This is a video transcript of how is the Las Vegas real estate market affecting buyers and sellers? To see original blog and video please click on the link in the bottom of this page. Video duration: 10:05
Low inventory of Las Vegas home and condo listing in appreciating Las Vegas real estate market
Our Las Vegas real estate market videos are one of the most comprehensive and accurate Las Vegas housing market reports available online. We not only tell you what is happening, but why it is happening. But this time, Instead of telling you why, I am going to tell you how these market reports impact Las Vegas homes, condos and town homes buyers and sellers. This is why you are watching these after all.
We sound like a broken record, repeating the same thing over and over again, and it is inventory is very tight in the Las Vegas home, condo and town home market, especially in lower price ranges. We will use the term condos to include town homes also for the rest of this report.
Let’s talk about increased sales activity of Las Vegas homes and condos.
Show Sales numbers for Las Vegas homes, condos and town homes for August 2016
As this graph shows 3,056 Las Vegas single family homes sold in August 2016. The percentage changes below the chart columns show changes from the previous year. For example home sales for August 2016 are 9% higher than the same month in 2015. Year to date figures show sales of Las Vegas single family houses up to August in each year and total sales in 2016 is 4% ahead of 2015.
As you can see August condominium sales are about 22% higher than August 2015 and 15% higher than total sales at this time in 2015. It is easy to see that sales numbers are higher than 2015 which in turn was higher than 2014. Now keep in mind that the median sales price of Las Vegas homes went up by about 10% in those years.
Decreasing inventory of active Las Vegas homes and condos listings
Show active Las Vegas homes and condos inventory
Let’s discuss decreasing inventory of Las Vegas homes and condos active listings, or listings that are not under contract.
This chart shows active inventory of Las Vegas home and condo active listings in the Las Vegas MLS. While the inventory of single family listings is about 24% below past year, condo inventory is down by an incredible 40.8% from 2015.
Show active Las Vegas homes and condos inventory by month
Increased sales activity and reduced number of active listings has led to the total inventory of active listings dropping to 3 months in 2016. The same for 2015 was 4.4 months. Active inventory of Las Vegas condo listings is now at a ridiculously low 2.3 months, the same for 2015 was at 4.6 months. Six months inventory is considered normal.
Now if you think these numbers are low, wait until we show you active inventory of Las Vegas homes for sale that are priced below the FHA loan limit. And newspaper articles say that the Las Vegas real estate market is entering a normal phase, ha.
Median sales prices for Las Vegas homes and condos keep going up in lower price ranges
Show median sales price for Las Vegas homes and condos
Couple increased demand and reduced inventory and you get price gains. This graph shows the median sales prices for Las Vegas homes and condos for August 2014, 2015 and 2016. As we have previously written, the median sales price for single family homes appreciated by about 5% from August 2015 while median sales price for condos and town homes appreciated by 12.4%. The year to date median price gain for Las Vegas houses has been 6% and for condos 9.5%.
Why is inventory of Las Vegas homes and condos so low?
Because prices keep going up and if one doesn’t have to sell, it would be unwise to do so. Our investors who purchased a home or condo before spring of 2015 have gained 15% in price appreciation in addition to 6%-6.5% in cash on cash returns after property tax and HOA fees. I am not sure where else they could get this kind of return on low risk investment.
What does the low inventory mean to Las Vegas homes and condos buyers?
Now as I promised, we will show you what this means for Las Vegas home and condo buyers and sellers, but buyers first.
Show North Las Vegas map
The City of North Las Vegas’s population is 226,000. If a buyer wants to buy a condo or town home for less than $200,000, there are only 44 listings in 16 condominium communities in the Las Vegas MLS to choose from. Let’s take a closer look at one of these listings.
Show Terrasini at Aliante condo active and sold listings
This Las Vegas MLS page shows search results for available listing and sold condos in Terrasini at Aliante in the past 3 months only. Check out the sales price for the 1454 square foot condos; they sold for $131,000 and $131,500 and both closed in the third week of August. Then check the asking list price for the one available listing on top, it is $11,400 higher than the highest comp. Most listings are more or less like this one, regardless of upgrades and property condition and this is what we see over and over again.
Show Henderson map
Let’s take a look at the same situation in the City of Henderson which is a Las Vegas suburb. Henderson’s population is 227,000 and real estate is much more expensive than North Las Vegas. Here a buyer has a choice of 25 condo communities with a total of 66 listings that are not under contract. Now imagine a city of more than 450,000 with 110 condo listings. What do you think will happen? Prices will go up due to nonexistent inventory.
Very low Inventory of Las Vegas homes that priced below FHA loan limit
Let’s discuss the inventory of Las Vegas homes for sale that are priced below the FHA loan limit.
Greater Las Vegas homes priced below the FHA loan limit of $287,000 are the most sought after due to the low down payment requirement and lower credit scores needed to qualify.
320 single family homes sold in August in North Las Vegas, 294 or about 90% were priced below the FHA loan limit of $287,000. 527 out of 658 of active listings in North Las Vegas are priced below $287,000 which makes the inventory of active listings at 1.7 months.
2860 houses sold in Greater Las Vegas in September, 1973 were priced below the FHA loan limit. The active listing inventory of homes for sale priced below the FHA loan limit stands at 3,282 or 1.6 months of inventory in this price range and they compromise about 70% of home sales in September. Again initial asking list price for home listings in this price range are higher than all comparable sales and come down over time.
High initial asking list price hurts Las Vegas homes and condos sellers
Let’s look at the effect of the Las Vegas real estate market on Las Vegas home and condo sellers.
This graph shows original list price for homes and condos that have sold in the past year vs. the final selling price. It fluctuated between about $15,000 in the fall and winter of 2015, however started to widen to $30,000 in spring 2016 and stayed in $20,000 range since June.
We would initially list a home at $10,000-$15,000 over comparable homes with the same upgrades and property condition, not higher than all sold listings as we see now. The reason is that we have seen buyers overpaying for newly listed properties all the time, so why not take a shot at it.
This way we have a little room to cut the asking price in a couple of weeks depending on the number of showings and interest, and account for inevitable seller’s contribution to buyer’s closing costs if the buyer has to finance. Setting the asking price at $20,000 to $30,000 above comps will work against the sellers because their listing does not generate any interest and become dated. This leads to the property selling for less than it should. It also confirms the listing agent’s ignorance of the Las Vegas real estate market.
Like we said in the beginning, like a broken record we repeat the same stuff month after month. The Las Vegas real estate market for housing will not see any changes unless the inventory of Las Vegas homes and condos go up significantly and there is no sign of that happening. So in lower price ranges for each area, homes, condos and town home prices will keep going up.
Finally, we will go on a limb and say: if nothing changes in Las Vegas real estate market and you want to buy a home or condo at or below the median sales price for that area, you will be paying at least 10% more by August 2017. By the way, we predicted a 6% price appreciation for Las Vegas homes for 2016 and so far we are EXACTLY on the mark. Like we said in the beginning, we have the most comprehensive and accurate Las Vegas real estate market reports available online.
If you want to buy or invest in Las Vegas, Henderson or North Las Vegas homes, condos or town-homes in the immediate future, please call us at 800-762-4917.
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On behalf of The Saber Team, this is Karen Saberzadeh of Realty
One Group and www.lasvegas4us.com wishing you a great day.
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