Why double-digit median price gains don’t apply to Las Vegas luxury home market?
Las Vegas luxury home market is unlike the Las Vegas real estate market that you read about in news articles. In this video we explain why the significant price gains of cheaper track houses don’t apply to the Las Vegas luxury home sector.
Our formal real estate market video was recorded in October, 2018 and this Las Vegas Review Journal article titled experts say luxury market will remain hot was published in September and they couldn’t be more different. Just check out their evidence, backing up their claims that the market is on fire!
Words have consequences, in million-dollar or higher price ranges the buyers shouldn’t pay more than they should because they incorrectly think that the market is very hot when it is not. Or conversely set a much higher asking list price while selling because they will lose willing and able buyers while sales number are relatively low.
Why is the Las Vegas luxury home market different than the housing market you read about?
Las Vegas luxury home market is very different from the Las Vegas housing market updates that you read about in the news articles.
The double-digit median price gains of Las Vegas homes for sale really apply to houses that are priced around the FHA loan limit of $294,500. The appreciation rates go down when conventional mortgages, which are limited to $435,000 are needed to buy and further down when jumbo loans are needed.
Luxury homes definition
There are no set definitions for luxury houses for sale in Las Vegas, so we had to come up with our own. We have used the following criteria: price higher than $1,000,000, lot size bigger than 7,000 square foot to have room for a pool, living areas larger than 3500 square feet and 3 car garage or more with price per square foot of higher than $150.
Unit sales per month
The first thing that we need to discuss is the low sales numbers of luxury houses that fluctuate greatly. On more than one occasion the sales number changed by 100% from one month to the next. That affects the all-important months of inventory greatly.
So, we will show sales numbers by primary year. As you can see the sales number went up appreciably in 2017 which should be matched in 2018.
Active listings VS sold units
This graph shows active listings versus unit sales. In 2016 an average of 18.4 houses sold per month the same for 2017-2018 stands at about 24.5 units per month. However, the active listing numbers are up as well, especially in the last two months.
Months of listing inventory
The most important factor in the Las Vegas luxury home market is the months of inventory which is calculated by dividing active listing inventory by the sales number and it has been fluctuating at about 20 months until March 2018 when it dropped to 15 months’ worth of listing inventory.
The months of inventory for all homes has stood at about 2 months for a long time. 2 month’s worth of listing inventory results in strong seller’s market which in turn results in double digit price appreciation. 6 months of active listing inventory results in neutral market. 15 to 20 months of listing inventory doesn’t result in median price appreciation.
Median price of Las Vegas luxury homes
Due to wildly fluctuating sales per month, it is best to show the median price of units from 2014 to October 2018 by primary year. The median price of Las Vegas luxury homes in 2018 is actually 8.16% less than 2016 which means buyers are buying homes in the same or in lower price ranges.
While May, June and July 2018 median prices have under-performed, there is a definite improvement in August and September median prices.
The all important price per square foot
The above information shows that buyers keep buying in the same or lower price ranges, but this doesn’t mean that prices are coming down, they are not.
While the median sales price of Las Vegas luxury homes in 2018 is 8.16% less than 2016, the all-important median price per square foot has increased by 8.2%. This means that buyers are getting less bang for the buck or less of a house while buying in the same or lower ranges. This is truly baffling given the high months of listing inventory, but it is what it is, and our job is to report what is.
The median price by square foot for 2018 by primary year is at $304 per square foot. But this is due to severely underperforming in the first 4 months of 2018. However, in the last 4 months the median per square foot prices are up appreciably. I wouldn’t worry about the September number, we believe it to be an anomaly, but it may be a forecaster of what is to come in 2019, only time will tell.
Given the above statistics, we don’t see explosive improvement in the Las Vegas luxury home market. While we do expect further improvements in the all-important price per square foot which means prices will continue to go up, but buyers keep buying in the same price ranges.
We work our hearts out to provide you with formal real estate market reports that can’t be found anywhere else and are unique to this channel and our website. You can reward our efforts by liking, sharing and subscribing to our Las Vegas real estate channel for upcoming videos and visiting our website for a great deal more.
If you want to buy or invest in Las Vegas luxury homes for sale, 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 Saber Team, this is Karen Saberzadeh of Realty One Group and www.lasvegas4us.com wishing you a great day.