Las Vegas Housing Outlook: Big Home-Price Gains in 2019 and 2020?

Welcome to the Home Buying Institute’s Las Vegas Housing Market Outlook for 2019 to 2020. This report was created to give home buyers, investors, and real estate agents some idea of what to expect in 2019, in terms of local housing trends. (See disclaimers below.)

Las Vegas Housing Market ‘Poised to Rule’ in 2019

In January, realtor.com® included Las Vegas in its list of “10 Surprising Housing Markets Poised to Rule in 2019.” To come up with their list (which also included Phoenix, Miami and Boston), the group’s research team looked at the number of sales of existing homes and their prices, along with the amount of new home construction in the 100 largest metro areas in the country.

They analyzed “the local economies of each area, along with population trends, unemployment rates, median household incomes, and other factors.”

Based on their analysis, the group stated that Las Vegas is one of several real estate markets where both the number of home sales and prices are expected to jump in 2019, bucking the national slowdown trend.

A couple of points about this ranking:

We also forecast that the Las Vegas real estate market will outperform the nation as a whole in 2019, in terms of home-price appreciation. But there’s an important trend that was left out of this particular study. The Las Vegas housing market is indeed cooling down. There’s more inventory available today, and that will likely lead to smaller home-price gains in 2019 than what we saw in 2018.

With that being said, Las Vegas is still a strong and active real estate market. And it will likely remain that way for the foreseeable future. We expect home prices in this market to rise more than the national average in 2019. Given the current supply-and-demand situation in the area, it would not be surprising to see the median home value in Las Vegas climb somewhere between 6% and 8% during 2019.

Home Prices Past, Present and (Possible) Future

Home prices in Las Vegas rose steadily over the last few years, outpacing the national average. (Of course, prices in this market declined harder and faster than the nation as a whole during the last housing crash, and that certainly plays a role in the rapid rise we are seeing today.) The difference is that the current run-up in prices is a bit more sustainable, being driven more by supply and demand instead of rampant speculation.

As of January 2019, the median home value in Las Vegas was around $277,000.

Home prices in Las Vegas have more than doubled from the low-water market set in 2012, but they still haven’t reached the peak set during the previous housing boom. That’s not necessarily a bad thing, either. The price peak reached back in the 2000s was the result of an unsustainable bubble. So we should hope things are different this time around.

During 2018, the median home value in Las Vegas rose by around 14% according to Zillow. That was nearly double the national rate of appreciation during that same 12-month period.

The chart below shows the median home value in Las Vegas over the past ten years, according to Zillow. As you can see, prices have risen steadily over the past few years. You can also see Zillow’s positive forecast for the Las Vegas housing market through 2019 (shown in the green shaded area).

Chart: Las Vegas home prices over 10 years. Source: Zillow.

A cooling trend might actually be beneficial for Las Vegas. Back in May of 2018, Fitch Ratings ranked Las Vegas as being the most overvalued real estate market in the country. (Fitch is one of the “big three” ratings agencies, along with S&P and Moody’s.)

Forbes covered this story back in May. As Samantha Sharf wrote:

“Home prices in Las Vegas have overshot economic fundamentals, says Fitch Ratings Managing Director Grant Bailey. There are bright spots in the local economy—the population is increasing swiftly, and the price to rent a place to live isn’t increasing nearly as fast as to buy one. Those highlights, however, are not enough to support 11% growth in the Case Shiller Home Price Index for the city or to save the gamblers’ paradise from the top spot on the latest Fitch ranking … of the most overvalued housing markets in America.”

At the end of 2018, the property analytics company CoreLogic also reported that the Las Vegas real estate market was overvalued, based on its analysis. So a slowdown in price growth might be a good thing at this point.

Housing Inventory on the Rise

There’s good news for home buyers who are planning to enter the Las Vegas housing market in 2019. Real estate inventory (i.e., the number of homes listed for sale) has increased over the past few months.

This means that buyers who make a purchase in 2019 could have more properties to choose from — and maybe a bit less competition as well. Some forecasts suggest that housing inventory in Las Vegas could continue to grow throughout the year.

Inventory in Las Vegas “bottomed out” at around 1.9 months in July. It then rebounded to around 3.7 months at the end of 2018.

According to economists, a 5- or 6-month supply of homes is considered to be a “balanced” real estate market. So back in the summer of 2018, Las Vegas was looking like a seller’s market in terms of inventory. But it’s beginning to shift more toward “neutral” territory.

The growth in for-sale inventory became apparent at the end of 2018. According to the Greater Las Vegas Association of REALTORS®, about 10,000 single-family homes were on the market at the end of November 2018. About 7,000 of them hadn’t had a single offer yet. That marked a 54% increase in inventory from a year earlier.

The bottom line to all of this is that there were more homes listed for sale at the start of 2019 than there were during 2017 and (most of) 2018.

Population Growth Increases Demand for Homes

You can’t talk about Las Vegas housing market forecasts and trends without looking at the population. It’s an important factor on the demand side of the equation. And the population in Las Vegas can be summed up with two words: gradual growth.

The state of Nevada’s population rose above 3 million last year. In December, The U.S. Census Bureau reported that Nevada’s population increased by almost 62,000 people (or about 2.1 percent) between July 2017 and July 2018.

In Las Vegas itself, the population was around 631,676 in 2018. That was about 10% higher than in 2010. So there has been steady growth in Las Vegas, as well as in the state of Nevada as a whole.

This kind of trend increases demand for housing, on both the rental and purchase side. It also helps to sustain home prices over time.

A Stronger Job Market

Employment is another important consideration for home buyers. This is true for investors as well as “regular” buyers who plan to occupy the homes they purchase. In short, a strong local job market gives buyers the financial means to purchase a home, and to keep up with their mortgage payments.

And there’s good news here as well. While Las Vegas’s unemployment rate is still higher than the national average (as of January 2019), it has improved steadily since the post-recession years.

The chart below is based on data provided by the U.S. Bureau of Labor Statistics. The gray shaded area that starts around 2008 indicates the country’s recession. As you can see, the unemployment rate in the Las Vegas-Henderson-Paradise metro area skyrocketed from 2009 to 2010. But starting in 2011, it began to steadily decline as the local economy gained jobs.

Unemployment rate in Las Vegas-Henderson-Paradise, Nevada

Disclaimers: This article contains housing market forecasts and predictions for the Las Vegas real estate market through 2019 and into 2020. Such predictions are the equivalent of an educated guess and should not be considered financial advice.