The Las Vegas real estate market continues to rise to unprecedented levels, setting a new record with a median price of $475,000 during the month of April 2022. Inventory continues to be limited, with many buyers ending up in a bidding war to see who ends up with an accepted offer. Of course, one of the biggest changes in the market over the last few months has been rising interest rates. Buyers who have been scouring the market trying to get their slice of Las Vegas real estate have noticed interest rates rise some two points, just since the end of 2021. At today’s price point, those two points are making a big impact on buyers, adding hundreds of dollars to monthly mortgage payments.
Additionally, as prices continue to rise so do down payments. Think about this, a 5% down payment that used to amount to a mere $10,000 just 4 years ago is now $23,750 on a median home. These additional costs have affected new and seasoned buyers considerably, forcing many to forgo their dream of home ownership or going in with other family members on a purchase, where they can combine incomes and down payments.
As interest continue to rise to reduce inflation, no doubt it will outprice many more buyers. While some may view this as a signal that prices will decline, the fact is, inventory continues to remain low and lending has remained restrictive, unlike the real estate crash over a decade ago. Even with interest rates rising over the last few months, the Las Vegas housing market has seen considerable increases in median sales prices. Will the market settle some? Yes, we can expect a leveling off as prices become unsustainable. However, many buyers are entering the market from other areas where real estate values are even higher, bringing cash to purchase a new property. This allows them to outbid other buyers and avoid appraisals.
What does all of this mean for Las Vegas? Even with rising home prices, as long as demand for properties exists and inventory remains limited, prices will remain strong, with some fluctuation.