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.