The Las Vegas real estate market continues to scratch and claw its way back from the depths of the housing bust. Once considered ground zero for the housing crisis, the city recently posted the largest month-to-month price gain of any metro area in the Case-Shiller 20-city index.
The latest release of the S&P/Case-Shiller Home Price Index was published yesterday and contained real estate data through February of this year. From January to February 2013, house prices in Las Vegas rose by 1.6%. That was the largest monthly gain of any metropolitan area in the 20-city index. See the table below for full details.
Las Vegas also posted the third largest year-over-year price gain among the 20 cities. According to the report, metro-area home prices rose 17.6% from February 2012 to February 2013. Only Phoenix and San Francisco had larger annual gains.
Of course, Las Vegas real estate prices are still nowhere near their 2006 peak levels. It will probably be decades before they reach that level again. But homeowners and investors can still take heart from the continuing upward momentum of home values.
“Phoenix and Las Vegas … joined this bubble around 2004,” housing economist Robert Shiller told CNBC, “and they crashed over 50%. Now they’re starting to come up with some exuberance.”
Shiller went on to say the Las Vegas real estate market is one of the most dramatic in the country right now, as far as prices are concerned.
The biggest problem right now? Not enough inventory. Real estate investors swept into this market a couple of years ago, and they haven’t let up since.
According to Quinn Eddins, director of research for housing data firm Radar Logic, real estate investment activity in Las Vegas has increased 67%, year over year. As a result, the inventory of homes for sale has dropped considerably over the last couple of years.
According to Realtor.com, the total number of listings in the Las Vegas metro area has decreased by 23% over the last year alone. The median list price for properties rose by 16% during the same period.
All of this comes at a time when demand is growing among regular live-in home buyers as well. Home prices in Las Vegas bottomed out during the first quarter of 2012. They have been rising steadily since then (note the 17.6% statistic from earlier). This inspires confidence among local residents who are considering the purchase of a house.
We have also had a stream of good news from the broader economy. These factors have a positive trend on housing demand. And they come at a time when inventory is shrinking. Anyone who took Economics 101 knows what happens when demand rises in conjunction with shrinking supply. It sends prices north. That is what we are currently seeing in the Las Vegas real estate market.
What does the future hold? I hesitate to make real estate predictions beyond the six-month mark. But one thing is for sure. It’s going to be a hot summer in Las Vegas – on the thermometer and in the housing market.
Disclaimer: This report contains forward-looking statements regarding various economic trends, including home prices. Such statements are the sole opinion of the author and should not be viewed as financial advice. We make no guarantees or claims about future conditions within this, or any other, local housing market.