Home prices in Southern Nevada are holding steady after sliding for three straight months.
Las Vegas Realtors reports the median home price in Southern Nevada sits around $450,000. That’s down about $30,000 compared to May. And at the end of September, more than 10,000 homes, condos and townhomes were listed for sale without any sort of offer.
So, what is happening to the housing market? Are the higher interest rates, but dropping home prices good for buyers? If you’ve been looking to buy or sell your home here in Southern Nevada, have you given up?
Home prices are sharply tied to interest rates. And who better to talk about rates than a lender. Jon Gedde is the CEO of SimpliFi Mortgage and serves as chair of the Nevada Mortgage Lenders Association. He joined State of Nevada host Joe Schoenmann for more, along with Shanta Patton-Golar, director of the National Association of Real Estate Brokers.
INTERVIEW HIGHLIGHTS
On what’s happening to Nevada’s market
GEDDE: Interest rates have been very low for quite some time. And as the pandemic came and reared its ugly head, part of the strategy of the government was to put some additional capital into the market to make sure that the economy wouldn't crash. One of the ways that they did that was buying mortgage-backed securities, which drove rates from the high ... 4% range down into the low threes, and sometimes even into the twos. Now we're in a very different economic situation, where there's too much capital in the market, and prices have been increasing across the board and all sectors. The government needs to slow things down a bit, and the way they do that is by raising interest rates.
On how Nevada’s housing market got here
GEDDE: In ‘08, ‘09, we were left with a situation where there was too much risk for builders to go back into building homes at the pace that they were before. So they slowed way down, some of them stopped building entirely. But that pace of building didn't pick back up again until very recently. What we ended up with was about a decade of under-building the number of housing units that we really need in this country, which caused a supply crisis. We don't have enough housing units. So this basic supply and demand imbalance was putting upward pressure on housing prices across the country, making things more and more expensive. But that was camouflaged by the fact that we had very low interest rates. Now we're getting back to, frankly, more normal interest rate ranges.
On who benefits from high interest rates
PATTON-GOLAR: I think it comes down to the buyers, this is their time right now. So it might not be ideal as far as interest rates that were never really meant to continue to be that way long term. But for that one house that had 20 buyers trying to get it, now might be you and one other person or just you. So I think it's a great opportunity to get some closing costs and potentially get the seller to buy down your interest rates, but long term you finally have the time to come and look for homes, have options, and less competition.
On the decrease of cash buyers
PATTON-GOLAR: We've seen a decline in cash buyers right now. I think they're waiting to see what happens. And that's why it's a benefit to the buyers. Right now cash buyers compete against sellers with potentially unrealistic expectations, those things have gone away. And now you have that extra benefit that you didn't have at least for the last three or four years.
It's better for the communities, there's stability in the communities. And it also allows buyers to get generational wealth. The whole point of this is to have an asset; renting is not an asset. So when you give more people in the community the opportunity to become homeowners and gain assets and wealth, then that benefits the whole city.
Jonathan Gedde, CEO, SimpliFi Mortgage, and chair, Nevada Mortgage Lenders Association; Shanta Patton-Golar, director, National Association of Real Estate Brokers
