August 9, 2016 - 4:00 am
A tight supply is putting the squeeze on the Las Vegas housing market this summer.
While Las Vegas is running ahead of 2015 in terms of home and condo sales, the limited supply has finally caught up with the market in part due to investors choosing to rent homes rather than put them on the market. The Greater Las Vegas Association of Realtors reported sales of single-family homes in July fell 12.7 percent to 2,837. Home sales were down 7 percent from July 2015.
The increase in home prices the market has seen in recent months has also slowed. The $236,000 median price of homes sold in July is only $1,000 higher than June. Between April and June the median price had risen just under $15,000.
The problem is with a home supply of less than three months, where a normal supply is about six months, said GLVAR President Scott Beaudry.
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in July was 13,217, down 3.8 percent from one year ago. GLVAR tracked a total of 2,401 condos, high-rise condos and townhomes listed for sale on its MLS in July, down 30.9 percent from one year ago. The median price of homes on the market was $265,000, up 10 percent over a year ago, according to the GLVAR.
“Our tight inventory might finally be slowing down our sales pace,” Beaudry said. “Sales slipped the most during July for lower-priced homes. This suggests it’s getting harder for entry-level buyers to find the homes they want.”
People are gobbling up the limited number of properties on the market. Homes sold faster in July, when 74.9 percent of all existing local homes and 68.8 percent of all existing local condos and townhomes sold within 60 days. That compares to one year ago, when 69.4 percent of all existing local homes and 65.2 percent of all existing condos and townhomes sold within 60 days, according to the GLVAR.
The total number of existing local homes, condominiums and townhomes sold in July was 3,447, down from 3,815 total sales in July of 2015. Compared to the same month one year ago, there were 7.2 percent fewer homes, and 4.2 percent fewer condos and townhomes sold in July, according to the GLVAR.
“It’s weird,” Beaudry said. “You have a low housing supply that does not follow practical marketing of supply and demand. We have demand and supply that’s really low, which should spark more demand and higher pricing. To me, what that says is it’s about our history.”
Following the housing crash after the Great Recession, investors picked up many properties, Beaudry said. Home prices fell from a peak of $315,000 in June 2006 to a bottom of $118,000 in January 2012. Investors who bought at the upper end of the market are reluctant to sell and those who bought near the bottom see price increases and are doing well with rentals because prices have increased 10 percent in the past year, he said.
“Our market crash created an anomaly in the market that has meant less properties for sale,” Beaudry said. “They haven’t put those properties on the market. I don’t know when and if they’re going to because they want to see and even more of a return on their investment. They are content, and the only way to get them to sell is if something happens to the market.””
Investor influence, however, is waning when it comes to acquiring more properties.
As for homeowners who are unwilling to put their homes on the market, Beaudry said there’s the 20 percent who are still underwater — they owe more on their mortgage than the home is worth. They’re seeing values increase and mortgage rates remain low and are willing to refinance and lower their payments and stay where they are.
In July, 5.7 percent of all local sales were short sales – when lenders allow borrowers to sell a home for less than what they owe on the mortgage. That’s down from 7.1 percent of all sales one year ago. Another 5.9 percent of all July sales were bank-owned, down from 7.7 percent one year ago, according to the GLVAR.
Beaudry said he doesn’t see inventory levels changing anytime soon. With the end of the summer and school approaching, people are going to be reluctant to put their homes on the market. And the closer the holidays come starting with Halloween, people will prefer to wait until 2017 before selling their homes, he said.
By the end of July, the GLVAR reported 7,338 single-family homes listed without any sort of offer. That’s down 1.3 percent from one year ago. For condos and townhomes, the 1,212 properties listed without offers in July represented a 48 percent decrease from one year ago.
The GLVAR said the median price of local condominiums and townhomes, including high-rise condos, sold in July was $115,000, the same as last month and last year at this time.