Realtor.com forecast Las Vegas #1, while Zillow forecast San Jose #1, for top markets in 2018. Realtor and Zillow are both well known and highly regarded in the real estate industry. From what I can tell, Realtor takes data more from MLS, while Zillow uses a few more avenues like individual broker sites.
Las Vegas had 14% annual appreciation for 2017, while San Jose was 17%, for 2017. From my point of view, both double digit returns. However, the one item that stands out in favor of Las Vegas is the affordability. The median home price in Las Vegas is $265k, while San Jose tops a million.
What is your opinion? Las Vegas or San Jose?
Of course the question and the determining factor is the earning power of the San Jose area. The median income in San Jose is $110,000 with a poverty rate of 9.5%. In contrast to Vegas at $54,00 and a poverty rate of 16.3%. I would say that appreciation will continue to rise at a constant pace in San Jose. The Vegas market and local area has plenty of room to build. San Jose is pretty much out of open space for new developments. The Vegas developers will continue to build as long as the numbers pencil out. Just this factor alone will slow the appreciation rate in Vegas. The rental market has a lot to do with rate of appreciation rise over time. Once a market has reach its top with qualified renters then housing will start to have longer DOM to find a renter. This will slow the buy and hold investors down on purchases, which will slow down the flippers who supply the buy and hold investors, so on and on. Most of the real estate sold in San Jose is purchased by buyers for their primary residences. With such low inventory , this will further inflate the values.
Sounds like you are saying San Jose is the better choice? Let me put it in a more simplistic approach. You can either buy a $1M SFR in San Jose, which can rent for about $4k a month, or purchase (4) SFR in Las Vegas, for about same price, near Summerlin, that can rent for $1500 a month, or $6k for total.
Let me add some more details, as my sister owns a remodeled SFR in San Jose that rents for about $3600, bought for $350k and another $250k in remodel. Her cash flow is negative to the tune about $200 per month.
A Las Vegas SFR, near Summerlin, will net about $100-$200 positive after PITI.
I mentioned to her that for one SFR in San Jose, you can buy (4) SFR near or even in Summerlin.
Well that's apples to oranges. There is a definitive difference between passive income and appreciation.
where's all the people in zillow or realtor.com camp?
As a Las Vegas FT realtor and investor my money is on my area for investments. I have owned rentals in CA and aside from the economic benefits find NV laws are much more favorable to the landlord in terms of evictions, etc... Also, the age of the property is likely going to be newer so less maintenance costs - overall I'm high on Las Vegas!
Population growth plays a factor too. Does anyone know the projected population growth for both metros?
Like @Robert Rayford said, it's an Apple's to Oranges comparison.
If you want some cashflow, then Las Vegas is much better with it's affordability metrics and you can spread your risk across multiple properties. In San Jose you would need to put down ~50% for the same.
Appreciation wise, there is a lot of land to build on in Las Vegas which would slow/limit appreciation rates.
In San Jose, land is limited, plus you are in the epicenter of the tech industry with it's numerous catalysts that bring more high paying jobs to the area.
It's a trade off...some steady money now or potential for big money later. I'd bet on San Jose.
Btw, when did your sister buy her place because there ain't much here for $350K :) Also unless she put very little down, at that price (inc rehab) she should at least be at break even. Feel free to PM me directly if that's better.
My sister bought in 2012, when San Jose prices where lowest. Bought low, fixed up, and rents to about $200 negative. Overall, appreciated over $500k.
Appreciation is better in San Jose, as long as economy is going well in Silicon Valley. However, if you have to pay all cash or finance, you can get 4 SFR in Vegas for every 1 in San Jose. The numbers alone is the better value. Also, if you look at just the barrier to entry, most cannot afford $1M home.