Sunday, May 25, 2014 | 2:01 a.m.
Las Vegas' housing market has been on a stomach-turning roller coaster ride for a decade.
Home prices soared to absurd heights during the bubble, crashed hard and fast during the recession, then rose from the garbage heap at one of the fastest rates nationally.
Now, for the first time in years, the market is showing hints of normalcy.
Property values are expected to continue to rise in the coming months but at a smaller, more sustainable rate. Short sales and sales of bank-owned homes, each of which comprised almost half of all deals in recent years, aren't nearly as common. Foreclosure filings and the number of underwater homeowners have plunged.
The market is far from stable, though. Las Vegas still has the highest share of upside-down borrowers in the country, and Nevada has the eighth-highest foreclosure rate. New-home sales are plunging this year after a big rebound in 2013.
Moreover, previous forecasts of a slowdown have proved wildly wrong. In mid-2012, Zillow analysts predicted that local home values would rise just 1.4 percent over the next year. They skyrocketed almost 30 percent.
So is now the time to buy? Or sell? Or pull out of real estate altogether and rent?
That depends on what your goals and priorities are – and like many things in Vegas, how much you are willing to gamble.
BUYING A HOME
Why it might be a good time:
Affordability: Although used-home prices have soared 63 percent since early 2012, houses here still are more affordable than in other big cities. The average previously-owned single-family home in Las Vegas sold for $192,000 in April; the national median was $201,100. Moreover, a typical valley household has to spend just 15 percent of its income to afford a mortgage, compared with 18 percent in Denver, 39 percent in San Francisco and 40 percent in Los Angeles.
Low borrowing costs: Borrowing costs are on the upswing but remain historically low. The average interest rate for a 30-year mortgage in April was 4.3 percent, up from 3.5 percent a year ago but down from 8.2 percent in spring 2000. In 1990, it was 10.4 percent and in 1980, a whopping 16.3 percent.
Lenders loosening lockdown: If you have good credit, obtaining a loan is getting easier. Mortgage lenders are opening their vaults again, with banks expected to lend $723 billion this year for home purchases. That's up 9 percent from 2013.
Owning can be cheaper: Owning a house becomes cheaper than renting one faster in the valley than in most other cities. Southern Nevada's "breakeven horizon" — the time it takes until owning a home becomes less expensive than leasing — is just 1.5 years. In Washington, D.C., for example, it is 4.2 years.
Choices: There are more houses to choose from. The valley's once-tight inventory is loosening. In April, there were 6,420 used homes on the market without offers, more than twice the number a year earlier.
Home values set to increase: Home values are expected to rise 6 percent by next spring.
Why it might be a bad time:
You're tied to the area: If you aren't sure you'll stay put in Las Vegas, now might not be the time to buy. If you sell in the next year, home prices may have only inched higher, meaning you won't make much money, if any.
Sellers holding out for better offers: You may not get a great deal. Sellers, emboldened by the rebound, have been getting greedy and may not budge on low offers. A key reason the number of homes without offers has soared recently is because owners want too much money for their properties, brokers say.
Bad credit abounds: Despite increased lending, you may not qualify for a mortgage. Nevadans have some of the worst personal finances in the country, and the bankruptcies and foreclosures that plagued the valley have made it impossible for many people to get a loan. As banks have smartened up, they now frequently require hefty down payments of 15 percent or more. During the boom, people could buy homes with little or no money down.
Rental deals can still be found: You might be able to rent a refurbished house for a song. Many investors bought houses in bulk to turn into rentals after the bubble burst, and a glut of homes-for-rent has pushed leasing rates down.
SELLING A HOME
Why it might be a good time to sell
Rising property values: If you've been underwater, rising property values may mean you finally can sell without being forced to get bank approval for a short sale. Thirty four percent of local homeowners with mortgages now owe more than their homes are worth, down from a peak of 71 percent two years ago.
