Why NOW is the best time to buy your home
Las Vegas real estate has been in demand for a very long-standing time. Since the start of the century, Las Vegas home sales have shown a constant rise, and therefore the current market solely sustains a five to six-week stream of obtainable homes at any time throughout the year. But, like any statistics, those numbers are averages and there are times of great activity and then times when the housing demand falls off a slightly.
The amount of foreclosures within Las Vegas real estate market is 16 percent higher than it had been at a similar time last year. Even so, the discount these properties give has really amplified similarly. Those curious about Las Vegas real estate investing will notice that these deals supply the best spreads within the city.
To determine the most affordable time to buy, NerdWallet analyzed the past two years’ worth of listings and sales in the 50 most populous U.S. metro areas using data from Realtor.com. See our full methodology. We found that home sale prices — the amount a buyer actually pays — in the nation’s largest metro areas typically peak during the summer, dip in the fall and are lowest in winter, potentially saving off-peak buyers thousands of dollars.
The majority of distressed properties in Las Vegas are simply at risk of being repossessed because of the owner’s inability to pay their mortgage obligations. At 50.4 percent of the distressed market, this is a large pool for Las Vegas real estate investing to target. Another 30 percent is to be placed up for auction, and the remaining 15.5 percent are all sitting on banks’ books as non-performing loans.
For all intents and purposes, Las Vegas real estate investing and home ownership are benefiting from a healthy market. Fundamentals are strong, and sales growth appears to be even stronger.
What about home buyers? When is it the best time to buy?
Buying a home for the first time is an exciting and important milestone for many Americans. As such, first-time home buyers must carefully consider a number of factors — what they want and need relative to what they can afford, for instance — before diving into the deep end of real estate.
Zillow recently named Las Vegas as the fourth best market for first-time homebuyers. The prominent real estate valuation site based its data on income, growth in home values and the number of entry-level homes on the market.
Often, potential buyers begin searching for their dream homes and drafting their wish lists without a realistic idea of market prices, interest rates or even their eligibility to obtain a mortgage.
For home buyers. The best time to buy a home is late summer when there are the most options and frequent price cuts.
As summer approaches, overall inventory of homes for sale is down 5.3 percent from a year ago, signaling another competitive home shopping season for buyers this year. Even in markets that have seen a recent uptick in the number of homes for sale, inventory is still well below the levels of five years ago.
Summer is traditionally the high season for real estate transactions. Extended sunlight hours, vacation days can be negotiated, children are out of school, these all add to the peak in real estate transactions. You will see report after report of housing activity based on summer months because usually, the numbers are positive.
But what happens when those sun-lit hours start to diminish? The calendar is counting more days past than future for the year, and that affects seller mentality. The holidays are rapidly approaching, the kids are back in school, and vacation time on the beach is over. Yikes. That could be a tough position for homes on the market, but conversely a great time for buyers.
But buyers seeking the best time to buy — looking to hit the market both when selection is good and deals are abundant — should remember that patience is a virtue and consider opening their home shopping window in late summer instead, according to a Zillow analysis of listing and price data from 2016.
Certainly, if you’re a buyer interested only in finding the most homes listed for sale, spring is the time to shop and make an offer. More new listings hit the market nationwide in April of last year than in any other month, and in almost every large housing market last year, buyers were offered the newest selection in April, May or June. This springtime pattern is even more extreme in markets with harsher winters: In Chicago and Minneapolis, for example, almost twice as many homes are listed in May and June as in December and January. More temperate markets, like Miami and Tampa, have barely any noticeable seasonal pattern at all.
And the fierce competition that bites buyers in Spring comes full circle and begins to squeeze sellers in the summer. Sellers, wary of the impending return of cold weather, school and all the other factors that annually signal the end of the spring/summer home shopping season, begin to worry about selling their home this season instead of having to relist and try again next year. The competition with all those other lingering listings leads many sellers to slash prices in late summer and early fall in hopes of finally attracting a buyer. In almost every large market analyzed, the highest share of listings with at least one price reduction was in August and September of last year.
Buying a Las Vegas Home in the Fall
RealtyTrac analysts have determined October is the best month for buyers to close the deal on a home. October buyers get an average 2.6% discount below estimated market value.
Here are lists of conspiracy theories for why fall is the best season to buy Las Vegas real estate
LESS COMPETITION
In our observations over the years, buyers tend to come into the market hard in the early spring. It might be spring fever, or possibly a desire to get a jump-start on open houses, but for whatever reason, they are like worker bees in a field of flowers. This notable trend continues throughout the summer months.
