It’s quite alarming that the median sale price for a Las Vegas home dropped from an all-time high of $432,000 in June 2022 to $375,000 in December 2022. These figures suggest that prices are falling for months.
Despite the sharp decline, the median sale price of a home in Vegas is still slightly higher than the national average. The Las Vegas real estate market is still relatively competitive as more out-of-towners move in.
So, whether you plan to move to the city or are already a resident, it’s important to understand the local housing market. With lots of commentaries on this market, sifting through the noise for the right information is quite daunting. It’s also easier for misinformation to get in your way when you want to buy or sell property in Vegas.
But if you know where to look, you’ll have reliable insights at your disposal. The best way to understand the Las Vegas housing market is to go through opinions from seasoned real estate experts.
This blog focuses on five expert opinions on what the market looks like. Read on for further enlightenment on this topic.
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1. Housing market slows down after two years of increase
A recent report on the 2023 Las Vegas real estate market suggests that single-family home sales in the market dropped by 48.3% from January 2022. The report also found that the numbers dropped by 13.6 % from December 2022.
But, the median sales price of previously-owned single-family homes remained the same as in December 2022. The price was down 2.3% from January 2022 and is currently at the $425,000 mark. While buyers may see this as a great opportunity, sellers may find it difficult to get their properties sold quickly.
The data provided suggests that the housing market is likely to remain fierce in 2023. It will have a high demand and rising home values.
The Las Vegas real estate market currently favors both sellers and buyers. Since homes may sell quickly, buyers can negotiate better prices. However, a 3.7% decrease in home values, predicted by the Zillow market forecast, may give homeowners who want to sell their homes a hard time.
Redfin’s deputy chief economist, Taylor Marr, recently predicted a drop in resales. In particular, he predicted that the resales would fall by about 16% next year. His predictions also suggest that a home’s median sale price will go down by about 4%.
Brandon Roberts, a broker at Signature Real Estate Group, also expected the sales figures in the market to slow down. However, he didn’t anticipate the change to happen as sharply and fast as it did.
High-interest rates are likely to cause a decrease in home values. They could make it difficult for buyers to secure good financing and afford a property. Despite this, the desirable lifestyle, strong job market, and growing population in Vegas contribute to high housing demand, stabilizing the market.
As Americans paid higher prices for groceries and gasoline, the Federal Reserve increased the interest rates to fight inflation. Borrowing costs for home loans jumped sharply due to this sudden increase.
The sharp increase in mortgage rates resulted in widespread price cuts and huge drops in home sales. It also led to more incentives from home builders and big increases in inventory.
2. After two years of continuous growth, the rental market decreases
A report from the Nevada State Apartment Association found that the rental market in Las Vegas decreased over the past year. In particular, the report showed that the price was at $1,451 in the third quarter of 2022, which is below the national average ($1,620). The rent also decreased by 1% to $1,420 per month in the fourth quarter of 2022.
These figures are quite different from the previous years. Particularly, the previous years had a steep spike and annual rate change of more than 20% from 2020 to 2021.
Brian Carberry of rent.com believes that the low demand for rental housing is due to seasonality. According to him, apartments are usually in high demand from late spring to the summer. The demand slows down in the winter since not many people are moving.
NVSAA ‘s executive director, Robin Lee, believes that the rental landscape in Vegas hit a plateau this year. Lee predicts that the rent prices may increase slightly in the next year.
The NVSAA report also found that Las Vegas had a vacancy rate of about 8.5%, which led to low rent prices. Since the normal vacancy rate in the city is 6%, this figure is quite worrying.
Despite the high vacancy rates, more apartment units are coming up in the area. The existing inventory will expand by 5.2%, with the total number of local apartment units standing at 9,300.
Likely, rent prices in Nevada won’t go below the pre-pandemic levels, as Jon Leckie of rent.com puts it. Nevada remains among the few states that see the most significant drop in rents. But despite the decrease, renters interviewed by The Nevada Independent think that the city’s apartment costs are too high.
3. Low inventory and unemployment affect mortgage rates and house market
As builders slashed prices and buyers pulled back, the home construction market in Las Vegas was at a halt in November 2022. Newly signed purchase contracts (minus cancellations) brought in 313 net sales to builders. This figure represents a 59% decrease from the same month a year earlier, according to a Home Builders Research report.
The sales cancellation rate for builders went up to 40% for the fourth consecutive month in November 2022. It was a sharp increase compared to the sales cancellation rate of 12% in November 2021.
Home Builders Research’s president, Andrew Smith, noted that more sales are shifting rapidly as base home prices change. In particular, he pointed out that the sales are progressing to the $ 400,000 range from the $500,000-plus range.
