If you are thinking about buying a home in Las Vegas, be it Southern Highlands, Tournament Hills, or any other Las Vegas area community, you are not alone. According to data from Redfin, Las Vegas was the third most popular migration destination in 2021 behind only Phoenix and Miami. The cost of living here is approximately 30% lower than in Los Angeles, which is a major reason why so many Californians are flocking to southern Nevada.

The Las Vegas area certainly has a lot to offer. In addition to being the entertainment capital of the world, several large companies have headquarters or major offices in this area, which powers a robust job market. The favorable climate also makes Las Vegas a popular choice for retirees.

When Should I Buy a Home in Las Vegas?

Since none of us possess a crystal ball, trying to “time” the housing market is a futile exercise. Ultimately, the answer to whether you should act now or wait it out will depend on your specific circumstances. All of that said, there are some factors that all prospective home buyers should consider as they decide which way to go:

1. State of the Las Vegas Housing Market

In recent years, Las Vegas has consistently been among the hottest real estate markets in the country. In 2022, things slowed down a bit, but this is still a very strong market in comparison to historical norms. The big looming question is whether or not this is going to continue.

Many experts believe that the US is already in a recession, while others are predicting steeper economic declines in 2023. Will this translate into a 2008-like crash in the housing market? That question is impossible to answer with any certainty because there are too many variables that could cause or contribute to a crash or keep the market stable.

One thing that should always be considered when it comes to the Las Vegas housing market specifically is the strong demand that has been driven by the continual influx of Californians relocating here. As we talked about earlier, Las Vegas has a significantly lower cost of living than Los Angeles, and as long as this is the case, it is likely that the Vegas housing market will not be hurt as badly if there is a nationwide crash.

2. Housing Inventory (i.e., Supply and Demand)

During the red-hot sellers’ market of the past few years, the inventory of available homes for sale in Las Vegas was consistently very low. A diminished supply with robust demand results in bidding wars that drive home prices higher. On the other end of the spectrum, a higher inventory with lower demand gives buyers an edge and allows them to potentially get a good deal on a property.

Which type of market do you prefer? If it is a sellers’ market, you will need to be ready to move quickly and put down a good offer in order to secure the home you want. The benefit of buying during a market like this is that the value of your home is likely to appreciate more quickly.

In a buyers’ market, you can afford to shop around and take your time deciding which house you want, which is far less stressful. The downside of course is that you are not likely to see a lot of equity built up on your house in the near term, at least not from home value appreciation.

3. Mortgage Interest Rates

Mortgage rates have been all over the place this year. As we close out 2022, we are looking at rates in the Las Vegas market of between 6% and 7% for a 30-year fixed-rate mortgage. This is considerably higher than the record lows of around 3% or less that we were seeing over the past few years, but historically speaking, these rates are still pretty decent.

To help answer the question of when to buy a home, it is important to consider where mortgage interest rates are likely to be a year from now. This year, the Federal Reserve has raised the prime rate nearly every time they have met, and as long as inflation persists, they show no signs of easing up on these rate hikes. 

While the Fed Funds rate is not the only factor that affects mortgage rates, more rate increases can only put upward pressure on rates for mortgages. If you believe that mortgage interest rates are going to keep rising, then it may be better to buy now before they go higher.

4. Your Personal Finances

By far, the most important factor in buying a home in Las Vegas is your personal situation. More specifically, does it make good financial sense for you to buy a home now? Or is it better for you to wait?

Within these questions, there are several things to look at:

• Overall income. Can you afford to buy a home in Las Vegas based on your income? If you do not have an adequate income, then there is no reason to even consider buying now, because you won’t be able to make your payments and you will likely end up losing the house. 
• Debt-to-income (DTI) ratio. Related to the first point, what are your current debt obligations as a percentage of your overall income? This would include car loans, credit cards, personal loans, and any other debts you may have. Most conventional mortgage lenders look for a DTI ratio of around 45% and no higher than 50%.
• Credit score. Do you have a good to excellent credit score? A FICO score of 670 or higher puts you in the “good” range, which means you should be able to qualify for some of the most competitive mortgage rates on the market. If your score is lower than 670, you might want to consider waiting until you are able to increase it, although there are options for buyers with lower credit scores, such as FHA and VA loans.
• Current living status. Do you currently own or rent the place where you are living now? Do you currently live in the Las Vegas area or are you moving from another part of the state or from out of state? All of these questions will factor into your decision on whether to buy a home now or wait.
• Your long-term plans. Finally, for how long do you expect to own a home in Las Vegas? Do you see yourself moving out of the area in three to five years? Or do you expect to stay here for a decade or longer? 

If you are looking to stay longer, you will be happy to know that buying a home in Las Vegas is considered a good long-term real estate investment. According to research from UNLV, Clark County is expected to add approximately 700,000 residents by 2040, and the University is projecting that several hundred thousand jobs will be added in the coming years as well.

Interested in Buying a Home in Las Vegas? Contact the Knoch Group to Discuss Your Situation

The question of whether to buy a home in the Las Vegas area right now or wait for a while is one that only you can answer. If you are considering getting into the Vegas housing market sometime in the near future, Ryan Knoch of The Knoch Group is here to help you with your decision. 

Ryan is one of the top luxury home brokers in Las Vegas, and he has an in-depth understanding of this market and the most important factors that a prospective buyer should be considering. Call our office today or send us an online message to speak with Ryan about your situation.

Ryan Knoch is a Las Vegas real estate broker and member of Las Vegas REALTORS® and National Association of REALTORS®. He provides skilled guidance on the purchase and sale of Las Vegas homes and is a resource for all other real estate matters. To schedule a consultation, call Ryan Knoch today at (702) 303-7946 or email him at ryan@theknochgroupre.com.