We are just starting off the year and we seem to have a bit of a trend we can start looking at. The Federal Reserve has come out and mentioned that we are not in a transitory progression, but rather looking like we will raise rates at a quicker rate. On this second week ending, we are actually seeing a higher Days On Market numbers and more Price Decreases. Mortgage rates have slightly gone up but loan limits have also gone up in most types of loans. Below I have attached a photo of our interactive chart that shows the metrics back to the 2006 market, where Las Vegas was at ground-zero for the recession and home values tanking.
This chart breaks down in what my opinion are the most important metrics to look at when measuring outlook into a market. By using the interactive chart, you can see that our days on market are going up slightly which could indicate that the buying hysteria is over, or that total inventory is going up. We are still too early to display that increase on a month by month metric, but you can see we are slightly going up in inventory. Our Median Sales Price has surpassed peak value despite the Las Vegas, Henderson and North Las Vegas areas being one of the last in the nation to do so. The last graph displays the total amount of inventory which will dictate the demand.
The outlook I predict is that when this inventory goes up as the rates go down, sellers will have to be more competitive on pricing because there will be less buyers that qualify for the higher prices because of the interest rates. To make it a little bit more easy to follow, I will bullet some points in the order that COULD lead to a price decreases:
- Our days on market is going up, should indicate that sellers are reaching the peak of sales price.
- Days on market could also mean that brokerages are offering less commission to buyers agent.
- Our sales price continues to go up as more and more new homes hit the market.
- Sales price going up along with a rise of days on market could signify a peak in market pricing.
- Total homes for sale is the most important metric to follow as the first two metrics show signs of a possible peak.
- Inventory dictates the supply and demand portion of these inflated prices
- Inflation raise hit 7% for the first time in history since they revised the algorithm in 1980
In conclusion, I think all the signs are there to indicate that the market in Las Vegas is looking close to peak value. The best thing to do is to keep an eye on these numbers and work with a good team of professionals to asses your personal financial situation. Sometimes lower entry price has a higher value to your situation than lower interest rates. They are relatively close factors, but overall every buyer and seller is case by case and you need to look at the path to getting into a home at the right time.