Housing Market: October
I had the best of intentions. I really did. I went to write this blog a week ago, and the site failed me. The stats site that we pull our data from was down. It was down last Thursday though the weekend. But as some would say; better late than never. Here is our Market Report for October. As always, the stats are for Single Family Homes only. If you would like a condo or townhome report, let us know! If you would like a specific zip code or area report, let us know! Stats are from Las Vegas Realtors, and any commentary and opinion is from me!
Closed Sales
The number of sales closed in October dropped a bit from September, but we still had one of the best October’s we’ve had in recent years. There were 3,222 Single Family Sales in October, up close to 11% compared to October of last year. In fact, this is the best October, in terms of closed sales, we have had in at least 10 years (and probably longer). As we have indicated for several months now, the few months we had as a delay with COVID is adding to the extra demand and fuel for the fire. The interesting thing, of course, is the lack of inventory is still prevalent, which produces this somewhat higher than expected result for units sold. And while we did have a drop off from September, October was the THIRD highest sales volume of the year, a remarkable recovery from the lows post COVID.
I would anticipate a few slower drops as well as we do head into the Holiday Season, and the possible resurgence of COVID-led activities. However, I do not see a significant drop off, unless of course we have another long and drawn out closure. Stay Tuned.
Pending Sales
Just when you thought we were going to see a downturn… Our pending sales continue to impress, continue to amaze, and for those of us on the ground every day, this number is not at all surprising. We finished October with 3604 Single Family Pending Sales. That is 32% MORE (a full 1/3) than October of 2019, and are you ready for this… the last time we finished a month with more than 3500 Pending Sales was April of 2012! 10.5 Years ago! Take a look at the chart for 10 Years worth of data. Very seasonal as you can see. But instead of what we normally see this time of year (dropping pending sales), we’re seeing an inverse, with pending sales strengthening.
The biggest change we can see for next month is what I just discussed above. Any lengthy shut down will of course drop our pending sales. However, I do not believe it will be the same level of a drop compared to what we saw March and April. Then, we had people in shock. Now, while we may see the government slow us down a bit, we know how to operate the real estate market in a pandemic. Real Estate is, and will be, essential!
Homes for Sale (Inventory)
Again, our theme of Supply + Demand comes into play. At the end of October, there were 5235 homes available for sale. That’s it. If you read above, you’ll see we had over 3500 Pending. That’s almost an even number. Look at the chart and the humps. Our 5235 was 44.5% LOWER than this time last year. I’ve been telling everyone we’re about 40% lower than last year, it’s approaching 50%. That does NOT mean we have 45% less buyers. Think about that. We have had MORE sales in the last couple months than we normally do this time of year. We have LESS for sale. This is why we’re seeing the pricing increase.
I wouldn’t expect or tell anyone that inventory is going up anytime soon either. This is the time of year that inventory levels drop normally as well.
Believe it or not, you have to go back ALL THE WAY TO 2008 to find our inventory level of homes LOWER than it is now. 2008. That’s 12 years ago! George W. Bush was still in office! This inventory shortage is not going away any time soon. Pricing is going to hold. We simply need MORE sellers to satisfy the thirst for Real Estate in our Valley.
Months of Inventory
Houston, we have a problem. We’re now below 2 months of inventory for homes. As you all know, this is my favorite stat. It shows the overall strength of the market. If homes stopped being put on the market, our overall inventory level would be completely (statistically speaking) sold out in under 2 months. Put that in perspective… we’d be out of homes to sell before Inauguration Day. This chart looks so much like the one above because they both track similarly.
I continue to say that although inventory is low, there are still good options for Buyers, and that’s because mortgage rates are extremely low. If you have to pay $5000 more than asking price, a) your loan is still way less than it would have been if rates were 4%, and b), with inventory levels the way they are, and pricing doing what it’s doing, that $5,000 can be recapped fairly quickly. But yes, we have an inventory level issue, and I believe it won’t get significantly better until March at the earliest.
Price
Your favorite. Everyone’s favorite. The MEDIAN sales price in October 2020 was $341,000! That’s 10.9% HIGHER than it was this time last year. That’s $28,000 MORE than it was at the beginning of 2020, and it’s a full $36,000 higher than it was right on January 31 of this year. This long term trend will continue to look like this for the foreseeable future as long as inventory levels remain low. Take a look at the 14 year chart for housing prices here in Las Vegas. Yeah, we fell off, but have roared back. Some may have said it took forever, others will look at this normally.
If you go out far enough, you’ll see a drop and a U shaped recovery. That’s normal and that’s similar for ALL investment options. Take a look at the 14 year chart for housing prices here in Las Vegas. Yeah, we fell off, but have roared back. Some may have said it took forever, others will look at this normally.
Now, look at this 100 year chart of the Dow Jones Industrial Average. If you look at ANYTHING long enough term, you’ll see ups and downs, but you’ll see the same theme… the long trend is higher. The same will hold with real estate. Even if we do see a 10% DOWN market, that still gets us back to where we were this time last year. If we have a 20% negative move, and I don’t think that’s what is going to happen, we’re still at about $273,000 for the Median Price. We were at $275,000 in February of 2018… that’s it. If you’re buying Real Estate for the RIGHT reason, the timing will always be right. Don’t try to time the Real Estate Market. If you want to gamble and ‘day trade’, do it in the stock market. Real Estate is not about the quick win, but the long term goal and satisfaction of building wealth.
What do YOU think is going to happen in 2021? Leave your comments below!
-GZ