We are starting to see signs that Las Vegas housing market could be slowing down
Our Las Vegas housing market reports are based on the median price of homes, condos and townhomes. However, in order to predict what is to come we use months of listing inventory which is the main factor that measures supply and demand. It is calculated by dividing the active listing inventory (supply) by the sales result (demand).
In this video we will show how 3-4 months of listing inventory lead to double digit price gains and what is required to halt the recent price gains. We believe this may happen in 2019, but we need an avalanche of additional listings to go to get there, and it nay come.
Significant price appreciation in the Las Vegas housing market so far in 2018, but will it go on?
We get a lot of questions about when the Las Vegas housing market will reverse direction and home prices will start to fall. Our answer is always the same, when the months of active listing inventory in the sector and price range that you are interested in surpasses six, then prices will stabilize. However, we are unsure of when this will happen, but are starting to see some signs that the great price gains are going to be slowly coming to a halt.
Las Vegas real estate market for homes
In order to show you how months of listing inventory affects median home prices and when prices will stabilize, we will show you 4 charts.
The first chart shows home sales by primary year. In 2016, 32,048 houses sold in Las Vegas. This number went up to 34,371 in 2017 and we should end 2018 with more than 32,000 home sales, so sales numbers will be comparable to 2016. The only reason for this is very sever shortage of listings in the first half of 2018. And as it comes to new houses, the waiting list is about a year to a year and half, which is due to a shortage of construction labor.
This chart shows the number of active listings of Las Vegas homes for sale versus home sales per month from January 2016 to October 2018. As you can see, in most of 2016 we had more than 9,000 single family home listings. And then came the great reduction and in only a quarter it fell to less than 8,000 listings, 8 months later it broke the 6,000 level which lasted for only another quarter. And then it dropped to 5510 listings only 4 months later before it started to rise linearly to 8456 by October 2018.
What we have shown so far is active listings versus sales numbers. However, the months of active listing inventory shows the relationship between supply and demand. And it is calculated by dividing active listings by the sales numbers.
This chart shows the months of active listing inventory of houses for the same time period. It should be noted that this chart rounds up fractions to the next highest or lowest whole number which means that 3.6 is shown as 4 and 3.4 as 3.
After February 2016 the months of listing inventory fell to 3 or less for a year and then dropped to 2. In March 2018 it further dropped to less than 2, until September when it surpassed 3.
Escalating median price of single-family houses
The median price of Las Vegas homes in August to October of 2018 is about $300,000 and has not changed much lately but this is seasonal. We did show the previous graphs for a reason, so we could explain the relationship between months of listing inventory and median prices.
|First 10 months of 2018||11.1%|
After the first quarter of 2016 the months of listing inventory hovered around 3 and stayed there for the reminder of the year. this resulted in the median price of houses appreciating by about 9.6%. In 2017 when it fell to around 2, the median price gained 12.5% and so far in 2018 it has appreciated by 11.1%. So as long as we have less than 4 months inventory of single-family houses, we will have a seller’s market. But if and when it surpasses 6, prices stabilize. It all depends on the supply and demand.
Las Vegas real estate market for condos
The shortage of listing for condos was more severe than homes and the months of listing inventory fluctuated around 2, for all 2017 and the majority of 2018 before raising to 4, recently.
|First 10 months of 2018||18.6%|
Las Vegas real estate market for townhomes
The months of listing inventory of townhomes resembles the single-family homes resulting in similar median price appreciation.
The median price of townhomes has been fluctuating between $212,000 and $219,000 before falling to $207,000 in October, but that is seasonal and will go up come February.
|First 10 months of 2018||11.9%|
There is a great deal of talk about another recession that scares investors and at least our investors selling activity in 2018 has increased appreciably. Thus, the market may be changing direction, but we will know much more come next March about whether or when it will shift to a normal market.
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If you want to buy or invest in Las Vegas homes, condos, high-rise condos or town-homes, please call us at 702-478-7800. You can find our contact info and web page with the embedded video and video transcript in the video description.
On behalf of The Saber Team, this is Karen Saberzadeh of Realty One Group and www.lasvegas4us.com wishing you a great day.