Why Prices are High and There’s No Supply
In Las Vegas real estate prices are high, and there’s no supply; but why?
According to a variety of sources, we are currently in a US housing crisis. And, you can see it right here in Las Vegas. What’s the crisis you ask? In order to buy a home, you need to find one that’s actually for sale!
Most are familiar with the recent 2000’s real estate collapse. Unlike the rise and crash in the 2000’s, prices today aren’t driven by subprime mortgages and savvy flippers. Today, mostly resulting from the crash, a majority of greater Las Vegas is now owned outright (no mortgages) and most all the subprime or negative mortgages were foreclosed or are now positive. The crash was as real as an economic market correction gets.
We need to consider that prices don’t always go down as a result of real estate or real estate mortgages.
In the 00’s it was also oil (and energy)… in the 80’s it was mortgage rates, and in the 20’s, 30’s, 40’s, 70’s and so many other decades, it’s been… WAR including World War I, II, and III? death, depression, lack of resources, Economic Crisis, housing bubbles, and how about Natural Disasters? they’ve damaged and destroyed cities causing massive displacement, and Clark County has been known to accept evacuees from natural disasters and to be a hotspot for those fleeing reoccurring disasters and laborious weather. Hello, how about the world’s migration crisis?
It all boils down to simple Economics: If there’s no supply and there’s a high demand, prices will be high. Clark County Nevada has surpassed the population of 15 plus states. In the 70’s our population was @ 250k people. 2010 US Census says 1,951,269 people! Estimated population of Las Vegas / Clark County Nevada in 2018 is @ 2.5m, and growing exponentially. And across the United States, not just Vegas, Population Growth is exponential; explore population growth in Clark County Nevada and the United States.
Many sports fans are flocking for the Las Vegas Raiders and the awesome Golden Knights. They’re also building a new baseball stadium, that could be home to a future pro baseball team, according to private source. And with the NBA Development team here, we’re probably not far from a pro NBA team. We’re maintaining the title of entertainment capital of the world. In Las Vegas Tourism is at an all time high with over 50 million visitors expected this year.
According to recent bankrate.com reports, over 75% of US homeowners say they have no plans to move within the next 5 years, and more than 60% of homeowners (62%) say they never plan to move. Plus, it’s hard to move when there’s nothing for sale!
“Americans are essentially staying put in their homes for the foreseeable future, either by choice, or by necessity or some combination… Because of this, prospective homebuyers are finding a real lack of quality, affordable inventory, which can lead to bidding wars and risky overspending.” said Bankrate.com senior economic analyst Mark Hamrick in a press release.
Resale and Rental Supply
The reality is, there’s few properties available for sale or rent. in Greater Las Vegas / Clark County as of July 4th 2018, the Median Sales price is $270k, we have 1.8 months of inventory, and the median days on market is 12 days (days from list date to under contract and MLS update to a pending status). Available Homes for sale are not at an all time low, but they are close. This is INSANE. The supply of properties for sale and rent have sharply declined and have and are drastically rising. Whether you rent or own, lock in your rates and terms.
More than a decade after our previous real estate crash, it’s hard not to think that another crash is brewing… Shy of Arizona and Idaho, we’re still the lowest priced compared to all of our neighboring states. According to Zillow, California’s median home price is $539k and is expected to rise @ 10% within 1 year. In Oregon, the median sold price is $327k and may rise as high as 15% within 1 year. Idaho median sales price is $172k, $257k in Boise, and is expected to rise @ 10%. In Utah the median sold home is $305k and is expecting @ 15% increase! In Arizona the median sold home price is $239k with a slower 5% increase expected.
Good news for buyers… interest rates (for now) are still incredibly low. If / when interest rates hike up drastically, this could cause prices to drop.
Bad news for buyers… unless Yellowstone supervolcano covers North America in ash (or ? the unpredictable happens), it’s highly unlikely to see average homes prices go down any time soon.
Builders are building, but not nearly enough. According to the Federal Reserve Bank: fewer homes are being built per US household than at nearly any time in our history. Keep in mind resale homes in greater Las Vegas have not surpassed average reconstruction or new build cost.
Maybe these recent photos of new construction will give you an idea of what’s happening in the greater Las Vegas Area (photos are mostly Summerlin and undeveloped Downtown Las Vegas):
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