Fitch Ratings, one of the “Big 3” providers of credit ratings, research, and commentary, recently indicated that Las Vegas, NV had the highest percentage of overvalued home prices in the country during Q1 2018.
Take a look:
– Las Vegas – +20-24%
– Phoenix – +10-14%
– Portland – +15-19%
– Seattle – +10-14%
– Several major cities in Texas – 10-14%
Fitch Ratings’ June 13 2018 report said that the price growth rate in these areas is 2X – 3X faster than the growth rates in rents or income during Q1 2018.
Fitch analyst Grant Brady indicated that Fitch looks at unemployment rates, financial income, rent levels and mortgage interest rates. He said that home prices in Las Vegas have caused “prices to overshoot…with no sign of slowing down but instead accelerating.”
In May 2018, the median price for a home in Las Vegas stood at $295,000, +18% higher than last year. In May 2017, the median home price in Las Vegas was up 9% y/y. Going back to 2006, the median resale price of a single-family home peaked at $315,000…with this current accelerating pattern, that peak price could be reached this year.
Chris Bishop, president of the Greater Las Vegas Association of REALTORS® and broker with Coldwell Banker Premier Realty, said, “Fitch’s conclusions make no sense at all.” Las Vegas has a shrunken unemployment rate of 5%, down from 14%, a pipeline of projects scheduled on the Vegas Strip and high buyer demand.
Bishop continued, “We don’t have any inventory of houses but still, 46,000 homes were sold here in 2017, the 3rd highest tally on record. We have consumers all day long, ready, willing and able to purchase homes in southern Nevada.”
Bishop was asked whether or not home prices in Las Vegas were inflated. He responded by saying, “prices would be inflated if there was nothing substantial in our economy to back up those prices. But our economy has several substantial things going for it. Are our home prices inflated? I’m not an economist.”