Chance to cut losses: This might be your best to chance to make a profit if you bought when the market was down or to minimize your losses on a bloated, boom-era purchase. If you paid, say, $400,000 for your house in 2006, it might be worth $200,000 now — but that's better than the $120,000 it was worth in 2009.
Better odds of finding a buyer: As the economy slowly improves, hotel, retail and other projects are popping up on the Strip and beyond. Job growth means more people might be house hunting, improving your odds of finding a buyer.
Escaping underwater status: If you've been itching to leave Las Vegas, now might be your chance. Some homeowners say they'd leave the area if they could escape underwater status and sell their homes.
Why now might be a bad time to sell
Investors are scaling back: Sellers who hope to find investors to swoop in and pay cash for homes might be disappointed. Investors have been scaling back on local purchases, and those who remain are looking for deals. They are bargain hunters and often buy in the $60,000-$80,000 range. Anything pricier squeezes their profits and loses their interest.
Flooded market: A rising inventory of homes without offers means there are more options for buyers and more competition for sellers.
Short sale process is long: If you have to do a short sale, it can be a months-long, hair-pulling process that can get derailed at any time.
RENTING A HOME
Why now might be a good time to rent
Plenty of options: A glut of available rental homes means there are plenty of options for renters, and deals are sure to be had. You might be able to land a choice property for a bargain price.
No buyer's remorse: You won't beat yourself up about when you bought, why you sold and the money you may have lost.
Less risk: If the market crashes again, you won't drown underwater or lose your home to foreclosure.
If it's your only option: Renting may be your only option if you can't afford rising prices or can't qualify for a mortgage. People with credit scores below 620 — 28 percent of Americans — are unlikely to qualify for a mortgage today, even with a high down payment. And banks typically won't lend to someone if they've had a bankruptcy in the past two to five years or a foreclosure within one to seven years.
No maintenance concerns: As in any city, if you rent in Las Vegas, you typically won't pay for maintenance, repairs or homeowners association fees. Better yet, you won't have to sit around all day waiting for a plumber – your landlord or manager will.
Why now might be a bad time to rent
Remodeling limits: Like anywhere, renters are beholden to property owners so you can't overhaul a kitchen or bathroom or paint a room to your liking.
Not an investment: You aren't building equity. When you move out, you will have spent thousands of dollars on rent and have nothing to show for it.
Buying is sometimes cheaper: It is relatively cheap to buy a house in Las Vegas. Owning a home in the valley becomes cheaper than renting one after only a year and a half.
You missed the bottom: If home prices soar again, you can't sell and capitalize on the boom.
No maintenance concerns: You might not find a rental you like or can afford. The valley has few affordable apartment complexes with above-average amenities. It has a large number of low-priced, low-quality apartment complexes and a smaller number of luxury buildings, but they cost a fortune.
WHAT ABOUT NEW BUILDS
After the carnage of the recession, homebuilders bounced back strong in 2012 and 2013. Sales increased, development resumed, and prices rebounded.
But so far, 2014 is not looking so good.
Sales fell 25 percent through April compared with the year before, and permits dropped 19 percent, according to Home Builders Research, which tracks the new homes market.
While Las Vegas' broader economy seems to be improving, the new housing market is in a slump.
Local builders sold almost 39,000 new homes in 2005 during the peak of the housing bubble but just 3,900 in 2011. Developers sold 5,500 homes in 2012 and 7,300 last year.
But sales are falling again this year as interest rates, though still historically low, creep higher, making borrowing costs more expensive for buyers.
And many buyers could be having sticker shock, as the median sales price of April's closings was up 20 percent from a year ago to $287,000.
Dennis Smith, president of Home Builders Research, said the slowdown highlights the big year builders had in 2013, when sales roared through the summer. They began to taper off later in the year.
And though Smith expects builders to ramp up development plans this year, he doesn't anticipate a big change in sales volume, with a prediction of only about 5,000 new home sales.
Developers could sell as many as 20,000 new homes a year, he said, but the local economy needs a major boost to get there.
"We'd need another CityCenter and a couple of MGM Grands going up," he said.