According to a new report out this month, the real estate market in Las Vegas, Nevada has experienced bigger home-price gains than other major metro areas across the U.S. Tight inventory conditions have had a lot to do with that.
Big Home-Price Gains During 2019
The report, published on June 25 by the housing analytics company CoreLogic, analyzed home-price changes in 20 major metros from April 2018 to April 2019. The Las Vegas real estate market saw the biggest gains during that 12-month period.
Phoenix, Arizona and Tampa, Florida rounded out the top three highest-performing markets. At the other end of the spectrum, the biggest price declines were seen in Seattle, San Francisco and San Diego.
According to the report:
“Las Vegas (7.1%), Phoenix (6%) and Tampa (5.6%) accounted for the highest year-over-year price increases [from April 2018 to April 2019], while metros with the largest slowdown from the previous year continue to be along the Pacific: Seattle (13% point drop), San Francisco (9.1% point drop) and San Diego (6.8% point drop).”
The real estate information company Zillow recently reported that the median home value for Las Vegas rose 7.6% over the past 12 months (as of June 2019). Home prices nationwide rose by around 5.4% during that same 12-month period. So the Las Vegas housing market is outperforming many other cities right now, in terms of annual price growth.
Las Vegas Housing Market Appears to Be Cooling (a little!)
Despite the big increases in home values mentioned above, this real estate market is currently experiencing a cooling trend. The same is true for many cities across the country.
From a housing standpoint, 2019 could be considered the year of the slowdown. It marks a turning point. As we’ve previously reported, home prices in many real estate markets seem to have peaked already.
The Las Vegas real estate market probably hasn’t peaked yet. According to several forecasts, home prices in the area are expected to continue rising through 2019 and into 2020. But those gains will probably pale in comparison to the ones recorded over the past couple of years.
In June, for example, Zillow’s research wrote the following: “Las Vegas home values have gone up 7.6% over the past year and Zillow predicts they will rise 2.2% within the next year.”
Current trends also indicate a slowdown. Earlier this month, the Greater Las Vegas Association of Realtors reported that the median sales price for the area has remained flat for the past few months. The median price for May was $300,000, the same as it was during April and March.
Population Growth Brings More Buyers Into the Market
Population growth has helped boost home prices in the Las Vegas area over the past few years. According to the U.S. Census Bureau, the city’s population grew by roughly 10% from 2010 to 2018.
The population for the broader metro area — which includes the town of Paradise and the city of Henderson — is now well above the two-million mark.
Population growth tends to increase demand for housing, on both the rental and purchase side. It also puts upward pressure on home prices and increases competition among buyers.
Inventory Remains Tight, as of Summer 2019
As of May 2019, the Las Vegas housing market had about a three-month supply of homes for sale. In theory, that means it would take three months to sell off all of the properties currently for sale if no new ones came onto the market.
Housing analysts and economists use such metrics to measure inventory trends over time. A five- to six-month supply level is considered to be a “balanced” real estate market. So from an inventory standpoint, the housing situation in Las Vegas still favors sellers over buyers.
But we expect this to change through the end of this year and into 2020. Home prices within this real estate market (and the nation as a whole) have risen faster than wages over the past few years. Over time, that kind of trend reduces affordability and “squeezes” many buyers out of the market.
Historically, periods of rapid home-price growth are eventually followed by a cooling trend where prices either level off or decline. And that kind of “correction” might be on the horizon for the Las Vegas housing market as well.
Las Vegas Economy Much Stronger Today
Economic stability supports property values by giving residents the financial means and security to (A) make a home purchase and (B) keep up with their monthly payments. Such is the case within the Las Vegas real estate market.
According to the Bureau of Labor Statistics (BLS), the unemployment rate for the Las Vegas-Henderson-Paradise metropolitan area has dropped steadily over the past eight years or so. The unemployment rate for the area peaked at 14% in 2010. This was followed by a steady decline that continues to this day. As of April 2019, the unemployment rate for the Las Vegas metro area had fallen to a healthy 3.7% — its lowest level in years.
Summary of key points:
— Las Vegas has experienced larger home-value increases than other major metros.
— But that appears to be changing, as of summer 2019.
— Price growth has slowed, and this could continue in the months ahead.
— Las Vegas could become more of a buyer’s market by 2020.
Disclaimer: This article contains forecasts and predictions issued by third parties not associated with the Home Buying Institute. They are the equivalent of an educated guess and should be treated as such. No one can predict future housing market conditions with complete accuracy.
Written by: Brandon Cornett
©2019, Home Buying Institute (HBI). All rights reserved.
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