Up, down or otherwise, housing is always a hot topic in Southern Nevada.
And rightfully so, since owning a home is the biggest investment many of us will ever make.
Tom Blanchard
That’s especially true today, as we’re seeing a relatively sudden shift in the local housing market.
Over the past few months, local home prices have declined following a long run of record prices and sales that saw buyers deal with bidding wars and a housing supply that shrunk to historically low levels.
This summer slowdown is a significant shift from 2021, which was a record year for the number of existing homes sold in Southern Nevada.
Of course, much of this shift was sparked by the recent rise in mortgage interest rates. In an effort to curb inflation, the Federal Reserve has raised interest rates multiple times this year, sending mortgage rates higher than they’ve been at any time since 2008.
The average interest rate on a 30-year home loan recently exceeded 6%, which is more than twice what it was a year ago. This is greatly increasing housing costs and pricing millions of Americans out of the market.
We’re certainly feeling it here in Southern Nevada, where the most recent report from Las Vegas Realtors, a local trade organization, showed local home prices decline in August for the third consecutive month, with fewer homes selling and more available for sale.
LVR reported that the median price of existing single-family homes sold in Southern Nevada through its Multiple Listing Service during August was $450,000.
That was down from the all-time record price of $482,000 in May and down 3.2% from July. However, that median home price is still up more than 11% from the same time last year.
For more perspective, consider that local home prices are still nearly four times higher than during their post-recession bottom in January of 2012. Back then, the median single-family home price here was $118,000.
I understand that this is a significant shift. But some people overreact to the inevitable changes in the housing market. Housing booms don’t last forever, and downturns eventually bounce back.
Over the past few years, we were on such a fast ride, with housing prices that we all knew needed to slow down. By raising interest rates, the Fed has done what it wanted and pumped the brakes on the housing market, creating what is really a more reasonable and normal market.
When arrows on major statistical indicators change direction and headlines start sounding more dramatic, it’s easy to overreact. But I don’t think Las Vegans should buy into the doom and gloom or worry about some sort of housing crash.
Fortunately, the federal government and our major financial institutions have learned their lessons from the Great Recession. They are very conscious and much more cautious in how they deal with the housing market.
During the past year or so, many locals expressed concern that home prices and rents were rising too fast. Thanks largely to rising interest rates, we now have what many of these folks wanted.
Since housing is also an increasingly important public policy issue, we expect the 2023 session of the Nevada Legislature to consider changes to everything from property taxes to a range of landlord-tenant issues.
That will likely include proposals related to rent control, a key issue for Nevada Realtors and all property owners in our state.
Realtors agree that affordable housing is a big issue in Nevada and nationwide. But heavy-handed measures like rent control are not the answer.
While rent control may sound good at first, it likely won’t solve the problem. In fact, it can make things worse by reducing the supply of affordable housing and by discouraging developers from building the housing we need.
In places where local governments have tried to cap what property owners can charge for rent, research and experience show that these measures do not lower housing costs. In fact, many developers have stopped building housing in those cities.
That leads to an even tighter housing supply, and even higher prices.
Nevada Realtors are already working with state lawmakers, industry and community leaders to find solutions that better address the root causes of this issue.
For example, we’re looking at ways to fast-track the construction of more affordable housing developments. Another potential solution could be to form a coalition to work even more closely with government and industry leaders to encourage developers to build and maintain more affordable housing to increase our housing supply.
We can also look into creating a state-run or state-backed fund to help tenants and homeowners in need.
We look forward to helping as many Nevadans as possible live the dream of homeownership.
Longtime Las Vegas area Realtor Tom Blanchard is the 2022 president-elect of the statewide Nevada Realtors group, a professional trade association with more than 20,400 members committed to protecting, promoting and preserving our communities.
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