Post-COVID home sales in Southern Nevada have shown a V-shaped recovery. While the number of total sales is still down, the average price of homes has increased while number of days on market has shortened. Here’s what you need to know.
Inventory remains the highest concern
There is a severe shortage of homes for sale in Las Vegas and Henderson. We are down on inventory 40.3% over this time last year. Some of this is attributed to high equity of homeowners, market uncertainty of selling during COVID, and fear of physically moving during the pandemic.
With the arrival of the Golden Knights and then the Raiders, home prices jumped, leaving many homeowners with high equity. Instead of selling, many homeowners opted to re-finance their loans at a lower rate.
Homeowners who choose to list their homes with Realtors at the right price are seeing multiple offers within the first few days. Many homeowners are shocked at how quickly their home sold, having to now arrange for a rental until they buy or build their next home. Houses in greater Las Vegas are on market an average of 40 days with houses in the Anthem area on market an average of 20 days.
With home-sellers as well as traditional renters searching for homes in less populated areas, the rental market is skyrocketing, driving monthly prices up. People searching for rentals are often finding themselves in a multiple-application hedge and even offering double the security deposit or advanced payments to compete.
High Unemployment Numbers Spur Foreclosure Fears
My most frequently asked question is: do you think there’s going to be a housing crash? While Vegas is founded on its hospitality, Las Vegas has become a rich and diverse metropolis, becoming a major economic hub for those in the financial, energy, and healthcare sectors. The halt on tourism has deeply affected those workers in entertainment service, but there remains a large subsection of people who maintain working remotely and in essential services.
Fears of mass foreclosures are not likely as many homeowners have built up equity and will likely sell over going into foreclosure. Unless homeowners purchased within the past 2 years and became unemployed with no mortgage forbearance, owners are holding onto homes that are worth more than they owe which is contributing to the shortage.
Furthermore, most banks are supporting homeowners in any way they can with beneficial forbearance programs for up to a year. Foreclosures can sometimes take years to complete, so the likelihood of enough houses going into foreclosure all at once to equalize the high buyer demand remains low. We have an inventory of 4,639 total homes for sale at the moment, so we would need to see almost triple the number of homes to come onto the market to meet current buyer demand.
So when can we expect a drop in pricing?
Like all markets, there is a natural variation in value as they rise and fall with respectives seasons. Stock markets, for example, typically drop near December and January as people try to equalize their losses for taxes. This does not mean it's a crash, it's a natural and expected adjustment. The same theory goes for housing.
We may see a slight dip in pricing as people focus on holiday arrangements and homes may start to linger on the market for a few more days. But if you're buying a home for the long-term, the value of your home will vacilate too, so waiting for home prices to lower shouldn't be the main decision driver. As buyer demand is so high, you may be left waiting too long.
Trying to time the bottom of the housing market is a gamble. When it comes to an investment as large as buying a home, it's best to make educated decisions, not bets.
Meet with a lender and assess your personal finances to see what you're comfortable affording. Partner with a licensed and contracted Realtor to refine searching for the home you want, and when you find the home you love at the price you're comfortable spending, that's when you should buy.
With record-low 2.5% interest rates, there has been a surge of interested buyers
For this reason, we’re seeing a spike in home prices, as homes that are priced correctly are seeing multiple offers within the first week. According to the NVMLS, homes are currently sitting at an average of 40 days on market (though homes with pools will often accept offers within only a few days).
Homes in the price bracket above $550,000 are sitting at an average of 60 days, with many realtors believing that that if your home doesn’t have interest in the first 30 days, it’s priced too high in this hot Seller’s Market.
However, good deals can be found and strong negotiations make dream homes possible.
First time homebuyers
With interest rates so low, people are able to afford homes at a much higher price point for the same monthly mortgage. Many renters are taking advantage by becoming first-time homebuyers.
With as little as 3.5% down with FHA loans, buyers are seeing mortgages less than their monthly rent. VA loans are starting at a staggeringly low 2.5% interest rate.
With a limit of $350,000 ($510,400 for military) some Nevadans are also taking advantage of down payment assistance programs, buying their homes with no down payments and closing costs less than their rental security deposits.
The costs are not meant to be taken lightly however. Without any assistance, closing costs average around $7,000 - $9,000. Yearly taxes should also be taken into account when determining your budget. Deciding on whether you should buy a home is an incredibly personal decision.
Lenders will be the only ones who have access to your full financial information, so it’s crucial to find a realtor who can communicate with your lender and work together to give reasonable economic advice based on your individual finances and wealth goals.
Building over Buying
On the new home build front, demand is at an all-time high. However, the price of lumber has increased significantly. If builders decide to pass those costs onto buyers, new homebuyers will likely expect to see an increase on base pricing in the coming months for this reason. NAHB estimates the cost to build a new single-family home to be nearly $17,000 more expensive.
When you walk into a home builder office, you’ll be greeted by a sales associate. They work for the builder. It’s important to bring your own representation, as a licensed and contracted realtor is legally bound to put your best interest first when negotiating on your behalf.
Realtors will help you save where possible or get additional add-ons for free. As customary, the seller (in this case the builder) will pay for all commissions, so choose a realtor you trust and feel aligned with when discussing visions for your home.
Final thoughts
This has been a particularly chaotic year, leaving many people feeling uncertain and anxious about the future. Buying a home should never be taken lightly, but the window for opportunity is open now for people who have stable employment to find a home they love.
Coronavirus has revealed the importance of being in a home you feel safe and peaceful staying in. Many people are using the low interest rates to upgrade to homes with more space and entertainment areas or move closer to family.
While COVID has taken so much from so many, it has also enabled people to assess what’s really important to them and decide what kind of life they really want to live.
Take stock of your financial and housing situation to measure if now is the right time to sell your house or buy a home.
Are you ready to decide if now is the time for your next major move? Contact Jessica Ream with Windermere Real Estate today and let us be your guide in the Las Vegas and Henderson housing market.
Picture Source is @JessicaReamHomes via Instagram