Home Buying in Nevada

Nevada is a state of hidden wonders and big skies. The Silver State was built on mining, but in today's media-saturated landscape, that legacy has been overtaken by the twinkling neon of casinos.

The median home selling price in urban areas of Nevada is $455,000 in 2024, above the country's average price of $420,000 but about $100,000 less than in neighboring Utah. In Carson City, the median listing price is $550,000. Even in unincorporated Pahrump, home prices average $419,000. In some areas, home prices have increased by 8 percent per year, and price inflation is blamed on a shortage of available homes. Several factors contribute to a short inventory situation, including too few new homes under construction and longtime homeowners with low-interest rate mortgages who don't want to sell their homes because their next mortgage would be more expensive. In Las Vegas, developers complain there isn't enough land available to build new homes.

A national magazine ranked Nevada's quality of life 33rd out of 50 states. It scored high on infrastructure and economy, but poorly on crime and the natural environment (pollution). The state's cost of living is low, and job opportunities are good. Individuals make about $36,000 on average in Nevada, and couples make $71,000.

In a national poll, Nevada residents rated housing issues among their top four concerns. Half of Nevadans rent their homes, probably due to the disconnection between average wages and the cost of housing. The average home in Nevada is just 23 years old, and the state is split 50/50 between detached single-family homes and multifamily buildings.

Nevada needs almost 100,000 more homes to ease the inventory and price crunch that's strangling the housing market, says a housing advocate. Much of the country is in a similar housing crunch because we have not caught up to the multi-year slump in construction that followed the Great Recession in 2008-2010, or the effects of ultra-high prices for materials during the pandemic.

Catching up on home construction reduces pressure on sales, resulting in fewer above-asking-price offers and lower stress on buyers. In other parts of the country, people are paying wildly high prices for average homes. Those who can't purchase homes may end up renting from an investor-owned company, which controls large numbers of single-family homes for rent around Las Vegas. The city has moved to requiring permits for short-term rentals because Las Vegas has the highest short-term rent in the country, at an average of $10,000 per month for vacationers.

It takes about 75 days for a home in Nevada to sell and for new owners to take possession. Buyers who are prequalified for a mortgage and have a 10- to 20-percent down payment ready are best positioned to get an offer accepted in this seller's market. To qualify for a mortgage, you need a good work history and a credit score above 600 (lower if you have a 20 percent down payment.) Your credit score is based in almost equal parts on your payment history and your income-to-debt ratio.

Nevada's low cost of living and lack of personal income tax attracts about 40,000 people from California each year. The state's net gain of residents is the sixth-highest in the country. It's tough to compete with people who sell expensive homes in California to live comfortably on less in Nevada.

Even towns like Winnemucca, which is between Reno and Salt Lake City along Interstate 80, is becoming expensive. The average home there is $374,000. Likewise, Walker Lake, in the center of the state, has a median home price of $371,000.

If affordability is an issue, or if the buyer is flexible in their selection, a townhouse or condo in Nevada is a less expensive option than a single-family home. Townhouses average $362,000 and condos average $272,000. These types of housing are more likely to be governed by homeowner's associations, of which there are 3,600 in Nevada, with an average monthly fee of $250 per homeowner. While condos and other attached properties can be more affordable, it's critical to understand how an HOA works before purchasing.

Property taxes in Nevada are among the lowest in the country. Each of the state's 16 counties sets its own rate, which ranges from .24 percent in Esmeralda County to .72 percent in Humbolt County, but rates can differ within counties as well. For instance, Clark County, where 70 percent of the state's residents live, has 92 separate tax districts. The rate is multiplied by a home's assessed value to find the tax due. Unincorporated areas have particularly low tax rates.

The sales tax in Nevada is 4.6 percent, but counties can add to that. In Las Vegas, sales taxes are 8.38 percent, in Reno, 8.27, and in Carson City, 7.6 percent.

It's important to take the temperature of an area before committing to a home purchase. Does the location make sense? Can you pursue the lifestyle you choose?

Nevada homes have appreciated quickly in recent years, up to 8 percent. That's faster than the average appreciation in the rest of the country. Whether your investment in a home will break even when you're ready to move on usually depends on the length of time you reside there, but there are many other factors as well, including the national economy.

