Californians relocating to Nevada bring a significant income boost to the Silver State. According to a recent study from the University of Nevada, Las Vegas (UNLV), former Californians earn about 32.7% more on average than long-term Nevada residents. This trend, driven by Nevada’s appeal as an affordable alternative to California, is reshaping the Las Vegas real estate market, often allowing new residents to outspend locals when purchasing homes.
California Residents Fueling Nevada’s Growth
California remains the top origin state for new Nevada residents. UNLV’s study reveals that two out of every five new Nevada residents come from California, with approximately 158,000 Californians relocating to Nevada from 2020 to 2023, as reported by the Las Vegas Review-Journal. These transplants made up 43% of all new residents to Nevada over the past four years, underscoring a significant demographic shift.
This influx of higher-income households has intensified competition in Nevada’s housing market, especially in the Las Vegas Valley. The average income of a California resident who moves to Nevada is about 93.1% higher than that of a non-moving Nevada resident who purchased a home in the same year. According to Nicholas Irwin, research director for UNLV’s Lied Center for Real Estate, this wealth disparity means that newcomers often have more financial flexibility, allowing them to bid higher on homes and secure properties with ease.
Impact on Las Vegas Home Affordability
With the current median home price in Las Vegas at approximately $433,975 (per Redfin), California residents migrating from cities like Los Angeles, where the average home price is close to $1 million, find Nevada housing relatively affordable. However, the median income in Nevada stands at $76,364, lower than California’s median household income of $91,905, creating a potential affordability gap for long-term residents in Nevada.
The wealth disparity between newcomers and Nevada’s existing population could further strain the state’s housing availability and affordability. As wealthier out-of-state buyers enter the market, local Nevada residents may find it increasingly challenging to compete, exacerbating an ongoing housing crisis in the Las Vegas area.
Challenges: Limited Land and High Interest Rates
Las Vegas’s housing crisis is compounded by two significant factors: a lack of available land and rising interest rates. Clark County, where Las Vegas is located, faces land scarcity due to federal ownership of approximately 88% of its land. The federal government’s slow release of land for development has limited the ability to expand housing options.
Additionally, the “locking phenomenon” has created a unique challenge for both buyers and sellers in Nevada. Many homeowners who secured low mortgage rates at the start of the pandemic, when rates were historically low, are now reluctant to sell. With current interest rates significantly higher, homeowners would face a sharp increase in monthly payments if they chose to move, leaving many “locked” in their existing homes.
Nicholas Irwin of UNLV points out that high interest rates are likely the single biggest factor impacting the Nevada housing market. Many homeowners who might otherwise consider moving face the reality of paying hundreds more in monthly mortgage costs if they sold their home with a lower-rate mortgage in exchange for a new one. This reluctance has led to a misalignment in housing needs, as some households are unable to move even if their family circumstances or lifestyle demands change.
Market Trends: High Listings, Low Offers
Despite leading the nation in new listings, Las Vegas has not seen a proportional rise in home sales. Elevated prices and limited buyer activity have contributed to a slower market. While new listings flood the market, many homes remain unsold, as the gap between list prices and buyer affordability continues to widen.
For those considering a move to Nevada or those already in the market, understanding these trends can offer an edge. Buyers and sellers alike need to navigate this unique market with awareness of the purchasing power of new Nevada residents, as well as the pressures placed on local affordability due to external market forces.