Las Vegas Homes - How much Home does $500,000 Buy You?
Las Vegas Real Estate - How much Home does Half a Million Buy?
As some of you may know 2007 was the beginning of the end for the Real Estate Boom nationwide and in particular in Las Vegas. Las Vegas Homes skyrocketed in value from 1997-2007 with double digit value increases in the early part of this decade being the norm for even small family homes.
Although I am not a Realtor I have a vested interest in the Las Vegas Real Estate Market. It’s amazing to see homes that were once listed in the $1,000,000+ range in 2005 now going for half that amount. And it’s a very tight market as the qualified buyers are in short supply, and those who are qualified to buy Vegas Properties are sitting on the sidelines expecting further losses.
Now let me clarify a point. I’m not talking about homes in the Family Affordable range of $100-300,000… those homes are selling. The Las Vegas Job Market is very weak so the available buyers pool is small and shrinking. However even with the highest foreclosure rate in the country over the past year the affordably priced homes are still selling. What is affordable today in the Las Vegas Home market is homes priced between $75,000-$200,000. It’s the higher end homes that are really stagnant in the Vegas Real Estate Market.
I’m using Zillow.com as my reference points for price values for these examples of Las Vegas Homes for Sale.
Las Vegas House For Sale #1:
4 Bedrooms, 3 Bath, 4,277 sq ft, Pool, Built in 1995. Includes RV Parking which is rare in Las Vegas.
Estimated Value Fall 2006: 1.05 Million. Asking Price Today: $499,000
Estimated ValueRange per Zillow: $370-580,000
Decent enough home, good size, decent location. But these types of homes are all over the Valley. It’s a buyers market. I’d expect this home to sell though because compared to other homes in the market place it has several features the others do not.
Las Vegas House For Sale #2
5 Bedrooms, 4Bath, 4,608 ft, Built in 2005
Estimated Value Fall 2006: 1.05 Million. Asking Price Today: $499,900
Estimated ValueRange per Zillow: $399-595,000
Very middle of the road, but newer construction. Located quite a distance from business centers on the far North West part of Las Vegas. I believe this home will continue to decline in the existing market with tight credit and few jobs. Chance of selling at this price is not very good in my opinion.
Las Vegas Condo For Sale
1 Bedrooms, 1Bath, 520 sq ft, Pool, Built in 2006. Located Blocks from the Las Vegas Strip
Estimated Value Fall 2006: 510,000 Million. Asking Price Today: $500,000
Estimated ValueRange per Zillow: $157-250,000
Clearly not going to sell unless a real “sucker” comes along that is entirely clueless and has way to much money to throw away! This is nothing more than a glorified Hotel Room. Someone is going to eat it big time on this property. Talk about buyers remorse.
Who can afford these Las Vegas Homes?
We are talking of payments in the $2,200 to $2,500 a month range on fixed 30 year loans with 20% down ($100,000) and interest rates between 5 and 5.75%. You are going to have to have stellar credit and a very good job to afford these homes.
In the United States only 5% of the population earns over $100,000 per year. With an effective tax rate of 40% (Federal, FICA, Property, etc.) this leaves a buyer with an income of $60,000 or $5,000 per month. As a general rule a lender looks for payments to not exceed 35% of net income. So in this case the buyer still might have trouble qualifying because they would have 21,000 a year or $1,750 a month available but need to safely cover a payment as much as half of their income.
If you simply do the math you’ll see that 95% of buyers are not truly candidates to purchase these half million dollar homes. Yet there is nothing really special about them! Loaning money to people to purchase half million dollar Las Vegas Homes – people who clearly did not meet the criteria for repayment is why Las Vegas has the highest foreclosure rates in the country.
Disclaimer: I am not a Realtor. These properties are actually for sale at the
time of this writing. I am expressing my
own personal opinions on these properties.
The reality of what happens is totally up to the marketplace. GLVAR is the Greater Las Vegas Association of Realtors.
Pictures of Las Vegas Homes and Condos For Sale
Las Vegas Homes Update February 2011
Since I wrote this article in Las Vegas homes and how much $500,000 will buy about a year ago the overall market in Las Vegas has continued to decline. I spent a few hours recently looking at the more popular zip codes 89134, 89144, 89117, 89074, 89052, 89149, 89129 and a couple others including smaller upscale communities like Southern Highlands and McDonald Ranch within the 89012 zip code. My sources were Trulia, Zillow, and Realtor.com. What I found was that your half million dollars goes a bit further but people who are not at risk of foreclosure are still in a bit of fantasy bubble believing their Vegas Homes still have values from 5 years ago.
Before the big building boom in Las Vegas... back in about 1998 it was pretty tough finding any property selling for more than half a million. In fact I can remember touring homes out in Summerlin on the TPA Golf Course that were selling in that range and were approximately 5,000 square feet. Boy have times changed. There are plenty of listings on the market in excess of $1 million dollars still but they are for the most part just sitting. I've watched some homes drop over $500,000 off of 2005 prices still sitting empty. The fact of the matter is if you have half a million to spend on a Las Vegas Home you can pretty much shop till you drop and make your offers. It's definitely a buyers marketplace for he affluent. There is plenty of available inventory.
The prices of Las Vegas Homes across the board is declining not rising and with a dim economic forecast for the area you can expect more of the same in the coming years.