Category: Blog

Las Vegas Resale Home Sales in 2018 – What is 2019 Going to Look Like?

Sticker Shock! Mortgage Rates! Lack of Inventory! These three issues contributed to a slowing in the number of sales of existing single family homes in Las Vegas in 2018.

Sticker shock comes with the ever increasing prices sellers are asking for their homes. That issue is in the process of being resolved as inventory grows, allowing buyers more options. We also saw a flattening of the Median Sales Price in 2018. It rose only a little over 1% from May through December. Many buyers are pausing to see if prices will decline. With an increasing population and solid employment in the valley, that is not likely, but neither can prices continue to increase at such a rate. The Median Price rose 26.8% from $235,000 in December 2016 to $298,000 in December 2018. That is not a sustainable rate of growth.

As for mortgage rates, they rose about one-half percent in 2018 as the Federal Reserve increased its rates three times. For a person with a $250,000 loan, that adds about $75 per month to their mortgage payment. Thus, houses become less affordable. It is predicted that the Federal Reserve will increase rates through 2019, but that depends on the overall economy. Mortgage rates certainly will NOT decline, so they will continue to be a factor slowing sales. For us older folks, it is difficult to imageine buyers thinking 4.5% interest is HIGH, when we remember rates of 7% being celebrated as reasonable in the early 2000’s and rates in double digits in the late 1970’s and 1980’s.

Finally, inventory has been tight. Through August of 2018, inventory hovered under a two-month supply. That caused buyers to match or exceed list price in their offers on many occasions. Those days are over! Since September, sales have slowed considerably. In fact December 2018 sales were 19% below December of 2017. Buyers have hit the pause button. Inventory of homes not under contract currently available is right around 7,000 today, so we now have over a three month supply of homes. Another good sign for buyers is price decreases of existing unsold listings almost equal the number of new listings. The market is correcting.

New home sales continue to outpace the year before. According to an article written by Eli Segall in the Las Vegas Review Journal on January 25, 2019, 2018 NEW home sales, including single family homes, townhomes and condominius, totaled 10,669 with a median price of $396,994. Although 10,000 new home sales is very good when compared to the recent past, it is far short of 2005 when 10,000 new homes sold in the 3rd Quarter! The median price for new homes did rise 7% from 2017. We expect that to stay level as sales of more affordable product such as condominiums increase in 2019.

So what lies ahead for Las Vegas home sales in 2019? REALTOR.com projects Las Vegas prices will rise over 8% in 2019, and volume will inch up over 2018 (a year in which sales went DOWN 7.4% from 2017). That may be true if you include new homes, condos and townhouses, but I see a much smaller increase in the median price for resale homes, as interest rates and affordability have started to curb buying power in a valley not known as a high wage center. I predict fewer homes sold in 2019 with a median price that inches up at a much slower pace.

Las Vegas Single Family Home Sales Show Market Is In Transition

The Las Vegas housing market is in transition! The boom has slowed considerably. Inventory is growing, and the median price has risen just 1% since May. In November, the median price remained at $297,000 where it has been since August. Year-to-year, the increase looks impressive at 12.5%, but keep in mind that most all of that increase occured before May. Inventory now sits at a 3-month supply, well above the 1.29-month supply in March.

Now, why does any of this matter? It is an indication that we are moving from a sellers’ market to a more stable market. This does not mean we are yet in a buyers’ market. It just means sellers will have to price their homes more accurately and buyers can at least ask for sellers to contribute to closing costs. Also, buyers will have inventory to look at that will not have received multiple offers on the first hour of public listing!

There is also news on new home sales. According to an article written by Eli Segall in the November 29, 2018 Las Vegas Review Journal, new home sales continue to sell at a very strong pace, with a median price of $404,100 in October. He also noted strong increases in attached home sales for condos and townhomes. As these are frequently less expensive than single family homes, many buyers are finding them to be an attractive option. The sales of attached homes rose a strong 40% from a year earrlier, with a median price for attached homes of $265,466 in October. The median price is expected to go down in the future with the introduction of some more affordable developments currently under construction.

Overall, Las Vegas’ housing market remains strong, but the heat is dissipating.

Real Estate sales in Las Vegas July 2018

Real estate sales in July 2018 were not quite as hot as the weather but remained extremely strong.  Las Vegas, Henderson and North Las Vegas real estate agents sold 3077 resale single family homes, up 3% from July 2017 but down 3% from June of this year.  With slowly rising interest rates and prices, these are strong numbers.

The median price has hovered in the $289,00-293,000 range for the fourth straight month.  Are prices leveling off, as the $290,000 median price for July might indicate, or do we look back the past three years and see that prices tend to rise early in a year, then moderate to the end of that year?  That has been the case in 2015, 2016, 2017 and, now, 2018, so it is not yet time to say the market has peaked.

Inventory remains very tight with just a 48 day supply of homes without offers.  The industry norm is 180 days for a balanced market, so we are way out of balance toward the sellers’ side.  The last month Las Vegas had a supply of homes over two months was February 2017, so buyers must be extremely motivated and ready to act!  Gone are the days of seeing a home, mulling it over for a few days and asking the sellers for a contribution to the buyer’s closing costs.

Buyers must be prepared with a strong mortgage approval letter and a willingness to get out and see homes as soon as they are on the market.  Cash buyers represent only 18% of the transactions last month, so a loan letter may now be the deciding factor when a seller looks at multiple offers.  Of the 1242 homes homes for sale available at or below the median price of $290,000 August 8, 2018 in Las Vegas, Henderson and North Las Vegas, 346 have been on the market 7 days or fewer.  Another 135 have been on the market over 90 days, so you know those homes are overpriced!

Looking for a short sale or foreclosure to purchase at a bargain?  Might want to check another area!  Only 46 foreclosure properties are currently available and 66 short sales.  Thirty-six of the short sales have been on the market over 30 days, as have 14 of the 46 foreclosed properties.  In a hot market, overpriced listings still do not sell.

Overall, the market might be taking a breather or this could possibly be the start of the end of the sellers’ market.  Las Vegas remains a working wage town.  We lack the high-tech salaries that have destroyed affordability in the San Francisco Bay Area, and the building of new homes continues apace. Again, Las Vegas and Henderson alone have 4 of the top 20 selling master planned communities in the nation, and new homes add supply to a tight market.  Wages are inching up and job growth continues to be good, but this is not a town of vast wealth and incomes. Propelled by irresponsible lender practices and a raging speculative fever, the median price for resale homes edged over $300,000 briefly in 2007. Thankfully, the market is slowing as we approach the $300,000 mark again. Perhaps it is time for a pause.

 

 

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