Economy & Real Estate Updates

A blue futuristic train passing through the high-rising buildings in a modern downtown district – Las Vegas

As more and more of the U.S population get vaccinated and COVID numbers down significantly from last year, Las Vegas is getting a breath of fresh economic air. It is clear that more and more people are travelling as the Las Vegas strip is getting busier and busier. As a result, hiring is starting to ramp up at hotel’s and casino’s, signaling more and more demand. More passenger traffic is also reported through McCarran International Airport.

Additionally, in just a few short months, one of the largest casino/hotel developments, Resorts World Las Vegas, will be opening their doors, hiring some 6000 people along the way! This will be a significant boost to the Southern Nevada economy, which has struggled to add jobs since March 2020. This and other developments will also affect small businesses, who many times support the tourism industry in various sectors.

Economists have stated that Las Vegas is poised to come out of the COVID economic slump stronger than before. And that does appear to be true. Many people are eager to travel and vacation this year, especially as the Nevada economy plans for a full re-opening in June. This will lead to money being poured into various sectors of the economy, driving new business. In the meantime, the Las Vegas housing market has also defied expectations throughout the pandemic, showing its resiliency. And Las Vegas continues to attract new business and new residents, despite the economic hardships experienced.

With such positive developments thus far, as we continue to see travel increase, new businesses establish themselves and new residents move in, we can expect the economy to pull through and exceed the expectations that many had.

Panorama of Las Vegas, Nevada, USA

The Las Vegas real estate market continued to see appreciation and demand as prices hit a new record high – a median sales price of $355,000 in the month of February 2021. As in previous months, low inventory and interest rates contributed to the rise in real estate values.

Is inventory expected to rise anytime soon? That’s difficult to tell. For month’s, it was expected that inventory would eventually rise, potentially curbing the drastic increase in real estate values. However, as spring approaches, the Las Vegas housing market continues to have a record low of available homes for sale. Especially is that true of properties under $300,000.

A quick search of local Multiple Listing Service here in Las Vegas reveals only about 1000 currently available homes up to $300,000! That includes condo’s and town homes. If you remove those and only look at single family homes, you end up at 382 homes throughout the entire Las Vegas valley, which includes North Las Vegas, Henderson and Boulder City! It is very apparent that inventory remains low, leading to bidding wars in that price range.

In total, the Las Vegas, Henderson, North Las Vegas & Boulder City housing market has less than 2000 single family homes in all price ranges. Total inventory including condo’s and town homes is 2687. As long as inventory and interest rates remain this low, coupled with current demand, we can expect prices to increase at a modest rate, which is what most expect throughout 2021.

If your looking for an experienced Realtor to help you navigate the real estate market, contact our Investor Team Sales Division at 702-755-5131.

Are interest rates on the rise?

While the housing market continues to appreciate, buyers seem plentiful and inventory limited, will 2021 be the year that see’s an increase in interest rates? While time will tell, it is interesting to note what is happening with the market.

For one, interest rates right now are one of the biggest drivers for buyers, especially first time owners. An interest rate can significantly affect a mortgage payment, especially with record high home prices. For example, consider a home that sells for $300,000. At 3.0% with a 10% down payment, the principal and interest on a 30 years loan would be $1138/ month + PMI. At 3.5% for 30 years, it jumps up to $1212 + PMI. At 4.0%, $1289 + PMI. Of course, this does not take into consideration property taxes, insurance or HOA dues. Additionally, not every buyer will have 10% as a down payment. Many will put down 5% and others 3%, increasing the monthly mortgage payment and PMI. The higher the interest rate goes, the higher the monthly payment – increasing nearly $75 for half a percent increase.

However, according to MSNBC, interest rates rose at the fastest pace last week in over a year. “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.23% from 3.08%, with points increasing to 0.48 from 0.46 (including the origination fee) for loans with a 20% down payment.” said the article.

As the economy begins recovering from the pandemic, the market expects economic growth and inflation, which in turn can drive higher interest rates. This has also affected the 10 year treasury yield, which has been increasing and is a considerable factor for interest rates.

However, the Fed continues to maintain that interest rates will remain low as the economy continues to recover. Based on these factors, we can expect some increase in interest rates throughout 2021, however, it should remain conservative. How home prices will be affected ultimately is also yet to be seen. The market currently has a shortage of inventory and a strong demand from buyers, which coupled with low interest rates, has made it very competitive.

Source Article: https://www.cnbc.com/2021/03/03/mortgage-application-demand-stalls-as-interest-rates-surge-.html

A Map of the United States

What a year 2020 turned out to be! The COVID pandemic coupled with an uncertain economy contributed to where people moved to around the country. Additionally, with many companies offering remote work, this allowed many to move to less densely populated areas or where the cost of living was significantly less. So, where did Americans move to during 2020?

