Las Vegas real estate on pace to have worst year since 2008

Las Vegas real estate sales are on pace for the lowest year since the Great Recession in 2008, but what’s happening in the valley is in line with national trends.

Sales of single-family homes, condos and townhomes in 2023 are expected to come in lower than last year’s total sales of 35,584 and lower than 2014 when only 35,710 properties were sold, experts say. This means you would have to go all the way back to 2008 to find a lower figure — only 28,618 homes were sold that year.

As of the end of September, only 22,967 homes have sold this year, according to Las Vegas Realtors, which pulls statistics from the Multiple Listings Services.

National data from Redfin, an online real estate brokerage, shows that 2023 is likely to end with approximately 4.1 million homes sold, which would be the country’s worst sales year since 2008.

But valley real estate agent Jonathan Catalano with ERA Brokers said it’s important to point out the distinctions between 2023 and 2008, mainly that the economy is not mired in a generational recession and people aren’t losing their homes at a record rate.

“Unlike 2008, homeowners can actually afford their mortgage payments and most have very low interest rates,” he said. “Unlike 2008, the majority of homeowners are sitting on a ton of equity. Home values remain stable and most likely will as the low number of buyers in the marketplace is offset by the low amount of inventory keeping values stable.”

The U.S. real estate market has been on a roller coaster ride since the start of the pandemic when the Federal Reserve slashed the overnight funds rate close to zero to stimulate the economy. This kicked off both a homebuilding and buying boom, which was curtailed starting in March of last year when the Fed started aggressively raising interest rates to stem runaway inflation, putting it up to a level not seen since the mid-2000s.

Catalano also said while interest rates are high, homes are still selling and there are ways around it if people still want to get into the market right now.

“Many new homebuilders are also now the lender as well and are offering interest rates in the mid-5s. New construction continues to thrive. Heading into the election year, I feel the current administration has to get mortgage rates down amongst other things, sooner than later if they seek re-election.”

Las Vegas Realtors President Lee Barrett said it’s also important to remember the industry has both its ups and downs, and after record-breaking years coming out of the pandemic, sales figures are invariably coming back down to earth. He noted this year’s figures are easier to understand given the Fed is actively trying to cool inflation through economic levers.

“The reality is that real estate historically goes through cyclical changes every 10 to 20 years, and we’re not necessarily in a manufactured state, but one that has been generated by interest rates, it’s not natural because of attrition or anything else. Consumers are in an awkward position; they don’t know what to do. They think (interest rates) may go down, which is based on inflation, but it doesn’t look like that’s going to happen anytime soon.”

Redfin’s economic research lead Chen Zhao said the market is clearly at a crossroads.

“Buyers have been in a bind all year. High mortgage rates and still-high prices are making it harder than ever to afford a home, shutting many young people out of homeownership and causing homeowners to reevaluate whether 2023 is the right time to move. Mortgage rates are staying high longer than anticipated, keeping away everyone except those who need to move and pushing our sales projection for the year down to a 15-year low.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.