Spoiler Alert… If you decided to wait for the market to ‘cool’ in January, you may want to skip this blog….

Kidding. Kind of.

The theme here is GROWTH and the other theme will be Supply and Demand, as much of what we’ve seen over the first 5.5 months of the year have had to do with one or both of these. As always, the following stats are taken directly from the official source at Las Vegas Realtors (LVR) and is for Single Family property only. If you want a condo or townhome report, please let us know!

(Limited) Supply

Unless you’ve been waiting for a market update from me (it’s been over 5 months), you probably have heard that we have very few homes for sale. And when I say very few, I mean the pickings are slim. At the end of May, there were 3,254 Homes for Sale (this includes some that were considered Under Contract Show). The REAL active number was well under 3000 homes. Put that into perspective. The Las Vegas area is home to close to 3,000,000 people. We have roughly 16,000 licensed agents in the area, all trying to sell 3,000 homes. If you look at the math, you can see why/how we are discussing the inventory being extremely limited.

The positive news? The number of available homes has remained steady for the last couple months as you can see at the tail end of the chart below. We’ve had a steady decline of inventory since midway through 2019, when we had over 10,000 homes for sale. Even now, our 3254 represents a 60% decline from May of 2020. But looking at the chart, I do like to pay attention not just to the big picture, but what’s been happening lately. In fact, here’s the same chart, just with a 3 year period on the left, and a one year period on the right. If you look at the one year, you’ll notice the flattening a bit better.

Why does this matter? When supply is low, we’ll have increased Demand, pushing days on market lower, and pricing higher. For sellers, this is GREAT. For buyers, not so much, creating more competition and driving offers not seen in a long time. For those of you that sat out of the buying frenzy, part of the reason you may have sat out is the amount of competition, feeling that an increased amount of inventory would crush pricing. As we’ll show later on in values, I don’t see that happening anytime soon, or with any amount of seriousness that could cause a large market correction.

New Listings

When people list their home, it tends to be cyclical in nature, whether people believe it or not, and this next chart proves that. We see troughs during the end of the year and into the beginning part of each year (Think October - February) with things generally picking up in Spring and then tapering off when kids go back to school in August. It tends to follow this pattern year after year, as presented below in a 5 year chart as shown here:

Here are some other things that the chart shows if you look hard enough. Our peaks are declining over the last few years. The top point on this chart was set in May 2019 when we had just under 4700 homes hit the market in that one month. Compare that to the highest point in 2020 (August), when we had just under 4100 homes hit the market, a significant decline. And so far, our highest point for 2021 was in April at just over 3900 homes hitting the market. So again, we’re seeing less homes hit the market than in years past, even with May 2021 being higher than May 2020. But remember, last year in May we were in ‘phase 1’ heading into ‘phase 2’ of the Pandemic when things were simply whacky. The trend shows peaks shrinking, but also the troughs rising, creating a more predictable band of inventory levels hitting the market. Still no signals that the inventory is going to correct itself overnight.

Closed Sales

Closed Sales is not price but the number of units that are sold. Obviously, with little to no inventory, it’s hard to sell something that’s not available for sale; or is it?

As discussed above, our inventory has almost never been lower. However, we’ve seen sales continue to perform well, and even with a drop off over the last 2 months, we’re still WELL above where we normally are in terms of monthly sales.

May saw 3207 sales, an increase of 87% over May of last year. That is no surprise given the Pandemic situation last year. Looking deeper, in March of this year, we had 3744 sales for on month. Looking at this 15 year chart, you’ll notice that was the HIGHEST single month in terms of sales in over 15 years!!!! Higher than the highs of the 2006/2007 top of the market, considerably.

So, if we have no inventory, how did we just break a 15 year old record just 2 months ago? The answer is DEMAND.

We have more and more people moving into the Valley. Combine that with low interest rates, and a general desire to move after spending a year at home, the demand for those homes we DO have for sale is causing homes to sell faster than ever before…

Days On Market

Our Days on Market is absolutely crazy (in a low way). Looking at the stats both in terms of Median and Average, we’ve never seen a market quite like this. The chart of the left is the Median Days on Market, and the Chart on the Right is the Average Days on Market. Not only is the long term trend heading lower and lower, our bottom for 15 years was just achieved for both the Median and the Average.

Our Median Days on Market (half the homes sell faster and half sell slower) is 6 days. Under a week. This is insane if you think about it. More than half of all the homes that are put on the market here in Las Vegas are sold in under a week. The month BEFORE the Pandemic started, February 2020, the Median was 30 days. So in 15 months, we went from homes selling in about a Month to about a week!

If you look at the Average, the number is different but the story is the same. The average days on market is now 19 days, the first time in over 15 years it’s been under 20 days. In February of 2020, it was 51 days!

So we have less homes for sale, but they are selling at a record pace, meaning our inventory levels are not getting better, they are getting worse. We are now at 1.0 Months of Inventory, another 15+ year record, and continuing to get lower and lower. We have been under 2 months of inventory now since December, and while it’s flattening out a bit, we’re still a ways away from being in a normal market of about 3-4 months of inventory. For those of you that have read some of my reports may remember this blog from last year: 2020 Blog on Inventory When I wrote that blog in April of 2020, we had roughly 3 months of inventory, which was lower than it was in 2019. We’re at 1 month now.

So, what does all of this mean? We have a low supply as seen, and the demand has continue to show strength. So when you see Demand High and Supply low, you get a price increase, and that’s exactly what we’ve been seeing…

Sales Price

I always end with Sales Price because while it’s the ‘sexy’ number, most of it is derived from the elements presented above. But hey, we’re on a ride like we’ve not seen in a long time.

At the end of May, our Median Sales price for Single Family homes finished at an all-time high, $385,000, up 22.2% since May of 2020, and up 11% since January 1st. If you have even just glanced at homes for sale lately, you’ll notice they are higher and higher each time you look and the stats are all here to back this up. The chart itself is impressive whether you look at it on a 1 year, 5 year, or 15 year window, but here it is in a 5 year period.

What happens now? Are we heading for a $400,000 median price? Yes, I believe we are. In fact, we’re half way through June, and we’re currently at $395,000, so I think we do hit $400,000 sooner than later (July is my guess). Will we sustain this level? Yes. I think we will. Will we sustain this speed of increase? Short term? Yes. Long term? No. But my crystal ball is foggy on what is considered short term and what is considered long term. Could we have a strong market for the next 1-3 years. Yes, I believe so. This blog didn’t even take into consideration external factors such as political climate, tax status, and the big inflation discussion. We can tackle those things later.

But in parting, I want to present this question.

What if our housing is not over priced, but properly priced? What if we were actually well below where we should have been the last 5-7 years? What if the recovery from 2007/2008 was actually slower than we perceived it to be? At the end of the day, no one will be able to decisively say one way or another, but it’s definitely a way to think about this market. And for those on the fence, perhaps it’s time to jump off that fence and commit to property ownership.

Until next time!

-GZ