High interest rates are keeping would-be sellers on the sidelines but those who do take the plunge are selling quickly and at higher prices than last year, the Las Vegas Realtors Association reports.
The price of an existing single-family home sold in May was $473,000, up 7% from $442,120 a year ago, and slightly below the all-time record of $482,000 in May of 2022.
The median price of local condos and townhomes sold in May hit an all-time high at $295,000, up 7.3% from a year ago and from $290,000 in April.
LVR President Merri Perry said housing prices are on the rise despite higher mortgage interest rates.
“Although the demand for housing here in Southern Nevada continues to outpace our supply, increased sales and inventory are positive signs for consumers and for our members,” Perry said in a news release.
A total of 3,091 existing local homes, condos and townhomes sold in May, up 3.7% for homes and up 0.9% for condos and townhomes from last year.
“We’re in a very, very strange market,” says Jeff Crampton of CSI Real Estate Team. “We should have 10,000 to 11,000 homes on the market and we’ve got less than half of that right now.”
Institutional investors, who rent while building up equity, have taken a good chunk of properties off the market.
With the exception of a pandemic-driven homebuilding peak in 2022, builders who slashed production following the Great Recession have learned to make more profit selling fewer homes, Crampton said. “They’re not in a hurry to flood the market with new construction even though the demand for it is crazy.”
Today’s home sellers are motivated by life events, such as marriage, divorce, and empty nesting. Other would-be sellers, who would have been in the market to downsize or upgrade, are uneasy about parting with low-interest mortgage rates and encountering higher rates to buy another property with a mortgage.
About one-quarter of sales in May were cash transactions, according to Las Vegas Realtors.
“Homes in Las Vegas double in value about every 12 years,” says Crampton, who advises clients the appreciation on their property will outweigh the hit of a high-interest mortgage.
And when rates go down to around 5%, demand and prices are expected to skyrocket.
“It’s going to be a bloodbath. It’s going to be a feeding frenzy of people who have a pent up inclination to buy and sell,” Crampton says. “It’s going to be like it was a few years ago where buyers are putting in 20 offers to try and get one one accepted because there are 20 offers on every house.”
Crampton says among the limited number of homes on the market are “about 20% that are very nice. But those are the homes 80% of the buyers are stacked up to buy.”
In May, about 86% of existing homes and condos sold within 60 days, up several percentage points from a year ago.
Crampton says even homes in need of work are selling quickly, but to flippers.
Clients facing the prospect of taking on a 7% mortgage are really opposed to the 2% on top of a more palatable 5% loan.
“The difference is about the amount of a car payment,” he says. “My advice is to buy the house you want now, while the price and demand are still reasonable, and forget the new car.”
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