Las Vegas has seen many cash sales in recent years.
After being hit hard by the Great Recession, the Las Vegas housing market became an ideal market for investors. Home values dipped, which opened the door to real estate investors ready to buy with cash-in-hand. For the last few years, cash sales constituted the majority of home purchases in Las Vegas. They still do, even with the market recovering, but that’s about to change—which is good news for homebuyers and homeowners alike.
The Good, the Bad, and the Future of Cash Sales
Cash sales, especially in Las Vegas, have earned a negative reputation among homebuyers. In markets with high cash sales, it isn’t uncommon to find a home you’re ready to buy, secure financing, and make a solid bid when a cash investor swoops in and purchases the property. Homeowners tend to like selling to investors because cash sales expedite the process. If investors are interested in a property, it often signals that the homeowner is in a bind and needs to sell soon. Cash sales are a hard reality for first-time homebuyers, who are also interested in these lower priced properties. However, cash purchases are ultimately a good sign for the market.
Cash sales often signal the beginning of a housing market recovery, because they reveal that investors expect home values to increase. If investors are confident enough in the market to put capital on the line, there’s a good chance home values are about to increase. This means any homebuyer, technically, will be an investor if they purchase in time to catch the wave of market growth. Cash sales can make it harder for some people to enter the market, but they signal when it’s time to buy—and they help boost the market, even when it’s struggling.
FOXBusiness recently reported that 50.7% of all Las Vegas homes sold in the second quarter of 2014 were purchased with cash. That’s a sizable figure, still technically a majority of home sales and above the national average, but it’s down from previous quarters, and current figures show greater drops. The Greater Las Vegas Association of Realtors reported that by the end of the summer, only about a third of Las Vegas homes were purchased with cash. The drop is expected to continue and level out around 30%, opening up more opportunities for non-investor homebuyers to find and bid on properties.
Las Vegas Housing Market Back to “Normal”
The reason for the recent decrease in cash sales is an increase in average home values, which means the market is back to normal. Nevada foreclosures have decreased significantly over the past year, decreasing the number of short sales. With inventory tightening too, the profit margin for investors has shrunk, so they’re moving on to other housing markets in America. This recovery is good news for anyone who owns a Las Vegas home—and any non-investor who’s ready to enter the real estate market.
A Better Market for Home-Buyers—and Sellers
Homeowners are obviously benefiting from this recovery, because their home values are increasing. The number of underwater mortgages will continue to diminish, and selling a home is more profitable than when investors flocked to the area.
Sellers have to grapple with higher price tags on listings, but the chance of being outbid by an investor has decreased significantly. It also means that a home purchased in Las Vegas is poised to appreciate steadily. With the Nevada real estate market recovering, homeowners will see fewer spikes in home values, but they’re also inheriting less risk of a decrease. Navigating the tighter inventory means buyers should strategize and choose between new or older homes, but the value of whichever they decide should continue to increase for the foreseeable future.
If you’ve been wanting to buy a Las Vegas home but felt deterred by cash sales, the time to purchase is now! To learn more about local mortgage rates, fill out our Fast Response form or call our Las Vegas branch at (702) 669-5400. To gain an estimate the kind of home you can afford, utilize our mortgage calculator to estimate monthly payments. We look forward to hearing from you!
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