When kids return to school, buyer competition gets on the bus with the students. Even for buyers minus school-aged offspring, the fall months seem to send them into hibernation. This void in buyer traffic opens the housing door to the hearty real estate hunters. Less foot traffic in listed domiciles sends sellers a message that it’s time to do what it takes to get their property sold.
Another fun bit of trivia for the fall months is that sports season is in full-court-press mode. Professional sports teams are back on the fields, or courts, or ice, and that means a plethora of sports programming on television. It’s challenging to find a day where some sporting event, golf even, fails to appear on televisions across the country in the fall.
Sports season also relates to youngsters back on the field or court. College football games kick off on most Tuesdays, Thursdays, and Saturdays during the Autumn months. Then you have high schools sports and activities revolving around those obligations. Add all of these events together and you’ll see how buyers can be distracted during the latter part of the year.
Affordability
Although used-home prices have soared 63 percent since early 2012, houses here still are more affordable than in other big cities. The average previously-owned single-family home in Las Vegas sold for $192,000 in April; the national median was $201,100. Moreover, a typical valley household has to spend just 15 percent of its income to afford a mortgage, compared with 18 percent in Denver, 39 percent in San Francisco and 40 percent in Los Angeles.
Low borrowing costs
Borrowing costs are on the upswing but remain historically low. The average interest rate for a 30-year mortgage in April was 4.3 percent, up from 3.5 percent a year ago but down from 8.2 percent in spring 2000. In 1990, it was 10.4 percent and in 1980, a whopping 16.3 percent.
Lenders loosening lockdown
If you have good credit, obtaining a loan is getting easier. Mortgage lenders are opening their vaults again, with banks expected to lend $723 billion this year for home purchases. That’s up 9 percent from 2013.
Owning can be cheaper
Owning a house becomes cheaper than renting one faster in the valley than in most other cities. Southern Nevada’s “breakeven horizon” — the time it takes until owning a home becomes less expensive than leasing — is just 1.5 years. In Washington, D.C., for example, it is 4.2 years.
Choices
There are more houses to choose from. The valley’s once-tight inventory is loosening. In April, there were 6,420 used homes on the market without offers, more than twice the number a year earlier.
Home values set to increase
Home values are expected to rise 6 percent by next spring.
TAX CREDITS
Those beginning mortgage payments are primarily interest payments, with a small percentage applied to the principal portion of the loan. While this is painful to read, the good news is that you get to deduct that interest from your tax bill. If you buy a house in October, you have three months of interest payments to apply to your tax returns the following April.
MOTIVATED SELLERS
For the same reasons buyers want in, the sellers want out. They have kids in school, year-end work deadlines, a basic human need to watch sports on their own couch, or they want to be finished packing before the holiday rush. Whatever the reason, sellers tend to be more motivated to negotiate after the summer high season has expired. A motivated seller means a good deal for a buyer.
Would other key people in the equation, such as realtors and mortgage brokers, also be scarce?
They say they get a lot of business done because the people who are out looking are serious. As a buyer, your broker will have more time to focus on you, as opposed to other times of the year when they might be juggling more clients. You may not be able to close before the end of the year, but it’s a good time to get something under contract.
Could a home buyer miss or overlook something?
Buying in winter may be the ultimate litmus test for a home since all the big systems such as heating, plumbing and the roof and gutters are put to the test in the cold. Some of the curb appeals may be gone, but fixing to landscape is a lot less expensive than finding out months later that your boiler doesn’t work.
Why it might be a bad time
You’re tied to the area: If you aren’t sure you’ll stay put in Las Vegas, now might not be the time to buy. If you sell in the next year, home prices may have only inched higher, meaning you won’t make much money, if any.
Sellers holding out for better offers
You may not get a great deal. Sellers, emboldened by the rebound, have been getting greedy and may not budge on low offers. A key reason the number of homes without offers has soared recently is that owners want too much money for their properties, brokers say.
Bad credit abounds
Despite increased lending, you may not qualify for a mortgage. Nevadans have some of the worst personal finances in the country, and the bankruptcies and foreclosures that plagued the valley have made it impossible for many people to get a loan. As banks have smartened up, they now frequently require hefty down payments of 15 percent or more. During the boom, people could buy homes with little or no money down.
Rental deals can still be found
You might be able to rent a refurbished house for a song. Many investors bought houses in bulk to turn into rentals after the bubble burst, and a glut of homes-for-rent has pushed leasing rates down.
For those not interested in living the suite life at a casino, U.S. News queried two of the top real estate agents in Las Vegas for advice on finding and purchasing a home for the first time in Las Vegas.
Do your map-work.
It’s a big place. From Summerlin on the west side to classic east side neighborhoods such as Paradise Palms and from Henderson in the south to North Las Vegas, figuring out the right spot for you will take a little homework.
