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‘Quick turn of events’: Las Vegas housing market hits brakes after heated run

Updated August 27, 2022 - 9:38 am

Almost any way you look at it, Las Vegas’ housing market was accelerating rapidly a year ago.

Today? The buying binge is becoming a more distant memory each week.

By almost any measure, Southern Nevada’s housing market is hitting the brakes. People are buying fewer homes, sellers are slashing prices, availability is soaring and home builders are pulling fewer construction permits.

Housing markets across the U.S. have slowed lately as buyers face higher borrowing costs. But at least in Las Vegas, the market looks dramatically different than it did just several months ago.

Of course, there’s no telling where housing will head over the next several months, and just because it’s slowing now doesn’t automatically mean it’s headed for a face plant.

But buyers have been pulling back, and the change feels fast.

‘Really quick turn of events’

Simply Vegas agent Jillian Batchelor told me a few weeks ago that the market was heated earlier this year but started to turn as mortgage rates climbed higher.

Buyer demand is down, and house hunters are making offers at or below the listing price and asking for concessions, Batchelor said.

This is a stark difference from last year when rock-bottom mortgage rates fueled a buying frenzy in which sellers were flooded with offers and buyers routinely paid above the asking price.

Overall, it’s been a “really quick turn of events,” Batchelor said.

Housing headlines have been pretty bleak lately, with a regular stream of reports from industry groups detailing the slowdown.

“Home buyers Are Increasingly Backing Out of Deals as Slowing Market Boosts Negotiating Power,” brokerage firm Redfin declared Aug. 16, following its Aug. 12 announcement that “Home buyer Competition Falls to Lowest Level Since Early Months of Pandemic” and an Aug. 9 headline saying “Redfin Reports A Growing Share of Home Listings Are Stale As Market Cools.”

Redfin announced in June that it was laying off around 470 employees, with CEO Glenn Kelman warning there could be “years, not months, of fewer home sales” ahead.

Sales down, inventory up

Fueled by low borrowing costs — and by an influx of out-of-state buyers as people worked from home — Las Vegas’ housing market accelerated to its most frenzied pace in years in 2021.

Prices hit new all-time highs practically every month, buyers flooded properties with offers and houses sold rapidly. Amid the buying spree, builders put buyers on waiting lists, regularly raised prices and, in some cases, drew names to determine who could purchase a place.

Today, the market looks much different.

Southern Nevada resale prices fell month to month in July for the second consecutive time after not dropping for more than two years. The median sales price of previously owned single-family homes was $465,000 last month, down $15,000 from June, according to trade association Las Vegas Realtors.

Buyers picked up 2,066 single-family homes in July, down 38.4 percent from the same month last year, and there were 7,331 houses on the market without offers by the end of July, up 143.8 percent from a year earlier, the association reported.

On the construction side, builders logged 434 net sales — newly signed purchase contracts minus cancellations — in July, down 61.5 percent from July of last year, according to figures from Las Vegas-based Home Builders Research.

All of this comes amid a sharp jump in mortgage rates. The average rate on a 30-year home loan last month was 5.41 percent, up from 2.87 percent in July 2021, according to mortgage buyer Freddie Mac.

Las Vegas’ home buying frenzy was bound to end at some point, as the market can only keep its foot on the gas for so long. The question was always when, and how, it would come to a stop.

And lately, we seem to be finding out.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

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