Unusual Las Vegas real estate market forecast for 2020, Video

masouds Las Vegas Real Estate Market Analysis Blog Leave a Comment

Las Vegas housing market should have witnessed far better price gains than it did but why it didn’t?

In order to do a Las Vegas real estate market forecast for 2010, we have to take a look back at a very unusual 2019. The law of supply and demand is represented by months of listing inventory of Las Vegas homes which is calculated by dividing the number of active listings (those that are not under contract) by unit sales. 6 months’ worth of listing inventory is considered normal, however, for most of 2019, the months of listing were in 3.2 to 3.7 range.

This should have resulted in far more median price gains than 3.3% in 2019. We will explain why it didn’t happen and make a prediction for the Las Vegas housing market for 2020. And lastly, we will explain why median prices do not show whether or not home prices have gained or lost and show you a much better way.

Video:

 Unusual Las Vegas real estate market forecast for 2020, homes video thumbnail

In order to make a Las Vegas real estate market forecast for 2020 we have to take a look at a very unusual housing market in 2019. In this video we will discuss:

1: While the listing inventory has increased from the very tight levels of 2017-2018, it is still too low for price drops in lower price ranges. The median price of single family houses gained 11.7% and 7.6% in 2017 and 2018, it only went up by about 3.3% in 2019. We shall explain why.

2: We will show a big discrepancy between the number of active listings in the MLS that you can search at any time and the number of active listings in MLS data that are used for the housing market reports and explain why it happens.

3: Explain why the median price is not a very good criteria to see if home prices have gained or not and show you a much better way.

4: Do a real estate market forecast for 2020.

5: We will discuss condo and townhomes markets separately because they are totally different, while they are combined elsewhere. But we will discuss it in the next post.

Quick Statistics:

Las Vegas homesAll ListingsForeclosures/REOShort salesMedian PricePrice per square foot
Active listings5,7637959$359,000$176
Home Sales31,774542192$314,000$168

As of December 28th we have 5,763 single family home listings which are not under contract. Of these, 79 are foreclosures and another 59 are short sales. 31,774 homes have sold so far in 2019, 542 were REO and 192 short sales. The median sales price of single family houses in December 2019 was $314,000 and the price per square foot of all homes sold was $168 per square foot.

Las Vegas home listings that are not under contract versus the home sales

Active listings versus unit sales

This graph shows active home listings versus the unit sales. It is easy to see that while sales numbers are similar to 2018, the listing inventory has increased substantially. However, if you have been paying attention, there is a big discrepancy between the number of available or active listings in the table where we showed 5,763 listings and the number of listings shown in the graph. The reason is that the number of active listings varies throughout the month and the number that we gave you in the table is a snapshot for one day. But, Realtor Associations use all listings that have been active at some point in a month, and many get expired or withdrawn. This is the way that it has been done since the beginning by Realtor Associations and that is how news organizations get their numbers. So we will use it because it makes perfect sense, but as it comes to the number of searchable listings at a point in time, it is highly misleading.

There is a big discrepancy between searchable active home listings and the number of active listings in the MLS graphs

Searchable active home listings

If you want to see how many listings were really available, say for the 17th of each month, we get far less listings and there is a 1500 to 2000 unit discrepancy among the 2 methods.

Increasing months of listing inventory

Months of listing inventory for homes has increased substantially

Months of listing inventory for homes has increased substantially

The best way to show supply and demand is by the months of listing inventory which is calculated by the number of active listings divided by unit sales.

The months of inventory increase substantially in the fall and winter of 2019 before dropping back to 3.2 to 3.7 months after the spring of 2019. While a 6 months’ worth of inventory is considered normal, this low inventory level should have resulted in bigger gains. We will explain why it didn’t after the statistics. The months of inventory for searchable listings at any moment is about half a month less.