According to Smith, prices are a huge concern in the current housing market as they were at the peak of the pandemic. But the conversation on these prices changed from how they are quickly falling.
Amid the slow sales, builders are offering high commissions to agents and incentives to buyers. The market continues to struggle due to challenging affordability conditions and supply chain disruptions. Elevated construction costs are also to blame for the bad state of the market.
One question on most people’s minds is whether the rising interest rates will cool the Las Vegas real estate market. Well, for the first time since 2008, the rates for 30-year fixed mortgages are above the 6% mark. The rates may increase this year, unlike what we saw in 2022, when the rates went as low as 6% and as high as 7%.
The higher mortgage rates may suggest a slowdown in the Vegas housing market. They reflect the Federal Reserve’s attempt at fighting inflation.
Low unemployment rates are also the cause of the drop in home prices. And even when people are working, they can’t seem to afford to pay off their mortgage or build equity to sell the property.
More people still want to live near the magnificent city with plenty of economic opportunities. But with the high mortgage rates, they have very limited options. Most potential buyers can’t participate in the market, and sellers have to seize any chance to make a sale.
4. Home prices lose ground comparing with previous years
The number of single-family houses sold in Las Vegas in December 2022 was 1,534. This figure reflects a 9% increase from November 2022 and a 57.7% decrease from 2021.
The median sales price of recently owned single-family homes dropped to $425,000 from $430,900. This was a 1.4% decrease from November 2022. The number was the same as the previous year.
Townhomes and condos had a median sales price of $260,000 in November and $246,950 in December. These figures represent a 5% decrease in a span of one month. The median sales price was also up 2% from the previous year.
In the luxury market, there were 60 home sales at an average price of $1 million and above in December. In contrast, there were 63 home sales in November 2022. Luxury homes also had a median sales price of $1,512,500 in December and $1,350,000 in November.
The number of listings in December was 1,677, which is down 20% from November. It was also down 23.6% from the previous year.
About 6,211 single-family homes listed for sale didn’t get any kind of offer by the end of December 2022. The number is up 175.9% from the same time in the previous year. Likewise, there were about 1,390 townhomes and condos listed without any offers in December, which is a 259.2% increase from the past year.
Home prices in Las Vegas continue to lose ground compared to the previous years as we enter the slowest time of the year for the housing market. Many sellers would wish for that time when homes sold for record-high prices.
Las Vegas Realtors’ president, Lee Barrett, noted that the falling prices and increased home inventory are creating a balanced market. Barret thinks that it will make things easier for buyers, despite the supply problem that it presents.
5. Inflation rates affecting the cost of living
The country is seeing an increase in the job sector, with many companies creating jobs. To be precise, employers created 223,000 jobs in December. This is proof that the economy will remain healthy despite the efforts by the Federal Reserve to raise interest rates.
With the newly created jobs, the unemployment rate dropped to 3.5% from 3.6%. The rate matched a 53-year low, as the Labor Department reports.
Even more, the average hourly pay growth slowed down in December for the first time in 16 months. The slowdown might force employers to increase prices to cope with the high labor costs.
Employees in the city earned 4.6% more in hourly wages on average in December 2022 compared to 12 months earlier. They also made 4.8% more in November and 5.6% more in March.
If the trends in the job market continue, there’s hope for a sustainable labor force, as Nick Bunker of Hiring Lab notes. Bunker, who heads the firm’s economic research department, also believes that we can’t know what to expect next year. But, he believes that there are signs of a soft landing instead of a recession in the market.
The job landscape of 2023 is quite cloudier. Many economists predict a recession in the second half of the year due to the high-interest rates. Officials from the central bank are also projecting that the rate hikes will result in an unemployment rate of 4.6% by the end of the year.
Federal Reserve Chair, Jerome Powell, emphasizes that the strong job growth may force employers to increase wages. Higher wages will attract more workers and help counter inflation.
Powell and other Federal Reserve officials believe that unemployment can help fight inflation on one condition: It will need to rise from the existing low level.
Looking to sell your house?
From a seller’s perspective, the Las Vegas housing market trends took a drastic turn in the past few months. It saw falling home prices and low home sales. Even more, properties stay on the market far longer than expected.
It’s advisable to list your property before the sales and prices drop any further. But, if you want to buy a house, wait until the interest rates drop, though there’s no guarantee in that.
If you don’t have the patience to wait, you may buy a property in the current Las Vegas housing market. The high mortgage rates mean that few buyers are competing for properties. So, you are likely to get a good deal buying a property now.
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