Las Vegas Housing Market Update - Housing Bust or Home Price Stability?

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The market is so strange right now here in October 2022. Let’s take a look at what happened in our local market with all these crazy things going on in the news, and How this is affecting our prices in our market here in Las Vegas.

Fortune magazine’s recent headline was “Boise, Las Vegas, and Phoenix look like housing busts…”
However, our Local paper Las Vegas Review Journal included a report from Las Vegas Realtors association that the median price of existing single-family homes sold in Southern Nevada through its Multiple Listing Service during September was $450,000. That’s unchanged from August, but down from the all-time record price of $480,000 in May. The median home price is still up 10.7% from $406,500 1 year ago. Does that sound like a “bust” to you?

LVR President Brandon Roberts said “It’s interesting to see local home prices level off ... Home prices and sales had generally been declining since mortgage interest rates started rising,”, “The good news for buyers is that it has been at least 3 years since we’ve had this many homes available for sale.”

At the end of September, LVR reported 9,970 single-family homes, condos, and town-homes listed for sale without any an offer… and a total of 2,554 local homes, condos & town homes sold in September. So, the absorption rate, a measure of supply & demand, is under a 4-month supply of properties.

LVR reported that short sales and foreclosures combined accounted for 0.1% of all existing local property sales in September. That compares to 0.4% a year ago, 1% of all sales 2 years ago, and 5.2% 5 years ago. So, there are less foreclosures than any time in the last decade.

Local home prices are still nearly 4 times higher than during their post-recession bottom in January 2012, when the median single-family home price in Southern Nevada was $118,000. So, look… you’re going to see a lot of fear based & inaccurate news. We’ll see less buyers in the market because of affordability, as Buyer demand has been squeezed, along with Less total sales & less new homes coming to the market.

Here’s a simple example-

$500K home, 10% down, would be a $450K loan

With 4% interest rate in April 2022, payment would be $2,148

At 6.5% rate in September would make it $2,844…a $700 per month payment difference.

With the average wealth of American households… last year it was possible to afford to buy 60% of the properties on the market. Today this percentage has dropped to 45%. Buyers really started exiting the market when interest rates went from 3% to 4%.

No doubt these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents also rose at their highest pace in nearly 4 decades. It’s true…it costs more to buy a home today than it did last year, but the same is true for renting. This means, either way, you’re going to be paying more. The difference is, with homeownership, you’re also gaining equity over time, which will help grow your net worth. The question is…what makes most sense for you?

Finally, let’s keep an eye on this trend, and why Las Vegas ought to do a little better – license surrenders. There’s still a positive net license surrender…meaning out of state driver license ID’s…of almost 4,000 per month, with about 40% moving here from California. After this current phase of interest rates causing a pause in the market, we will likely see a similar problem next year, as we experienced last year… with low inventory.

Let me know what you think down below…and, if you have any stories that you want me to talk about from a real estate agent’s perspective, from a local perspective, make sure you reach out to me, and if you’re looking to buy or sell a house anywhere in the Las Vegas valley, I’d be thrilled to be your real estate resource of choice, email me at randysellslv@gmail.com.

So, call, text, or email me with any thoughts or questions.
Call or text me at 702-239-8400

References-
https://www.reviewjournal.com/business/housing/las-vegas-house-prices-stop-sliding-at-least-for-now-2652369/
DMV photo courtesy of LVRJ
https://fortune.com/2022/09/29/housing-market-busts-boise-las-vegas-phoenix-interactive-map-home-prices/

Disclaimer: Randy Milmeister is not a practicing tax accountant, licensed attorney, or financial adviser. Therefore, the information in these videos shall not be relied upon as tax, legal, or financial advice. If you need such advice, please contact a qualified tax accountant, attorney, or financial adviser. We have taken reasonable steps to check that the information in this video is accurate but we cannot represent that it is free from errors. You expressly agree not to rely upon any information contained in this video - it is for entertainment purposes only. Randy Milmeister is a licensed real estate broker-salesman with Keller Williams in Nevada Lic.# 64289