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Can Home Values Dramatically Increase in a 2016?

by Administrator on Feb 8, 2016 Market Conditions Articles 1448 Views

Of course they can given the right circumstances, but as some homeowners discovered in the Las Vegas area boom in 2007 if your home increases in value by 100% it's difficult to take advantage of the increase because the entire market has likely increased by a similar amount.  So unless you are moving to another area your gain is a relative one. 

It's not difficult to imagine a situation where you find that your home value increases by 20% or more but the overall market also increased by 20% or more and if you sell it to move up, to buyer a better or larger home, you will have more money in your pocket but you may be farther from the amount that you needed as a down payment for the upgrade and farther from the income requirements to qualify for the new loan.

Home prices in Nevada started to strengthen in 2013 and now in the first quarter of 2016 that continued increase has slowed and possibly stalled. There have been a number of forecasts indicating that home and condo values will continue to increase in the short term future, but in early 2016 we have reached a plateau.  Las Vegas home values hit a high in 2007, that were nearly 40% higher than they are today, and we are a long way from our high value mark.

Las Vegas home sales statistics in 2016 revealed that home foreclosures have fallen to about 10% of total market sales which is down from a high of nearly 25%. Thus REO and short sales are becoming a much smaller part of the market and that bodes well for the future health of the market.

The recent Federal Reserve interest rate increase was modest and in all likelihood it and a few small follow up increases will not negatively impact housing affordability.  Continued upward interest rate moves by the Fed, in my opinion, could cause a housing market slow down.  It’s unlikely that the Fed will follow the path of continued increases beyond a total of 1.0% increase through 2016.

Home affordability is not only affected by interest rate increases or decreases it's also influenced by the cost of housing and changes in household income.  Nevada is ranked 27th by median household income and median household income in 2014 was near $ 51,000 a slight decline in from the previous year.  While an official release of a median household income statistic for 2015 won't occur until 2016 it's likely based on other statistics and historical data that the change will again be nominal.

The supply and demand for housing usually defines a real estate market and population is an important demand factor in it.  While Las Vegas has seen continued population increases over the last few years the increases have been modest.  The in-migration of residents to Nevada in early 2016 has not heavily influenced demand. 
Without a strong upward movement in population and strong increases in household income it's difficult to imagine that housing prices in Las Vegas will move up without their being affordability issues.  Housing demand softens when housing prices move up too far, small increases can be tolerated but large housing price increases slow demand.  While dramatic home price increases can occur they are unlikely given slow net population increases and anemic household incomes. 

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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