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Gambling on the Las Vegas real estate market is a risk that buyers are increasingly unwilling to take. According to Zillow (NASDAQ:Z), inventory increased by a massive 44.5% in March compared to the same time last year.
A deluge of new construction has flooded the market, specifically in Sunbelt states, to make up for the pandemic shortfall, but high interest rates have caused homes to sit on the market.
“What’s happening nationally is playing out similarly but more prominently in Las Vegas,” Kara Ng, a senior economist with Zillow, told the Las Vegas Review-Journal. “Sellers are listing their homes at far greater rates than last year, but buyers are not absorbing those homes at the same rate. This has left more homes lingering on the market. However, while Las Vegas inventory is up almost 45% over the year, it’s still about 20% lower than pre-pandemic norms.”
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Zillow reported the average Las Vegas home value was $437,324 as of April, up 3.6% over the past year. The relatively modest increase is a change from previous years, when interest rates were lower in 2021-2022. However, prices are still high, which has impeded buyers.said that listings showing price cuts had skyrocketed, up by 13.6 percentage points year over year, reaching 27.3% in February.
“Affordability is a hurdle, especially for first-time buyers who are relying on savings alone, and turbulence in the stock market could push down payments out of reach,” Ng told the Review-Journal.
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Part of the reason for Las Vegas home prices escalating so quickly, particularly during the work-from-home boom during the pandemic, was the influx of Californians to the city. According to the Census Bureau, some 158,000 Californians since 2020 have moved to Nevada, accounting to 43% of new residents in the last four years.
However, the number of Californians moving to Las Vegas has dropped precipitously from the peak post-pandemic years, according to KVVU-TV, which has further contributed to the inventory buildup. A big part of the drop-off is tied to interest rates.
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“A lot of people have a low-interest mortgage interest rate loan. So their monthly payment is pretty low. They couldn’t match that in the current market,” Stephen Miller, economics professor and director of research for the Lee Business School’s Center for Business and Economic Research at the University of Las Vegas, told KVVU-TV.
“As soon as the lockdown hit, people started bailing out of California left and right,” Jeff Stelter, manager of business development at Muscle Movers, told KVVU-TV. “We saw a huge boom during the lockdown for about two years, and people couldn’t get out of there fast enough,” Stelter continued. “We saw a big drop recently. This last winter was worse than the crash of 2006, 2007.”
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This article Las Vegas Real Estate Market Sees Inventory Increase A Massive 44.5% As Buyers Won’t Gamble On High Prices And High Interest Rates originally appeared on Benzinga.com
