In the southwest Las Vegas Valley, a one-story home with vaulted ceilings, stucco and an open floor plan is listed for sale.
It’s a “gem,” the listing says, and amid falling local and national home sales, the price was cut by $25,000 on Tuesday.
This is not one. In Henderson, a home fell nearly $31,000 on Thursday, and in the Northwest Valley region, the price of a home was cut twice this week, losing a total of $110,000, as seen on Zillow’s website.
A growing share of home sellers is pushing prices down in Southern Nevada and across the country as higher borrowing costs make home buying even more expensive for people after a year of huge price increases.
In the Las Vegas area, 13.7% of active listings had price cuts in May, compared with 11.5% in the US, according to Zillow.
At the local and national levels, the proportion of price declines in May increased for the third month in a row.
This doesn’t seem surprising. Rising mortgage rates have put an end to the cheap money that fueled America’s unexpected housing boom, fast sales and record high prices since the start of the pandemic, and people are also paying more for gas and other goods in the face of high inflation now.
Zillow economist Nicole Baschot said in an email that sellers “finally found it necessary to price their homes competitively” after a period when buyers “seemed willing to meet almost any asking price and in many cases bid above the list price to outbid others.” interested persons”. buyers.”
She also said it was “absolutely true that there is an affordability crisis in the housing market,” noting that low mortgage rates have held back monthly payments even as prices have risen at a record pace.
However, monthly payments for a typical US home are now 65 percent higher than a year ago, and in Las Vegas they are up nearly 80 percent, she said.
Mary Preheim of Keller Williams, a low-cost home listing agent in the southwest valley, said prices are falling across the valley and pointed out that she hasn’t seen such a spike in discounts in years.
She argues that the Las Vegas housing market is still on solid ground as a home can be sold in two and a half weeks, rather than “four hours” as it could be last year when mortgage rates were at an all-time low.
In addition, many of the asking prices were also “unrealistic” from the start.
“We’ve been spoiled for the last year,” Preheim said.
At the moment, sales are falling as prices continue to rise.
According to the trade association Las Vegas Realtors, the median selling price of former single-family homes in May was a record high of $482,000, up 25.2 percent, or $97,000, from a year earlier.
Just over 2,900 homes were sold last month, down nearly 9 percent from May 2021.
According to Las Vegas-based Home Builders Research, builders recorded 767 net home sales — new signed sales contracts minus terminations — in Southern Nevada in May, the lowest monthly figure of the year.
Meanwhile, the average 30-year mortgage rate was 5.78% as of Thursday, up from 5.23% a week earlier and 2.93% a year ago, according to mortgage finance giant Freddie Mac.
The weekly rate increase was the largest in decades.
With high inflation, recession fears and soaring borrowing costs, the Las Vegas housing market faces an uncertain future to say the least.
However, housing markets tend to change direction, especially in Las Vegas, and there are always people looking to buy a home, especially at bargain prices, which has been rare in the past few years.
One can only guess where the cost of housing will go in the next few months. But, as Tim Kelly Kiernan, branch manager of Realty One Group, told me, Southern Nevada has seen a “crazy amount” of price cuts in the last week – 1,447 compared to 319 in the same week last year. figures he pulled from a major Las Vegas listing service.
“You can no longer overcharge,” he said.