Last year, when buyers were quickly snapping up Las Vegas homes, anyone would have guessed how long that hotline would last.
Now that it’s over, another question remains: How long will the market continue to slow?
Buyers are retreating in southern Nevada as rising mortgage rates wipe out the cheap money that fueled America’s unexpected post-pandemic housing boom. Total sales are falling, available inventory is up, and sellers are increasingly lowering their prices.
Las Vegas isn’t alone, as markets across the country are putting on the brakes, too. Two home-trackers told me Friday they don’t expect sales to rebound quickly.
It’s hard to predict, noted Jeff Tucker, chief economist at listing site Zillow, but said the national sales slowdown “could continue for another year or two,” adding that there appeared to be a “confrontation” between buyers and sellers.
The flow of new listings has slowed as existing homeowners may hold a lower mortgage rate than they could land on a new purchase. He noted that they probably bought their place for less than they would pay now.
They can wait for market conditions to improve, Tucker said. Meanwhile, people looking to buy a home also face higher mortgage rates, so they may not want to pay what the sellers want.
“Even if mortgage rates don’t drop dramatically, I don’t quite see how this crisis is resolved,” Tucker said.
Taylor Marr, deputy chief economist at real estate brokerage Redfin, says the nationwide drop in sales has bottomed out. But he added that it may not rebound for another year or two.
As he sees it, mortgage rates need to come down so that more buyers come back.
Mortgage buyer Freddie Mac reported that the average 30-year home loan interest rate last month was 5.22 percent, down from 5.52 percent in June, but up from 2.84 percent in August 2021.
Lower prices can, in theory, increase demand. Mar noted that this does not send a good signal to buyers or sellers about market conditions.
heating and cooling
Finally, the months-long housing slowdown, both locally and nationally, points to a rapid change from the frenetic market of the not-so-distant past.
Driven by low mortgage rates that allow people to stretch their budgets — and by an influx of out-of-state buyers — the southern Nevada housing market accelerated last year to its craziest pace in years. Prices hit all-time highs almost every month, and home hunters flood properties with offers and sell homes quickly.
However, the market has begun to put pressure on the brakes this year with rising mortgage rates.
On the resale side, just over 2,000 single-family homes traded in southern Nevada last month, down roughly 38 percent from August 2021. Also, there were nearly 8,000 homes on the market without offers at the end of August, a 146 percent increase. Almost year-round, the Las Vegas Realtors trade association reports.
The median sale price of these homes was $450,000 in August, down 3.2 percent, or $15,000, from July. Prices were still 11 percent higher than a year ago, but this is the third consecutive month that prices have fallen, after not dropping for more than two years.
Moreover, 42 percent of Las Vegas-area listings saw price drops last month, up from just 9 percent in February, according to Zillow’s Tucker.
So, how long will the market continue to slow down? Your guess is as good as mine
But for now, don’t expect to switch over to overclocking again anytime soon.
Contact Eli Segall at firstname.lastname@example.org or 702-383-0342. Follow Tweet embed on Twitter.