Has the Las Vegas real estate market stabilized?

Everyone would like to buy at the bottom of the market, after all those that do will see the most capital appreciation. So are we at the bottom of Las Vegas real estate pricing? That’s impossible to answer, and the wrong question to ask. As with stocks, the smart investors buy on the way up, not by speculating on whether we are at the bottom. The better question to consider is whether the market is showing any signs of stabilizing, and moving back up.

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If you asked this question in early 2010, you would have seen stable pricing for the prior year, and even signs of slight uptick in the summer. Many investors thought they were coming at the bottom at that time, only to find that prices declined yet further in 2011. There is a downwards trend line that started in 2007 and continues today. But there is clearly a deceleration in the decline, with the 2009-2011 rate of decline nothing like the 2007-2009 freefall.

So are the investors that bought in 2010 disappointed? Well if they bought right they have enjoyed an 8%+ net annual yield from the rental income on their property and will continue to do so year after year until they decide to sell. If they bought with a medium or long term view then they are likely comfortable to hold during this period of slow deceleration and wait for the market to improve. Buyers today with a similar mindset and time horizon have a greater chance of meeting their goals than those buying  in the expectation of a rapid increase, after all the fundamental driver of Las Vegas real estate value, the local economy, remains weak.

One interesting statistic of the 2011 year of decline is that more existing local homes were sold than during any other year on record. In total 48,186 local properties were sold in 2011, including 38,153 single-family homes and 10,033 condominiums and townhomes. If demand remains at its current high levels, or increases, then the market will eventually work through its distressed inventory, at which point upwards price pressure would have a surer footing…To read more subscribe via the box above.