State Real Estate Market Outlook
Realty Market Outlook Nevada State Profile - Spring 2006
Housing market conditions warrant monitoring
Although Nevada continued to attract new residents, the number of single family housing permits slightly declined during 2005 from the 2004 peak. The leveling in permitting activity could signal a slowing in residential construction activity in 2006 from record levels, however, large commercial developments such as the 3,025-room Palazzo (scheduled to open in 2007) could support construction employment.
Deteriorating affordability and rising interest rates may also weigh on the state’s housing market.
Home price appreciation in Nevada has moderated from recent highs. The state reported 18.0 percent year-over-year growth in the home price index in fourth quarter 2005, well below the record pace of 37.1 percent set in third quarter 2004.
Innovative mortgages and investors may be influencing Nevada housing demand. Interest-only and negative amortization loans accounted for 61 percent of non-prime mortgage originations in the state during the first 11 months of 2005. During the same period, investors and second-home purchasers accounted for 28 percent of Nevada Alt-A mortgage originations.
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