The Las Vegas real estate market isn’t kind to many people these days.
After last year’s buying spree, home hunters have faced a steep rise in borrowing costs and big price gains over the past year, and they’ve put the brakes on the ‘purchase.
Sellers increasingly slashed prices, faced overabundant competition, and faced an ever-shrinking pool of people who could afford to buy a seat.
The Southern Nevada market appears to be at an impasse, and it is unclear when it will break through.
“It’s impossible for people in this market to afford these homes, and so something has to change,” said Nicole Bachaud, senior economist at listing site Zillow.
Bachaud, who spoke to me last week at the National Association of Real Estate Editors’ conference in Atlanta, said southern Nevada used to be a “very affordable area,” but “it’s not the case”.
Prices rose rapidly during the pandemic as the market became “very cheap very quickly,” she said. Sellers also face the prospect of a much more expensive purchase at a new location, which may persuade them not to budge.
Home values have been falling in Las Vegas in recent months, which has helped “soften up” the market, but it “doesn’t really make things more affordable,” Bachaud said.
The median sale price of previously owned single-family homes — the bulk of the market — was $450,000 last month, unchanged from August but up 10.7% from September 2021, the trade association says. Las Vegas Realtors.
Prices stabilized after sliding for three straight months, down from a record high of $482,000 in May.
Buyers bought 2,030 homes in September, down 36.7% from the same month last year, while 8,121 homes were on the market without offers at the end of last month, up 134, 5% over the previous year, the association reported.
With buyers retreating, price cuts have become increasingly common in southern Nevada. According to Zillow, 42% of real estate listings in the Las Vegas area saw a price drop in September, compared to just 9.3% in February.
Of course, Southern Nevada is far from alone in seeing the market cool. Nationally, the pace of resales fell for the eighth consecutive month in September, with sales down nearly 24% from September of last year, the National Association of Realtors reported.
On the construction side, US builders’ confidence in the market is half as high as six months ago, according to the National Association of Home Builders.
‘Wind out of the sails’
Robert Dietz, chief economist of the builders association, declared a “housing recession” this summer. Last week in Atlanta, he told me he still sees it that way.
Traffic from new-home buyers has fallen to its lowest level in years, and about half of all builders are now offering incentives such as price reductions or low-cost or free amenities, he said. he declares.
Locally and nationally, rising borrowing costs are throwing cold water on the market as the Federal Reserve fights inflation with higher interest rates. The average rate on a 30-year home loan was 6.94% this week, down from 3.09% a year earlier, mortgage buyer Freddie Mac reported.
“Mortgage rates have risen at the fastest pace in four decades, quickly cutting the wind in the housing market,” Freddie Mac chief economist Sam Khater said Friday.
Housing markets, especially the Las Vegas market, are subject to ups, downs and other changes. Sales and prices will eventually take a new direction, as they always do.
But where are they going and when will they change course?
We will find out soon enough.