Top Inbound States:

  1. Idaho
  2. South Carolina
  3. Oregon
  4. South Dakota
  5. Arizona
  6. North Carolina
  7. Tennessee
  8. Alabama
  9. Florida
  10. Arkansas

Top Outbound States:

  1. New Jersey
  2. New York
  3. Illinois
  4. Connecticut
  5. California
  6. Kansas
  7. North Dakota
  8. Massachusetts
  9. Ohio
  10. Maryland

What were the main reasons for moving? According to United Van Lines, which has tracked migration patterns for many years, the top reasons were: family reasons, being closer to family, employment change and lifestyle change.

How will 2021 shape up to be? With similar circumstances surrounding all of us, we may find this year to be very similar to last year. Of course, much will depend on how contained the pandemic will be and what part of the country the economy improves and job growth occurs.

Information Source: United Van Lines (https://www.unitedvanlines.com/newsroom/movers-study-2020)

Las Vegas skyline

Though it appears much of 2021 will resemble 2020 due to the COVID pandemic, higher unemployment and limitations on many businesses, certain sectors are actually booming within the valley! Real estate development is one of them. While housing is in demand and supply is low, other sectors of real estate are also moving forward – specifically new development. Here are a few we can look forward to during 2021:

NEW HOUSING DEVELOPMENTS

New home builders have been busy building new communities throughout the prior year and we expect them to continue throughout this year. With resale inventory is way below average and interest rates setting new record lows, many buyers are interested in purchasing a home. Granted, the median price of a new home in the Las Vegas valley is considerably higher than the median resale home. However, this is not deterring prospective buyers. We anticipate more new developments throughout 2021.

RESORTS WORLD

Still under construction, the new Resorts World on the north end of the Las Vegas strip is planned to open during Summer 2021. The 59 story hotel with some 3500 rooms will feature some modern tech, including a 100,000 sqft LED screen.

VIRGIN HOTEL LAS VEGAS

On the site of the former Hard Rock Hotel, Virgin Hotel – part of the Virgin group owned by Richard Branson – was expected to open January 15, 2021 but has since been delayed. Reports indicate that the current COVID situation may be to blame. However, with nearly a full year ahead of us, we anticipate the hotel to open its doors sometime this year.

These main projects do not include the many commercial, industrial and apartment developments currently under construction within Las Vegas. Other large projects were planned, however, due to the ongoing pandemic and disruption in supply chains, many have been put on hold, such as the Drew Las Vegas and MSG Sphere.

As the situation improves in the coming months, we look forward to seeing these unique projects once again move forward.

A young family standing in front of their home

The eviction moratorium has been lifted in Nevada effective October 15, 2020. As a result, late payment notices and 7 day pay or quit notices are starting to be served. Of course, for Landlords experiencing a lack of rent, this is news they have been waiting for. For tenants behind on payments due to financial hardship, this is less than ideal. So, what solution can be offered?

Negotiation. Having a meeting of the mind is key. This is an opportunity for landlords and tenants to work together. The situation we all are facing is far from ideal and it is bringing on hardships that we haven’t seen in a long time for both tenants and Landlords. So, perhaps coming up with a mutual solution is the answer.

As a tenant behind on your rent, are you able to come up with a reasonable, monthly re-payment plan that would be agreeable to your Landlord? Since rent is not forgiven, it will eventually be owed. Perhaps coming up with a plan to make your Landlord whole is the answer. Don’t forget! Many landlords have mortgages that have to be paid and a lack of income can put a financial pinch on their monthly obligations. Or they may rely on the rental home you are living in as retirement income.

As a Landlord, are you able to negotiate with your tenant for a monthly re-payment plan? Perhaps writing up a promissory note that you and your tenant can agree to will make it a real possibility. As a Landlord, if your tenant has a financial hardship, are you able to work with them? While rent is not forgiven, are you able to settle for an amount? That, of course, depends on your personal situation and decision.

When negotiation happens, especially in this instance, late payments and evictions can be avoided. Of course, every situation is different and calls for its own solution. In the end, we all hope that this situation will ease soon and a sense of normal is restored.

The Las Vegas real estate market continues to be on fire amidst a pandemic. Buyers are willing to pay more for a home as inventory remains tight and interest rates low. The average sold price of a single family home during August 2020 was $335,000 while condo’s averaged $185,000, another new record for the Las Vegas area (source: Las Vegas Realtors)

Though unemployment remains high and the economy slow in recovering, with many directives in place to mitigate the spread of the coronavirus but restricting economic growth, demand from individuals with savings and stable employment is keeping the real estate market alive and thriving. This scenario also goes to show market stability. How long will this trend continue? That is difficult to predict, as many factors go into keeping real estate alive and healthy. However, economic recovery from pandemic restrictions will be key.

We hope to see the pandemic get under control soon and as a result, positive developments in the economic sector.