June ’22 Housing Market Update
Are sellers having FOMO? Is the housing market going to crash? There are so many conflicting rationales out there lately on the shift in the real estate market, how is one to make sense of any of it?
As a top producing team in Las Vegas who have been selling real estate since the late 90’s, we’re going to talk about the numbers/trends, but also tell you what we are actually seeing on the ground here in the Las Vegas Valley, as well as give a few perspectives to take into consideration when trying to make heads or tails out of the current housing market.
Firstly, this is an election year. Every election year, whether midterms or presidential election there is a little slowdown as it holds a little bit of uncertainty in the market. This year is no different ESPECIALLY in our very polarized political state our country is in.
No Surprise the Trends are:
Inventory Up Everywhere
Sales Velocity is Down.
Median home price went down for the 1st time since April 2020 start of pandemic. In May it was $482,0000. June , the median home price was $480,000.
Let’s just take things in perspective a moment. In 2021 the Las Vegas valley had a RECORD number of sales with over 50,010 sales. That is a HUGE number. It’s no wonder the sales velocity is down, that pace was crazy and I think many of us agents are happy that things are a little calmer.
The June 2021 Median Home Price was $395,000. At $480,000 1 year later, that is still a 21.5% increase from this time last year.
Let’s go over the median home prices since the start of 2022 to further put things in perspective.
Median Home Prices Since The Beginning of the Year:
January ’22 $435K
February ’22 $450K
March ’22 $460K
April ’22 $475K
May ’22 $482K
June ’22 $480K
I mean – this is like gas prices – how in any way was this normal? Home prices are not meant to go up month over month at the rate and increase that we’ve experienced. This was 2 years straight.
When we look at the housing market for the past 2 years – nothing about it has been normal . Covid changed everything & was something that NOBODY from Gen X’ers’s to Millenials To Baby Boomers ever experienced in our lives. We had the “new normal” with lockdowns,, quarantines, business closures, masks, schools closed, etc. etc., and the covid death ticker on the news. Covid sparked this mass state to state migration – people picked where they wanted to live, interest rates were SO low to keep the economy afloat amongst all the lockdowns, and it created inventory supply shortages that none of us have experienced before. We did not have inventory shortages like this back in 2008…
Speaking of inventory, we went from 1.6 months of inventory in May – still super low, to 2.2 months at the end of June. We will have to watch the inventory numbers – it didn’t quite double month over month, and a 2 month supply is still low even with the fewer buyers out there, but if it jumps from 2 months, to 4 months, to 8 months then we will be in a totally different scenario. Sellers are having FOMO because they didn’t cash out when their neighbors did, and they are no longer “King Sellers” naming their price and terms.
We are definitely seeing some price reductions – rightfully so on some properties, and we are not seeing the verbiage we saw just a few months ago- all offers presented by this date – submit highest and best. I am seeing verbiage like MOTIVATED SELLER WANTS PROPERTY SOLD NOW. I am seeing flippers on Million Dollar Plus properties offer $25K incentives to buyers to buy down their interest rates.
That being said, one very noteworthy fact is that 86% of properties are selling within 30 days or less. That is a very STRONG number. In a normal market, we have 4-6 months supply of inventory, and homes take about 90-120 days to sell. The fact that many properties are selling within 15-21 days is a good indicator that homes priced appropriately are moving very quickly.
For example, we took a listing on this property that was a Single Story Home, in a non HOA community, on a large 23,000 SF lot (that is a large lot for Vegas). The property was listed for $625,000. Within 2 days, we had multiple offers. The seller was smart, didn’t play games, and accepted the best offer quickly. After we had put it under contract, we had multiple agents reach out to us wanting to submit back up offers on behalf of their clients, and to please let them know if the property becomes available again. We could’ve sold this property 10 times over. Days on Market = 2.
Next example, we listed a high rise condo in The Martin. Very desirable floor plan, with beautiful views on the perfect level in the tower – 23rd floor. The interior was finished beautifully, and it was also being sold furnished, and all the furnishings were designer like. The property was listed for $725,000, and within 14 days, we put it under contract. Once again, after we put it in pending status, we had several agents calling, asking us to please let them know if it falls through, as their client missed seeing it come on the market, and they were very disappointed.
Days on Market = 14.
Properties that are selling quickly are very property and location specific.
Let’s talk about that for a moment.
