The real estate investor boom in Las Vegas appears to be over.
Investor sales in metro Las Vegas plunged a dramatic 60 percent in the first quarter compared to a year earlier, according to a new report from Redfin, an online real estate brokerage. That was well above the 48.6 percent national average for metro areas.
Las Vegas had the sixth-biggest drop in investor sales among metro areas nationwide, according to the report.
Redfin defines an investor as “any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes.”
Las Vegas Realtors President-Elect Merri Perry said everything is tied to high interest rates right now. Mortgage buyer Freddie Mac reported last week that the average rate for a benchmark 30-year home loan hit 6.57 percent, the highest since mid-March.
“I think sales are down mostly because of tight inventory and rising interest rates,” said Perry, who has been a real estate agent in Las Vegas for more than 30 years. “This year is a market where buyers need to understand you’re not marrying the interest rate. You’re marrying the home. When interest rates go down, they can always refinance.”
Perry said she’s seen an uptick in new home sales, partially because home builders can offer to reduce mortgage rates, which can help people bettter stomach the financing costs.
“Everyone is looking at it from last year,” when both sales and construction reached record levels in Las Vegas and across the nation coming out of the COVID pandemic, she said. “We do have new homes coming on the market, but we’re seeing people staying in their homes longer, so it’s more divorces or wanting to upgrade or downgrade as to why people are buying right now. Everyone is not shelling out top dollar just to get something like the way it was last year.”
Approximately 28 percent of homes sold by investors in March in Las Vegas were sold at a loss, according to Redfin. Phoenix was the only metro region in the country with a higher rate.
The Sun Belt has been particularly hard hit by the drop in investor sales, as all but two of the 10 metro areas with the largest declines were located within that region. The largest first-quarter decline among the 40 metro areas Redfin analyzed was in Nassau County, N.Y., where investor home purchases fell 67.9 percent year over year.
Redfin noted that sales in the Sun Belt “soared in popularity among homebuyers during the pandemic. Investors piled in to capitalize on surging rents and home values, and are now pulling back as Sun Belt housing markets slow relatively quickly after getting overheated in recent years.”
Meanwhile, home prices locally dropped 5.1 percent year-over-year in March, according to the latest S&P CoreLogic Case-Shiller Home Price Index. However, prices in March were up 0.5 percent from February.
Nationally, home prices were up 0.7 percent year-over-year in March, according to Case-Shiller. The biggest jumps for home prices nationally were in Miami (7.7 percent), Tampa (4.8 percent) and Charlotte (4.7 percent).
Contact Patrick Blennerhassett at email@example.com or 702-348-3967.