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Las Vegas Valley Has More Renters Than Owners

Home ownership in the Las Vegas Valley is now at 48% which is down from a high of 64% in 2000.  This is according the US census.

Most experts predict that this number will continue to fall even though home prices and mortgage rates make it far less expensive to own than to rent.

About half of the homes that have been purchased in the past 2 years have been all cash transactions and these will also likely end up as rentals, as they are being purchased by mostly investors.

Decline in home ownership is largely the result of a historic economic downturn and the resulting credit challenges for consumers. Relatively speaking, we have low prices relative to income. Consumers have a problem with credit, not cash flow, which suggests growth in the share of renters over the next five years according to Jeremy Aguero, principal analyst with Las Vegas-based Applied Analysis.

Renters have gone up considerably in the market due to people losing their home from foreclosure and short sale, and they can’t get a loan again for a couple of years, and with so many investors coming in and buying.

A  combination of record-low home prices and lending costs have made buying a home relatively cheaper than renting in nearly 100 major U.S. metro areas, including 11th-ranked Las Vegas, according to Discovery Bay, Calif.-based Trulia.com, an online listing service.

Trulia calculates the price-to-rent ratio for 100 major U.S. metros by estimating the ratio of asking sales prices to asking rents, adjusting for attributes of the properties and their locations. A home with an asking sales price of $200,000 and monthly rent of $1,500 would produce $18,000 in annual rent, for a price-to-rent ratio of 11.

Anything under 15 indicates that buying a home is a better deal than renting for people planning to live in a home for at least five years. Even if the buyer plans to live in the home for less than five years, buying could be a better deal if the index is 10 or less, depending on moving and closing costs.

Las Vegas currently has a price-to-rent ratio of 7.0.

This makes it a great time to buy if you are able to get financing.  That is one of the major reasons we have so many renters in the current market.  Financing is still a big problem for many would be homeowners.  With the tight lending restrictions many people that want to purchase are not able to get a loan that will work for their current financial situation.

The average credit score required to obtain a mortgage loan is 700. It’s higher than scores required before the mortgage crisis, but constant with requirements a year ago.

While indicators in the Las Vegas Valley point to a continued decline in home ownership, there are indications that a loosening of credit availability may help slow the trend. Banks are lending amounts up to 3.5 times borrower earnings. That’s up from a low during the crisis of 3.2 times borrower earnings.

OWNER VS. RENTER

Land use Owners Renters
Single family 289,962 190,782
Duplex 1,409 2,185
Triplex 480 566
Fourplex 6,398 7,410
Apartments 39,112 134,450
Townhomes 23,000 18,360
Condos 27,361 54,830
Mobile 6,289 18,424
Other 71 397
Total 394,082 427,404

Source: Applied Analysis

For more information on this topic, please click here; http://www.lvrj.com/business/more-in-las-vegas-now-rent-than-own-144074176.html

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