If you’re in the market to buy a home, whether a resale or a new construction home, this is the time when it is SO important to have a knowledgable & experienced realtor who knows good real estate, and will be honest with you about what you are buying or want to buy. You should ALWAYS buy with an exit strategy – one thing I learned over the years selling real estate is you make your money on the way in. We have worked with SO MANY savvy buyers/investors over the years, clients who have bought and sold 20+ properties with us, and we have all made money together. Our clients made great returns on the properties we advised them to buy, and we earned the commissions. Trust me when I tell you a good realtor wants to sell you a property that has good resale potential, so that when you come back to us to sell, your home has a better chance of selling quickly and for more money than someone who didn’t use a realtor. Longstanding successful realtors don’t get to where they are by selling you under the river – they want you to come back to them to sell and buy and repeat. That way, everyone makes money.
According to some, the market is going to crash.
*We do have inflation of everything – houses, gas, food. Stock market and crypto also took some rough hits, so people think housing is naturally next. We’re definitely going to see a correction in pricing on certain properties – here in Las Vegas we would see some homes come on the market – nothing unique about the property in particular not on any decent amount of yard space for $1M – and there were some times that I said to myself- these sellers are crazy town!
According to others, the market is stabilizing after 2 years of a boom.
There was a very positive jobs report last month, & interest rates dipped back down to the low 5’s, which is decent. We believe the market is stabilizing, and getting back to normal after 2 years of nothing being normal. Rental prices are quite high, and we still have a shortage of rental properties. If you’re relocating to Vegas or Henderson, you have to weigh what it costs to rent vs what your mortgage payment will be. You can pay someone else’s mortgage or you can pay your own.
Travis & I, plus June, are both buying new construction homes in Florida. We are diversifying our real estate portfolios into another no state income tax state, which also has very strong inbound migration. We believe real estate is a good hedge against inflation, and both of us are buying in locations that are extremely desirable – close to the Northeast Coastline. Interested in Florida real estate? We have expanded to offer our real estate expertise in the great state of Florida! Please feel free to reach out to us if you’re interested in buying a property in Northeast Florida, or you can Subscribe to Our Florida Real Estate You Tube Channel and join me as I show you around beautiful Northeast Florida!
Things to Watch For In Our Market:
Inventory Levels next few months. Right now we are sitting on 2.2 month’s supply of inventory, which is a good thing – right? We needed more inventory. However, if the inventory levels compound and go from 2.2 months to 4.4 months, to 8 months, etc. then we will be in a completely different market situation. This is something we will have to keep an eye on as things really are changing month to month. If the inventory builds up a little more to a normal healthy supply, and levels off, then that will be a good thing.
October slowdown with midterm elections on horizon.
Interest rates possibly dipping down around midterms?
The Luxury Home Market has a good bit of inventory, and I think we will see some of these prices correct themselves. Days on market for luxury homes may go back to taking 1 year or longer to sell. That was how it was prior to Covid. During covid, we would see multiple offers on multi million dollar homes (many cash buyers BTW), but I think the luxury market will start seeing longer days on market, and more significant price corrections.
New Home Builders Want Your Business!
New home builders are going to start offering very attractive incentives. We are already seeing that in some communities across the valley, and the other thing we will also see, is the ridiculous lot premiums that the builders were charging, come down. They are going to want your business, so if you’re in the market for a new home, give us a call. You definitely want to have realtor buyer representation on a new home purchase so that we can help you pick a home with good resale potential. Remember – you always want to buy a home with an exit strategy in mind!
One thing about Las Vegas and why I remain optimistic about the housing market – who has flown into town lately? We are out of land – we are developed up to the bases of the mountains and in some cases communities are carved into the mountain ranges. I am bound to get some comments about our water situation here in the valley – I just filmed a video on that – you can watch it here & link below.
Vegas still has strong inbound migration, but affordability for Vegas is down and with the rising interest rates – some homes are just plain old overpriced.
In closing,
One thing we know is the market doesn’t like is uncertainty.
Don’t forget this is an election year. Election years are Always like this, especially given our current polarized political environment.
The old saying – this too should pass – the state of the frenzied housing market has passed.
Getting back to normal means more choices for buyers, home incentives from new home builders, you can sleep on making a decision, you can negotiate on price, a home may be listed for 2-4 months – it doesn’t mean something is wrong with it – those are all normal market conditions.
If you’re purchasing for speculation to make a quick return , or you think you may have to move or relocate within 1-3 years, then you may want to wait, but for those who look at real estate as an asset to their longer term portfolio plans – there are realistic sellers and absolutely some good buys to be found!