One thing that the Las Vegas area has seen is an immense growth rate when it comes to our real estate market. Average home price has increased over 20% from October 2020 and the average price for a rental jumped 19.6%. This isn’t the statistic I want to focus on however… The alarming statistic is the amount of rentals leased from October 2020 has DECREASED 17%. With measures in place such as AB 486 that protects tenants from getting evicted, there is less and less inventory available. Another statistic to consider is that with home values increasing, more and more renters are buying instead of renting which means a lot of these homes being purchased will not become available on the rental market whatsoever.
I am going to show you a recent search I did for a client that is on the fence about buying or renting and I did two different searches with identical search criteria.
This first search shows everything that is 4 or more beds, 3 or more baths and with a private pool with a price range of $450,000-$600,000. We have 105 homes available at this price range and the mortgage for this would be anywhere from $2000 a month to around $2800 a month depending on variables such as credit score and debt to income ratios banks use to underwrite mortgages. Not a lot of inventory, but when I show you a similar search for rentals, you will see the obvious difference.
This search is identical except for the price range I searched for $2700-$3000 and the result was just 14 available to lease as of today. Even though this is considered a bit above the average rental price of $2000, this client is extremely limited on what is available to them and unfortunately nothing in the area that they want to live in.
My advice to her was to speak to a lender and just start coming up with a plan to get the best rates and best terms for when she is ready to buy. Staying put is often one of the best strategies someone can do while they prepare to get a home in the near future. Lenders will typically run a credit check and take a deep dive into your situation and usually it results in making some adjustments to your credit profile or paying some items down to get your debt to income ratio a little better. Anything you can do to try and get those better terms is truly worth the effort. From my experience with working with lenders, here’s some of the tips I have picked along the way:
- Do not pay off anything before speaking to a lender, this could affect your available credit or other factors that might drop your FICO right before you’re ready to buy a home.
- People are not using their credit at all so there’s no credit history.
- I make sure I’m using some of my credit to make sure I build credit history on items I need to buy regularly.
- CreditCards.com has this great article about using a credit cards to pay your rent which could be used for rewards and credit utilization on something you need to pay anyways.
- There are secured credit card options and other credit products available to help you use your credit.
- Find a home that would be ideal (price point is most important metric here) for your home and develop a plan with your lender on how to get the best possible terms for a lookalike home.
- DO NOT MAKE ANY BIG PURCHASES BEFORE YOU BUY A HOME OR WHILE YOU’RE IN ESCROW
- Don’t open any new credit cards while you’re shopping for a home unless the lender says to.
- Last but not least: if you are 1099 or own your own business, talk to your lender and accountant on best strategies on write-offs as it could effect your income level and your ability to qualify for a home you can definitely afford.
The point of this blog article is to show where our market is today and how you can start preparing today to get the best terms for your future. Feel free to call us anytime or reach out to me online at David@DWNevada.com and I’d love to chat about your situation and point you in the right direction!