A little over a year ago, Las Vegas and the whole of Nevada, along with the rest of the world, changed dramatically due to the COVID-19 outbreak. As a tourism-driven economy, the closing of casinos, resorts, and almost all small businesses hit the state hard.
However, beginning late last year, the housing market regained its momentum. And it hasn't stopped since then. Today, it's still in a hot frenzy – with people almost fighting to buy a home in the city.
But what's actually happening with the Las Vegas housing market? How and why did it get there? What does this trend mean for the future of Las Vegas real estate?
Let’s dive in and find out.
What’s the situation with the Las Vegas housing market right now?
In the midst of a struggling economy, Las Vegas’ housing market is in a months-long hot streak.
Currently, homes are selling at hyper speed. Sellers are fielding multiple offers at a time, which leads to market prices skyrocketing. In March, the housing market saw a record-high $363,000 sale price for previously-owned single-family homes, and $194,000 for condos and townhouses.
On the other hand, buyers are getting more aggressive and decisive. Last month alone, buyers picked up 3,700 single-family houses, a 35% growth from the same month last year.
Most of them are buying homes just within a few hours or days of noticing the listing – some without even seeing pictures of the property. They know they have to decide fast or else they miss out. Many of them are putting offers on multiple properties all at the same time, just to improve their chances of closing a deal. Likewise, it has become common for buyers to pay way above the asking price and in cash.
Meanwhile, homebuilders are making the playing field even more interesting, as demand greatly exceeds the supply. On top of regularly raising the market prices, many builders are putting buyers on waiting lists, so they get notified when new home sites get released.
Some builders are even holding lotteries to draw someone (who will purchase the house) from the pool of interested homebuyers, in an attempt to make the selection process fair and equitable. Still, others have cut down the agents’ commission fees or resorted to flat fees, as more buyers show up without needing an agent.
How did we get here?
Las Vegas Review Journal notes that the boom in the housing market is driven largely by the low borrowing costs. This allowed people to enjoy rock-bottom mortgage rates and affordable monthly payments, resulting in the low supply of properties for sale. As of the end of March, only 1,770 single-family houses remained on the market, a whopping 69% decline compared to March 2020.
In addition, the Las Vegas market is seeing a tremendous inflow of out-of-state buyers, particularly from California. With physical offices shut down and more people working from home, the newcomers are looking to the valley for bigger, more affordable homes.
While the rapid growth in the housing market may sound promising, it is, in reality, pricing out the locals as property values continue to rise. And with high offers coming in and the supply of homes running out, buying a home in Vegas in incredibly competitive.
Moreover, the pandemic has greatly contributed to the supply shortage of properties. With people out of work, they are unable to move or upgrade unless they pay in cash. Also, with the work-from-home regulations still in place, homeowners opt to stay longer in their homes.
How long will this real estate trend continue in Vegas?
Many fear that this trend is a repeat of the mid-2000s crash of Las Vegas’s real estate market. That era, called the Great Recession, ultimately led to numerous foreclosures and abandoned construction sites, as well as declined property values.
Mortgage lending practices then allowed just about anyone to buy a house, several of them, in fact. But today, the lending standard and requirements are a lot stricter. Lenders are required to have documentation from the buyers to prove that they can afford the property now and in the future. Plus, most buyers have learned from that demise and are now somewhat wiser.
However, even with the tighter regulations, the housing market shows no sign of slowing down anytime soon. Las Vegas realtors are predicting that this trend could stay strong until next year, simply because of the law of supply and demand – with low inventory and countless interested parties making the game competitive.
What does this mean for sellers?
Taking advantage of the hot sellers markers, many homeowners are leveraging the competitive prices and selling their properties. A lot are listing their homes above market price while preparing to move to another city or to another part of the state.
Many are also looking to stay within Las Vegas valley. Some homeowners are seeing an opportunity to buy another house while their current one is selling at a much higher rate.
If you’re planning to sell your home, it’s best to speak with your real estate agent about the smartest strategies to market and get your property sold. While closing might not be that challenging right now, your agent will be able to guide you through getting the right deal.
What does this mean for buyers?
Although Vegas is currently in a seller’s market, there are still opportunities for buyers to score a good deal. But again, you need to consult with your agent to better understand the search and buying process.
Remember, it’s best to go for local experts as they will have knowledge of those pocket listings and off-the-market properties. Because they coordinate with other agents, you can get first dibs on homes even before the for-sale sign gets put up.
Are you looking to buy or sell your Vegas property? Contact The Brendan King Group today and find out how we can help you make that happen.