The Las Vegas real estate market is on fire! July prices increased 8.5% nationally and our local market was no exception to that. Why on earth are prices increasing when Nevada has one of the highest unemployment rates in the country and growing?
Even during a pandemic that we haven’t seen in 100 years can’t stop this market! Let’s take a deeper dive into what is really going on in our local market to try and explain this phenomenon.
The Death of Urban Life
We are starting to see major trend shifts that were entirely unpredictable, in my opinion. More and more people are starting to list their homes in big cities like Los Angelas, Seattle, and San Francisco to move to more affordable places.
The suburbs are starting to pick up immense steam as we move into the second half of the year. The Las Vegas real estate market is definitely bigger however, its prices are incredibly attractive for LA types.
California buyers are dominating the market here. We are seeing multiple cash offers or huge down payments with low leverage on every deal that hits the MLS.
I made over 30 offers this past week and lost every one of them to people willing to owner occupy and paying cash! It is hard to compete with owner occupied offers when they are most likely going to live there for the next few years.
They are over paying for property which is driving prices up.
Isn’t Las Vegas Unemployment Rate High?
Yes.
It is incredibly high and climbing because we are a major tourism market. You would think that a lack of jobs would deter people from moving here, but the data is the absolute opposite.
Massive exodus from our neighbors to the west is causing our market to remain high. I believe, if we weren’t seeing this exodus the market would have collapsed like 2008.
But Interest Rates Though?
Absolutely, interest rates are at an all time low! If you are planning on buying or refinancing, I would do it now. What an incredible opportunity to have such a low rate/payment.
Should you be concerned about rates, absolutely. I cannot see them decreasing this rate any lower unless they go negative! I just have a hard time believing they will decrease more over the next year.
Interest rates are going to remain low to incentivize borrowing but the market is in a very volatile state and should be concerning for everyone.
So Why Did Prices Go Up In the Las Vegas Real Estate Market?
COVID shrunk our market big time. We are hovering around 2 months of inventory in the Las Vegas real estate market which is really low. A healthy market should have around 6 months of inventory at any given time.
All that means is if the market where to sell 100% of its inventory it would take 2 months to go through it. That’s very low.
Sellers are choosing to wait because they either don’t want people walking through their homes or they feel it will be better to sell when this is all over.
I am here to tell you something, you should sell right now. The market is just not sustainable at these prices with our unemployment which will cause a shift in price eventually. TAKE ADVANTAGE NOW.
Sometimes I get to use my economics degree here when I say our market shrank in inventory, but demand for housing in Las Vegas did not shrink the same amount. Hence, increase in price! School really paid off for that economics lesson I just gave you!
Prediction Time
I am going to be very diplomatic here with this prediction because it really can go either way.
The Las Vegas real estate market is going to remain strong despite what some economist say. I think we are being propped up with people moving here from California and California is going to have the same issues for at least a decade.
Our market will remain strong through all this uncertainty. However, the market will need to adjust because local Nevadan’s purchasing power is too low to sustain these prices. Our jobs have vanished and they don’t seem to be coming back until tourism comes back.
Personally, I am buying everything I can get my hands on. If a realtor brings me a deal, I’m buying it. If a wholesaler brings me a deal, I’m buying it. We are very bullish on our flips right now because we can absorb a decrease in price in the short run.
I can’t see our market dropping more than 6% over the next 12 months so I will remain bullish until something changes that opinion.
So bring me your deals!! We are very eager to start buying in the Las Vegas real estate market and we can’t wait to work with you!
