What a difference two quarters can make in an already volatile Las Vegas Housing Market. It was not too long ago that you could list your home on a Thursday, and by the end of Sunday, without hosting an open house, you would be presented with multiple offers over your listing price. How quickly times have changed.
Throughout the end of 2021 and leading into 2022, Las Vegas had an amazing sellers’ market that the valley was exploiting to the fullest. Then came the gradual increase in mortgage rates which slowly began to lower a buyer’s capacity to purchase. The household that was once qualified for a $500,000 home slowly began to lose their ability to purchase their dream home. A simple rate increase from 3.5% to 5.5% lowers a buyer’s capacity to purchase by over $100,000 for the average home buyer.
The days of paying over asking price has slowly diminished into the days of buyer’s receiving seller’s concessions. That’s Right! The power has now shifted into the buyer’s hands. With more homes sitting on the market for longer periods of times and median sales pricing also slowly decreasing, the qualified buyers now have the power to leverage with sellers. Buyers can now submit offers at the listing price and can expect to be competitive. Buyers can, again, ask for seller contributions towards closing costs and still have purchasing power with a competitive offer. The market shift has created a slight advantage for the well qualified buyer, but that power came with the cost of increased interest rates.
Month over month since May, when the single-family home median price peaked at $525,000 (per Las Vegas Realtors, www.lasvegasrealtor.com) there has been a decrease in median price over June and July down to $499,990. Single family homes median price is still up 17.64% year over year, but available homes are also up 33.81% year over year. Inventory hit its low in January of 2022 with 5,572 available homes on the market. As of July, there were 9,854 homes available in the Las Vegas valley. With the basic Economics 101 formula, an increase in supply with a slight decrease in demand the main change will be the market lowering of price.
A patient buyer can now hold out to purchase the home they want at a price they are willing to pay. The time of extreme pressure being placed on the buyer to act hastily, has for the current time being, come to an end. Well qualified buyers can now leverage their preapprovals into a competitive offer, which will lead to a home purchasing contract where they’re in the driver’s seat. That leverage does come with a slight increase in monthly overhead, but remember, whether you rent or own, you are always paying down on a mortgage. Now the choice lays in whether you want to pay your own mortgage, or your landlords’.
Daniel Herrera is the Branch Operations Manager at Residential Bancorp. He can be reached at 714.878.3112 or firstname.lastname@example.org.