The last couple of years have been truly a large test for the Southern Nevada housing and mortgage markets. Property values were heading south, sales stalled, the mortgage community decided to label, although it's now lifted, the valley a "declining area" and buyers generally pulled back to the sidelines to watch the mayhem. Yet, this spring has brought along a few positive signs of life to the battered industry.
And recently another upbeat report makes a case for a nascent recovery. House Prices in America review is put together by a research shop Global Insight and a bank-holding firm National City Corp. According to its latest edition, the median Las Vegas home price of $232,600 in the first quarter dropped 3.1% under the historical standard, or a line, that is considered the norm. In essence, the market here is now judged to be slightly undervalued. If it is, it isn't by much, so it can really be called a level, sustainable condition.
In addition, House Prices in America discloses that in the first quarter of 2007, a year ago, the local market was 22.9% overvalued at a median price of $286,100. With that said, the figures during this current downturn were the worst in the third quarter of 2006 when the overvaluation stood at 30.4%. This rapid, steep and speculator-fueled appreciation was one of the main reasons to the market's spectacular reversal of fortunes the city is now wrestling with.
In the same report, among the regional cities Loa Angeles is tagged as overvalued by 15.4% at a median home price of $432,200. So is Phoenix by 20.2% with a price of 224,900. Reno, a fellow Nevadan, is right around par on the historic scale, undervalued a tick at 0.2% with a price of $251,500.
Is the real estate market in Las Vegas now fairly priced? It definitely seems to be. As long as the range either over or under the historical standard is within, say, 5 to 7%, the situation can be called stable and sustainable. When it races up to double digits, look out. That's when it's time to sit back and carefully evaluate what's going on.