I have been following the current trends in the market and the saying “what goes up, must come down” certainly fits into what is happening in the Las Vegas market. Of course we can look back at our history and see that we have in fact been in this same position before and it all started with builders not selling as much as they were. Shortly after the builders slowed down, so did the resale market. There is various causes to what causes a market to slow down and this at first glance could be that the FED raised the rated to combat inflation. The fact that they have raised over 200 bases points has made mortgage payments 52% more expensive than last year and it has priced a lot of buyers out of the higher priced homes.
The local market is still showing that the demand for homes is high; however, the prices have indeed started to fall. We currently have 1,952 listings on the market as of this post and 1,210 homes that have seen their original listing price decreased. This figure of course includes rentals and properties that are for sale. It seems as if Las Vegas has tested the top and we may just have been there. This figure does not include those homes that have accepted offers for less than their original list price. (We just accepted an offer on one of our listings at a $35,499 discount)
Another reason prices seem to be taking a turn is because foreclosures and defaults are finally making a comeback and more restrictions on investment properties are taking effect. Vacation rental homes were a huge reason new investors started buying in the valley but in many cases they were not aware of restrictions. Not only do most HOA’s have restrictions for this, but the cities in the valley are imposing new fines for all vacation rentals and will limit the amount of permits they will grant.
Another statistic I was looking at was mortgage layoffs as they have lost almost all of their refinance business due to a rise in rates. Last year at this time, we were seeing mortgage rates under 3% to encourage more buyers to enter the market which skyrocketed competition causing home values to rise faster than ever before. Now as sellers are seeing the market turn, many are now jumping into the market to capitalize on their new equity before they lose value and profit. At this time, mortgage rates are well above 5% which greatly impacts affordability for buyers and allows cash buyers to come in and purchase with little competition.