With supply tight, Las Vegas home prices set another record in November
A new report says the median price of a single-family home in Las Vegas reached $420,000 in November, a new record high and a nearly 22 percent increase over a year ago.
The numbers were released today by the Las Vegas Realtors trade group, which predicts “a warm winter for the local housing market,” with moderating price increases.
“We’re probably looking at more modest growth for 2022,” said the group's president, Aldo Martinez. “If our median home prices continue to go up by double digits in 2022, it’ll be the first time we’ve had three straight years of double-digit price growth in more than a decade. The closest we came to that was in 2012 and 2013.”
The local housing supply remains tight, with homes selling faster than in past years. Martinez said the current sales pace equates to less than a one-month supply of properties available for sale.
Martinez said near record-low interest rates, which run about 3.5 percent on a 30-year mortgage, make a residential real estate purchase a good deal, even in an era of rising prices.
“The interest rates are so low that 42% of the payment that you make toward your housing goes into technically a savings account — it's your equity savings account,” he said, noting that a two-point increase in mortgage rates would cut in half the amount of principal being paid down monthly.
"If your dream and your aspiration is to own a home, don't give up on it," Martinez told State of Nevada. "As a matter of fact, do it now rather than later because it's going to be more advantageous for you."
Low-interest rates are also helping builders control costs because they often buy land and materials on credit, said the head of a Nevada construction industry trade group.
“We would be in a much worse position if it weren't for the fact that that, thankfully, we've been able to keep interest rates as low as we have,” said Aaron West, CEO of the Nevada Builders Alliance. “That has really given the builders the cushion necessary to absorb some of these dramatic price increases on every level of construction.”
Broker Yvonne Hunter of Urban Nest Realy said Las Vegas buyers today navigating a market that has seen two years of double-digit price appreciation, face sticker shock followed by an education.
“It's hard for my buyers right now to have so much information online and see what the houses that they're looking at cost two years ago,” she said. “So at first, they're wanting the house at that price, but after looking at houses and getting offers rejected their expectations change a little.
"They just feel like they're getting priced out and they get discouraged."
The story in rural Nevada is the same as in the big cities but tougher because of the remoteness and developers being unable to build at economies of scale.
”While some of our communities just need a few units, like 10 to 15 units in order to stabilize their market, a builder, a developer is not going to travel to Carlin, Nevada, to build those units, or they will, but at an inflated price,” said Mishon Hurst, deputy director, Nevada Rural Housing Authority.
The agency uses tax credit financing as it seeks to promote the construction of about 50 homes a year in the rural part of the state.
“That doesn't sound like a lot, but that's just the funding that's available for rural Nevada, there's just not a lot of tax credit funding or affordable or funding available for affordable housing,” Hurst said, adding that the challenge is growing because of “the increased price of labor, materials, the supply chain issues, it just reduces those number of units each year.”
Aldo Martinez, president, Las Vegas Realtors, Yvonne Hunter, broker, Urban Nest Realty; Mishon Hurst, deputy director, Nevada Rural Housing Authority; Aaron West, CEO, Nevada Builders Alliance