For Las Vegas homeowners, one of the few bright spots of the COVID-19 pandemic has been the remarkable rise in home values in the valley amid what was otherwise an economic tailspin.
But the spiraling cost of homes, which hit a record last month when the average resale price hit $363,000, carries with it a trend that is increasingly threatening our economy in the long-term.
As home values rise, affordable housing is becoming harder and harder to come by in Las Vegas.
That unfortunate fact is laid out in a new report from the U.K.-based firm Online Mortgage Advisor showing that housing affordability in Las Vegas has undergone the seventh-worst change in the world from 2016 through 2020. The study, based on comparisons of average gross incomes in communities and the per-square-foot cost of housing in those areas, showed that the average Las Vegas resident could afford to purchase about half as much space last year as they did in 2016.
The study is a bit too simplified — in comparing gross income, for instance, it doesn’t take into account the nuance that Nevada is a low-tax state — but it does offer evidence of a trend we can see and feel all around us. Wages haven’t been able to keep up with skyrocketing home values in recent years, putting a squeeze on affordable housing. That record $363,000 resale value from last month was nearly 65% above the level five years ago — $220,350 in the spring of 2016.
Meanwhile, business shutdowns and rampant layoffs over these past 12 months further ate into Las Vegans’ ability to afford housing.
Yet demand for housing in the valley has been scorchingly hot, fueled largely by an influx of California buyers and the wide availability of low-cost loans. Realtors are reporting cash buys of properties within hours after they’re listed.
That’s great for the sellers — thank goodness the housing market didn’t take a dive during this crisis like it did during the Great Recession — but it does increase the urgency for local, state and national leadership to address housing affordability.
Fortunately, there are several examples of leaders doing just that. The Biden administration’s $2.3 trillion infrastructure plan, for instance, includes $213 billion to preserve affordable housing and improve homes in middle- and low-income areas. Closer to home, February brought the announcement of an innovative new group of city and community leaders, including the Urban Chamber of Commerce, the National Association of Real Estate Brokers and AmeriFirst Financial Inc., who are working with a Utah-based real estate tech company to address an alarming Black homeownership gap in the valley. The new group, known as Coalition to Make Homes Possible, is offering free coaching and educational services in an attempt to boost equality in homeownership. Currently, 30.4% of Blacks own their own homes in the valley, compared with 61.2% of whites, according to the Urban Institute. That 30.8% gap is nearing rates last seen in the 1960s, when buyers of color faced legalized discrimination.
Efforts like these are vital to Las Vegas’ future. As we emerge from the wreckage of the pandemic, it’s critical to ensure that the working families who keep our economy up and running can comfortably afford to live here. Resort staff on the Strip, construction workers, service-industry employers — we must be able to attract and retain them in our community as we grow.
Unfortunately, we have a long way to go in that regard: The Nevada Housing Division’s latest Annual Housing Progress Report shows a shortage of 163,523 affordable housing units in Southern Nevada.
But with home prices showing no sign of leveling out and with thousands of Nevadans still hurting financially from the pandemic, reducing this shortage must be a top priority.