Median price of Las Vegas homes

Median price of Las Vegas homes increased only by 3.3% in 2019

Median price of Las Vegas homes increased only by 3.3% in 2019

This graph shows the median price of single family houses and it hit $300,000 in the fall of 2018 and has only gained about $15,000 or 5% in 18 months and 3.3% in 2019. The median price of homes is an OK criteria to show market directions in lower price ranges but it only shows the median price of what people are buying. However, it doesn’t really show how much unit prices have appreciated or not. In Las Vegas high-rise condo market we showed how it fails miserably when the number of data points are low.

Price per square foot of single family houses

Price per square foot of Las Vegas homes is a much measure of whether or not home prices have gained or not

Price per square foot of Las Vegas homes is a much measure of whether or not home prices have gained or not

It is the price per square foot of units that show how much home prices have gained or lost. As when one divides the accumulated price of all units by square footage of all units the result is the price per square foot ratio. It is the lowest common denominator that all homes sold have in common.

Again, there is minimal price per square foot appreciation from the fall of 2018.

This table compares median price appreciation with price per square foot appreciation in 2017 to 2019.

Comparing price per square foot and median home price gain 2017 to 2019

 201720182019
Median price gains for Homes11.7%7.6%3.3%
Price per square foot gains for homes14.4%12%2.4%

The second set of data is a far more accurate description of whether or not unit prices are going up or down than the median price of what buyers are buying. And backed up by hundreds of CMAs which we do every year.

Conclusion:

We have no expertise when it comes to US or world economy and have no idea whether or not a big recession is on the way or not. But, there is about 24 billion dollars of large commercial properties currently under construction in the Valley which will undoubtedly help our economy in the near future.

Additionally, we know the Las Vegas real estate market, and all we can do is to make a prediction based on the historical statistics. As we discussed. 3.2 to 3.6 months of listing inventory should have led to much greater appreciation then 2.4% in 2019 and by extension in 2020 if the number of active listings is similar to the last year.

The reason for the low appreciation doesn’t show up in the graphs. The main reason is that even though sales number in 2019 are very similar to 2018 the number of active buyers have decreased. Many listen to forecasts of impending recession and are waiting for significant price drops, which there is no sign of as of yet. A good friend of mine who is a property manager and manages about 200 homes thinks that the Federal Government shut down of last year has scared buyers away and it is to blame.

Multiple offers have vanished and most listings, including all our listings have sold with only one offer. In most cases after the first price drop.

Average days to sell Las Vegas homes January 2017 to December 2019

Average days to sell Las Vegas homes has increased in 2019

Given that listings have stayed on the market much longer in 2019, buyers wait for a price drop before they make an offer.

And lastly, this was an overview of the whole Las Vegas housing market. It is actually very lively in some unexpected sectors. Such as multimillion dollar luxury homes in some of the best golf communities, especially in Henderson, such as Anthem Country Club, or highly upgraded condos in North Las Vegas.

Given that listings have stayed on the market much longer in 2019, buyers wait for a price drop before they make an offer.

And lastly, this was an overview of the whole Las Vegas housing market. It is actually very lively in some unexpected sectors. Such as multimillion dollar luxury homes in some of the best golf communities, especially in Henderson, such as Anthem Country Club, or highly upgraded condos in North Las Vegas.

Las Vegas real estate market forecast for 2020

The loan limit has been increased in 2020. FHA loan limit in 2020 is $322,000 and the conventional mortgage limit is $484,350. These increases should help the market.

As for our unusual Las Vegas real estate market forecast for 2020 for homes, we are going to go out on a limb and predict higher price gains in 2020 than the last year. How much higher? We shall know by March 2020.

The only Las Vegas housing market that counts is how your desired property has done in the past and that varies greatly with the neighborhood and price range.

If you want to buy or invest in Las Vegas homes, 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.

We are not going to insult your intelligence by giving you direction on how to subscribe to our real estate channel. But if you like our market reports please do subscribe.

On behalf of The Saber Team, this is Karen Saberzadeh of Realty One Group and www.lasvegas4us.com wishing you a great day.

Unusual Las Vegas real estate market forecast for 2020, Video was last modified: January 6th, 2020 by masouds

Leave a Reply