Prices are increasing as buyers want the low fixed payment and a home that will appreciate in value and add to their net worth.
Homeowners net worth increased an average of $245,000 over a 10-year period. Renters net worth on average increases $6,000 over 10 years. Many first-time home buyers have entered the market to have a lower fixed payment instead of a higher rent payment that may continue to increase.
Las Vegas was the #1 Foreclosure state in 2008. Prices plummeted due to the mortgage debacle. Even so, look what has happened to Las Vegas home values since 2010. We took the median price of homes and compared the median price with today’s median price. If you purchased your home in 2017, for example, your appreciation today would be $97,000. This chart does not take into consideration the mortgage principal reduction if you had a mortgage.
Seller’s may have a high interest rate. Seller’s sell to downsize, have a newer home, change locations, and now can have a lower payment if they sell and buy. With the equity to purchase another home with a lower payment, sellers are selling and buying so inventory remains low.
Inventory is decreasing with only 18 days of inventory. Interest Rates are historically low, and NAR says rates will stay low through 2021.
The new home market is experiencing supply and demand issues as well. Buyers are on wait lists and having to bid for lots.
LAS VEGAS MEDIAN VERSUS AVERAGE HOME PRICES
The higher home prices do impact the above calculations.
465 million dollar homes have sold so far this year. Last year, the total of million dollar homes sold was 618. So far this year the monthly sales are averaging 116 versus last year average monthly sales of 51.
Las Vegas continues to keep projects on the move for completion giving promise of more jobs. Tourism is coming back strongly. The vaccine leads the way for the country’s recovery from the pandemic. CES – The Consumer Electronics Show Announced its convention to be back in Vegas in January 2022. The new Resorts World will open this summer. The underground transportation system will move conventioneers quickly to their destinations.
The pandemic has left many people working from home without the need for a commute, and buyers can get a bigger house for less money in Las Vegas than in, say, Los Angeles or the Bay Area.
Q1 SNAPSHOT OF THE USA ECONOMY AS IT RELATES TO THE HOUSING MARKET.
Instant Reaction: The GDP Recovers to Pre-Pandemic Levels in Q1, with Strong Consumer and Residential Investment Spending
The economy is now back to its pre-pandemic level as the economy undergoes a 6.4% annualized strong expansion. (Released by the Bureau of Economic Analysis. The first estimate will be revised two more times but those have typically been marginal revisions.)
The National Association of REALTORS® estimates that rates will average 3.2% by the end of the year.
In Q2 residential investment spending outpaced GDP growth. This economic recovery is quicker and stronger compared to the recovery post-2007-2009 recession.
This recovery is due to dose of monetary expansion and strong fiscal spending. Investors are also bullish about the economy's growth potential.
70% of the economy is consumer spending.
Consumer spending expanded 10.7% with more spending on durable goods, motor vehicles, household equipment, and recreational goods. The stimulus checks are likely fueling consumer spending.
Housing starts rose a healthy 10.8%. Housing starts steadily recovering to an annualized rate of 1.74 million in March. Builders are contending with the rise in lumber prices.
Businesses appear to be generally bullish about the economy's prospects. There was a 17% rise in investment spending for equipment.
70% of the population likely to be vaccinated by end of August 2021 at the current pace of 1.4 million a day is contributing to the strong business confidence.
The strong housing market will continue through 2021 with sustained economic growth and with mortgage rates hovering within the range of historic lows.
Based on its latest April forecast, NAR expects GDP growth to hit 4.5% in 2021, mortgage rates to average 3.2%, and existing-home sales to increase 10% to 6.2 million.
The economy should continue to expand with the stimulus from the $1.9 trillion COVID-19 relief bill. Sustained monetary expansion with the Federal Reserve Board keeping the federal funds rate at 0 to 25 basis points. There is a commitment to increase its purchases of Treasury securities and mortgage-backed securities by at least $120 billion every month until the economy attains maximum employment.
That is likely going to happen through the end of 2022 with the unemployment rate declining sluggishly since the fourth quarter of 2020 to 6.2% and with 9.7 million people still unemployed.
The NAR article gives Credit to Scholastica (Gay) Corporation Research Economist
Scholastica Gay Corporation is the Research Economist for the National Association of REALTORS®.