The housing market has always been a hot topic and an important part of our lives here in Southern Nevada.
That’s understandable. Housing has a huge impact on our economy, and homeownership has always been a key part of the American dream. Owning a home is also the biggest single investment most people make.
So it’s no surprise that people get concerned when market conditions change—especially when that shift seems sudden.
Lee Barrett
We started 2023 in the midst of such a shift. After years of seeing local home prices post double-digit gains from one year to the next, the first housing market report of the year from Las Vegas Realtors (LVR) showed that local home prices have now reverted to where they were one year earlier.
LVR reported that the median price of existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during December was $425,000. That’s down 1.4% from November and matches the median price from December 2021. It’s also down from the all-time record price of $482,000 in May 2022.
The median price of local condos and townhomes sold in December was $246,950. That’s down 5% from the previous month, and down from the all-time record price of $285,000 in May. Condo and townhome prices are still up 2% from $242,000 in December 2021.
Part of the slowdown is seasonal. Local home prices traditionally warm up during the spring and summer and then cool down during the fall and winter, with December and January often the slowest months for local home prices and sales.
But the big spark for this recent change is the rise in mortgage interest rates—which began in mid-2022 as part of an effort to curb inflation.
We began 2023 with the average rate on a 30-year home loan hovering just under 6.5%. That’s more than double what it was one year earlier, when mortgage rates were averaging about 3.2%, according to mortgage buyer Freddie Mac.
This obviously makes it more expensive and difficult for people—especially first-time and entry-level buyers—to afford a home.
You can see it reflected in local home sales. With the market slowing down in the second half of 2022, we didn’t come close to matching our sales totals from 2021, which LVR statistics show was a record year for sales of existing homes in Southern Nevada.
Still, the sky isn’t falling. Buyers are benefiting from having more homes available for sale at lower prices.
When people ask me what to expect in the local housing market this year, I say it’s all about balance. We have a more balanced housing market today than we’ve had in years. And I expect that to continue throughout 2023.
Instead of buyers dealing with bidding wars, they now have more homes on the market from which to choose than they’ve had in the past several years.
With more homes available and fewer new and existing homes selling, as we flip the calendar to 2023 the sales pace equates to roughly a four-month supply of properties available for sale in Southern Nevada. That’s a big improvement from one year ago at this time, when we had less than a one-month housing supply. With a supply that tight, you could argue we were facing a housing shortage.
Odds are, that situation will be much better for prospective home buyers this year.
I’m not an economist, so I won’t speculate on what might happen with mortgage interest rates this year. But I can tell you they’ll go a long way toward determining what happens to local home prices and sales.
If you’re really concerned about today’s housing market, rest assured. These things are cyclical. Conditions will always change at some point, with home prices rising over the long term.
Lee Barrett is president of Las Vegas Realtors and broker and owner of Barrett and Co. Inc. Realtors in Las Vegas.
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