Posted by Andrew Jones, LA Beach Cities Homes 310-399-3740 (Horizon Pacific Realty ) over 9 years ago

Andrew,

For new residents moving in these low prices are a great incentive to buy a property.

Posted by Esko Kiuru over 9 years ago

Participate