To narrow down your options, start with the basic question: What do I want to be close to? Is the answer work, good schools, the airport or nightlife? Once you know what is most important to you, an experienced agent can point you to additional resources for finding out your ideal home base.
Understand what your budget can get you.
Depending on your perspective, Las Vegas real estate can either be a homebuyer’s dream, or it can cause sticker shock.
If you’re anticipating a hyper competitive bidding war and pressure to act quickly, take a deep breath and relax. Although you always want to be prepared to make an offer when you see something you like, in Las Vegas, you will typically not be competing with multiple offers. (Always ask your agent to find out if there are other offers.) Plus, your money will likely get you more in terms of square footage and quality than it would in pricier markets.
Familiarize yourself with the condo market.
Condos are an option, but you should know that they are harder to finance than homes in Las Vegas. “You might see the $200,000 condo is perfect for your budget, but good luck on getting a loan,” says Allison Jung, a Realtor with Universal Realty Inc. While a loan for a house may require only 3 percent down, it is not uncommon for a loan on a condo to require 25 percent.
Be prepared to renovate if you’re after the character.
If you imagine yourself in a gated community with a fine-tuned homeowner’s association, you’re in luck because Las Vegas has plenty. But if you’re dead-set on a house with charm or loathe HOAs, you should develop an appreciation for mid-century and desert modern architecture, and get ready to renovate.
Neighborhoods like Paradise Palms, the Scotch 80s, and McNeil Estates offer unique homes, but many have not been updated over the years. In Vegas, people tend to buy a house, own it for 20 to 30 years, and then when the neighborhood starts to change, they just move farther out instead of spending the money and fixing the house.
Know how to sweeten your offer.
Many first-time buyers in the Las Vegas market will be looking at houses in the $150,000 to $200,000 range. This happens to be the range that is also attractive to cash investors – buyers, typically from out of town, who plan to rent or flip the property and who pay in cash. Common in Las Vegas, cash investors can be more appealing to sellers because they can close deals quickly and without appraisal contingencies.
For home sellers, when you examine each of the four seasons in Las Vegas, you do start to see trends that help to determine the best time of year to sell a house in the desert. Now that the national economy is slowly recovering from the recent recession, home sellers can expect to get more from their properties when they sell at the right time.
Winter
Las Vegas real estate, despite the recent rise in home sales that started 5 years ago, tends to follow the same trends as other markets around the country. Winter is the worst time to try and sell a house because the housing demand is so low. For the most part, people avoid moving into a new home in the winter, and the holiday season also tends to deter people from putting in offers.
While most people avoid moving into a new home in the winter, there still tends to be steady traffic into Las Vegas during the winter with people looking for new homes. Since many people avoid putting up their homes for sale in Las Vegas during the winter, you can use that as a reason to turn the winter in the best time of year to sell a house in Las Vegas.
Spring
In April and early May, the housing demand in the Las Vegas real estate market is just coming out of hibernation, but this is still not a great time to put your house up for sale. Early spring is when people are still deciding if they want to make a move and it also tends to slow down business on the Las Vegas Strip. Once June rolls around, then it is time to put your house on the market and get your best-selling price.
Summer
June through August is the best time of year to sell a house in Las Vegas for a couple of reasons. Despite the heat in the desert, the summer is the most popular time for people to visit Las Vegas. There is a frenzy of activity throughout the city, and this is also a time of year when the newest residents decide to move to Las Vegas from outside the area. The Las Vegas Sun estimates that as many as 5,000 people per month move into the Las Vegas area and the summer months tends to see more.
Fall
Fall is the time of year when the city of Las Vegas sees a lot of business conventions and a lot of people deciding to move into the area to pursue a new life. Traditionally, September has been a great month to sell a house because the beginning of fall tends to put a spike in housing demand in the Las Vegas real estate market.
The month of October also tends to rank as in the category of the best time of year to sell a house because the cooling weather seems to get people into a buying mood. In Las Vegas, it is always the best time of year to sell a house. But in the fall, you will see an influx of snowbirds from the East Coast who are trying to close on their Las Vegas dream home before the snow starts flying in their current city.
In Conclusion
Really, if you’ve saved up for a down payment, have a good, stable job and you really want a house, then there’s little reason to procrastinate. We know where the economy and the housing market is today, but we can’t always predict the future. Waiting another year, or possibly two could mean an entirely different climate in our housing market.
But don’t rush to buy your home if you aren’t ready. Common sense should tell you that a mad dash to take out a loan you’re not financially ready for will create as many monetary headaches, and probably more, than waiting several years until you’re in a good place but possibly paying a higher interest rate. And maybe the interest rate won’t be higher, or much higher. We can’t predict the future. So do your homework and check with family or friends who have been through this process already, then take notes.