Personal income lags behind state home prices
June 28, 2005
Carson City is ranked as a real estate boom market because of its home-price gains – bad news for those who are looking to purchase a home but living on low to moderate income.
Nevada home prices far outpaced increases in per-capita income, according to a new report from the Federal Deposit Insurance Corp.
Nevada State Profile for summer 2005, released Tuesday, shows that annual home-price appreciation moderated slightly in first quarter 2005, but that still kept Nevada No. 1 in the nation for home-price gains.
Barbara Ryan, associate director of the Division of Insurance and Research, said home prices outpaced per capita personal income particularly in Las Vegas and Phoenix. The FDIC identified 55 boom markets nationwide, the list also included Reno.
Boom areas are defined as having inflation-adjusted prices at the end of 2004 that were up 30 percent or more in three years.
In Carson City, the annual median family income in 2004 was $55,800, according to Housing and Urban Development. Single-family homes in Carson City sold for an average $319,199 in Q1 2005 on the Northern Nevada Regional Multiple Listing Service.
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In Q1 2005, Nevada home prices increased 31.2 percent over the previous year. In Q1 2004, per-capita personal income increased 8.3 percent. A more recent income number is not yet available.
Rich Brown, a FDIC chief economist, said this trend cannot continue indefinitely. Some worry that if housing prices get too far ahead of per- capita income, then prices will suddenly snap back too low.
“That’s the concern but prices have been sticky downward, meaning people are less reluctant to part with homes in economically distressed times,” he said.
Economic officials maintain that as long as an area has population growth and job growth then housing values won’t plummet.
Catherine Phillips-Olsen, Division of Insurance regional manager, said they are watching Nevada’s population growth versus the single-family home permits. Even though Nevada’s population growth is topping the nation, single-family home permits decreased 12.2 percent in Q1, compared to the previous year’s Q1.
Another encouraging sign for Nevadans – year-over-year job growth in Q1 accelerated to 6.7 percent. That means about 74,500 jobs were added, which includes 19,000 alone in the construction industry.
Ryan said the state’s top ranking in job growth reflects “the region’s vibrant housing rate, construction job growth, tourism recovering in a down economy and a low dollar.”
n Contact reporter Becky Bosshart at email@example.com or 881-1212.