Starter home prices have more than doubled in Las Vegas in 10 years, report says

Starter home prices in the Las Vegas Valley have more than doubled in the past decade, according to a new report from Zillow.

The latest numbers from the online real estate marketplace paint a bleak picture for potential first-time homebuyers, as the price of a starter home in the valley sits at $312,141 in July, down 3.2 percent from the same month last year when it was $322,577. The median price for a starter home in the valley back in July 2016 was $140,630.

Starter homes are usually considered any home within the bottom third of pricing within a specific residential real estate market and are a homebuyers first purchase. They can range in size but usually are one to two bedrooms and can more frequently these days be condos or townhomes.

Zillow Senior Economist Kara Ng said the days of Las Vegas being a cheap place to live are clearly over, but the year-over-year drop may represent a light at the end of the tunnel.

“Historically, Las Vegas has been one of the most accessible housing markets in the West, a place where first-time buyers could actually get a foothold,” she said in an email. “And while starter home prices have more than doubled over the last decade, there are early signs of relief: prices are down about 3 percent from last year, a modest but meaningful shift for buyers who have been waiting on the sidelines.”

Residential real estate sales have bottomed out since a high point in 2022 during the COVID-19 pandemic as mortgage rates shot up with inflation. The residential market is locked across the country, as potential home sellers are unwilling to drop prices while buyers remain picky given the current economic climate.

Matt Hennessy, a local mortgage advisor, said the starter home market is being squeezed by high mortgage rates, which has cut buying power by roughly 30 percent compared to when rates were substantially lower during and before the pandemic. The average long-term fixed-rate mortgage in the U.S. is 6.65 percent, according to mortgage buyer Freddie Mac.

“The drop in Las Vegas starter home sales is less about waning demand and more about an affordability squeeze,” he said. “At the same time, inventory has moved to a more balanced three to four months supply. Qualified buyers who can make the numbers work have better negotiating leverage today than they did at the peak of the frenzy.”

Hennessy said he is telling first-time homebuyers now that while starter home sales are down, overall the residential real estate market is a buyer’s market, which offers some negotiating power.

“One of the most effective tools right now is negotiating a seller concession,” he said. “That simply means the seller agrees to contribute money toward the buyer’s closing costs. Instead of applying the seller concession strictly to closing costs, the buyer can use that money to drive down their interest rate and monthly payment.”