Renting an average $2,200 condo for a couple years is a better option than purchasing a $350,000 home with a 20 percent down payment. However, after four years, the rental starts costing more, making purchasing a long-term home the more cost-effective option, especially in an area of high demand like Henderson.

A local realtor professional should enhance your chances of finding a home with the qualities you desire. A buyer's agent listens to your priorities, understands your budget, and sifts through listings to find those within your desired location and amenities. That person will also help you create a strategy for purchasing a home, including writing your offer and negotiating the price.

Your realtor should have research ready on each property's price history, the pros and cons of the local area, and insight on taxes and services. They will help hire an inspector, renegotiate the price if there are significant issues, and keep the closing process on track.

If buying in a condo or homeowner's association, Nevada law allows buyers five days to cancel the transaction after signing a contract to purchase. There are 3,000 homeowner's associations in the state. It's critical to understand the membership fees and bylaws of the organization in your community before making a purchase.

Rather than splitting a 5-6 percent commission with the seller's agent, buyer's agents now negotiate their payment with the buyer. The commission can be written into the purchase offer, making it part of the sale price.

A large down payment makes it easier to get a mortgage, but even a significant amount of cash isn't enough for most banks because you need a good credit score and a significant salary, too. A single buyer making $50,000 annually with 33 percent down on a $300,000 home may not be approved for a 30-year, $200,000 mortgage because payments would be about $1,400 per month. Lenders won't allow most buyers to take on a mortgage that's one-third or more of their annual income. If you can lower the mortgage amount by borrowing from family members, you may qualify. Closing costs are usually 2 percent to 5 percent, or an additional $6,000-$12,000, which is also expected in cash.

Shop around for the best mortgage terms. If a local bank has a history of working with you, they may extend special benefits to get your mortgage business. Compare your bank's offerings to those of a mortgage broker who has access to a wide variety of mortgage options. A decision may hinge on your knowledge of and comfort level with the mortgage industry.

Your income-to-debt ratio and your history of on-time payments are critical to qualifying for a mortgage. Your credit should be above 600 for government-backed loans and above 640 for other mortgages. A high credit score can lower your down payment requirement and lock in a better interest rate. Start early by requesting free copies of your credit report from the major agencies (Experian, Equifax, and TransUnion) and checking them for errors.

Fixed-rate mortgages are good if interest rates are low, but less desirable if rates are high (the rate is currently above 7 percent). Adjustable-rate mortgages are riskier because the interest rate can change during the loan's term. Jumbo mortgages allow wealthy buyers to borrow more than the federal housing authority limit, about $766,000, in areas of particularly high property values.

Mortgage options include these government programs:

• Nevada offers low-income and first-time buyers a special opportunity to buy homes.
• FHA mortgages are tailored for first-time buyers with down payments of less than 5 percent.
• Rural properties may qualify for USDA loans, especially buyers with low incomes, but good credit scores.
• Eight percent of Nevada residents are military veterans. Military veterans and their surviving spouses may seek a Veterans Administration-underwritten VA loan. These mortgages do not require PMI and may be used multiple times by qualifying individuals.

Nevada's climate and lack of serious storms mean that homeowner's insurance is significantly more affordable here than in the rest of the country. In Las Vegas, insurance averages $1,300, more than $1,000 less than the average American home. The state does not require homeowners insurance, but mortgage lenders usually make it mandatory. The national average cost of homeowner's insurance is $2,300 per year.

A mortgage lender will require both homeowner's insurance and mortgage insurance, called PMI, to protect their interest in the property. PMI is calculated according to the mortgage borrower's credit score and is usually $1,300 to $4,500 per year on a $300,000 mortgage. This is in addition to your mortgage payment.

Regardless of any obvious extreme weather threats, it's a good policy to consider additional insurance for barns, fences, and garages, which are not covered unless specifically noted in the policy. Valuable personal possessions inside the home are also unlikely to be covered by insurance unless an additional rider is written.

A home purchase is both personal and financial. Owning your home makes you more secure against rent increases and related unplanned moves, but it can be a challenge, too. There are market fluctuations that make it hard to sell, and your job or other prospects can make you transfer. Since properties are appreciating at a modest pace, a home purchase should be a long-term commitment to realize a profit on your investment. Remember, if you move and decide to rent your property, your mortgage will be affected because it will no longer be your primary domicile. Keeping a property in good condition, including addressing any structural or systemic issues, protects your investment.