Las Vegas Real Estate Housing Report - April 2020
WARNING: if you are expecting a ton of doom and gloom and for us to state that the Real Estate world as we knew it is over, and that prices are going to plummet, you probably shouldn’t read this, because that’s not what this is about (wow that’s a long sentence). If you want real data, some ugly truths but some hope for the near term and future, keep reading, because hopefully that’s what you’ll get in this update!
Note: Data is pulled from our MLS on 5/4/2020. Some adjustments will be made for those late reporting of sales that occurred at the end of April, but this information is very accurate. Also, for all stats other than Sales Price, I used ALL property types (including Condos, Townhomes, and 1-4 Multi-Family units). For Sales Price, I use Single Family homes only.
Spoiler Alert: If you want to see values… it’s at the end.
April 2020 - Market Report
Closed Sales
Overall, the month of April was what we somewhat expected, and can be compared to other industries… bleak. But there is hope, and there are silver linings, so please keep reading. We KNEW that the volume of sales would go down. That was absolutely on the cards. When jobs were furloughed and lost, and we had stay at home orders, people did what they needed, and we saw less activity. However, less does not equal NO activity. Way back on April 13, before the month was half-over, I predicted some sales numbers. If you want to take a look at that blog post, you can find it conveniently, right here: April 13 Blog. In that blog, I stated we would see about a 50% drop off in terms of number of sales from March. I figured we would see just over 2,000 total sales. We ended April at 2508 Sales. This is down 34% from last April. It’s also down about 31% from March. Indeed, it was a significant one month fall, but this is what we expected. I actually had been expecting to see things cut by 1/2, but it was roughly 1/3 instead… so like I said, a slice of hope in all data! To give comparison of the number of sales in the month, we are not in completely unchartered territories. February 2019 saw 2645 sales, so about the same as April 2020, and January 2019 actually saw less sales than last month, clocking in at 2435 sales. So, we did drop, and we did have a significant drop, but it was actually less of a drop than even I thought it was going to be.
Pending Sales
Another Stat we pay attention to as it sheds some light on what may happen in future months is Pending Sales; the homes that went INTO contract during the month. Now, some of the sales that went Pending in April also closed in April, but many of them will close in May and Beyond. Hence, the reason we look at Pending Sales is it is a good indicator of what sales will look like in the near future. This number too, as expected, dropped significantly. April saw 2377 homes Pending, a drop of 41.4% from last April, and a drop of only 14% from March. This is a glimmer of hope as well. Based on what we saw for the first half of April, I only anticipated about 2000 Pending sales for the month, and we exceeded that. This shows that the latter half of the month saw MORE activity than the beginning, which absolutely is in alignment with what we are seeing on our personal business. People are starting to come out and realize the market, and its stability, are going to survive. Again, we EXPECTED to see a drop, but it wasn’t as significant a drop as I had anticipated. Again, for recent historical evidence, our number is low, but we had LESS Pending Sales in December of 2018. What this forecasts is of course, another low month in terms of SALES for May, but I would not be surprised if we saw an uptick from April, which would be great, not just for the market, but for the comfort level of those watching the market!
New Listings
While we had less homes put into contract (Pending Sales) and less Sold Homes (Closed Sales), we also saw Less NEW listings hit the market, which counterbalances the negative on the sales side, and helped keep our market in equilibrium. For April, we had 3419 new homes hit the market, which was again, down 42% from Last April, and down 32% from March. Put that into perspective. 1600 MORE homes were put on the market in March than in April, in a market that we already had too few homes! Quite simply, many people decided to NOT place their homes on the market in April due to to COVID-19. I am not saying that was a bad tactic, I’m just reporting the stats. We had some clients that chose to wait, but we also had some clients that pushed through. Again, this will keep the overall inventory levels LOWER, which will again create more demand. The amount of new listings will directly effect the number of overall Homes For Sale, which we will talk about next.
Homes for Sale
I call this the HUMP chart for a reason
This is the stat that shows the overall number of properties for sale at the end of the month. I love this chart (below) because it looks so different than the others above. We again, saw an overall dip in the number of homes available for sale in our market. The month of April ended with 9612 properties for sale, down 27% from Last April, and down about 4% from the prior month. That means buyers actually have LESS homes to view now than they did even a month ago. Buyers are still out there, and while there were less sales last month, there are also less homes for them to choose from. Our Inventory levels are not as low as they were in 2018, but SIGNIFICANTLY lower than the hump of inventory we saw in the Summer of 2019. In fact, in June of 2019, less than a year ago, we had 13,755 available units for sale! We are 30% LOWER than the height of last Summer. Again, reason for hope!
Months Supply of Homes for Sale
Our Months of Inventory chart is always one that I pay attention to, even more so than the pricing and number of sales. This shows the overall ‘health’ of a Real Estate Market. I blogged about this extensively here. I have stated that nationwide, experts state a market is in equilibrium with 6 months supply of inventory. That number is too high for Vegas, and I believe our market is ‘neutral’ or at equilibrium between 4 and 5 months. Anything less than that is considered a Seller Market, and anything above a Buyer Market. Our Months Supply of Inventory, as calculated using the end of April Statistics, shows we have about 2.8 Months of Inventory, which is the same as it was last month, and actually lower than it was last April by a full month (April 2019 saw 3.8 months of Inventory). Geoff, how can this be? Remember, sales dropped, but so too did the number of new listings, and our inventory levels are at multi-year lows. We have seen a great equilibrium of new buyers, new sellers and transactions in the marketplace, even during COVID-19. Now, this can change if all of a sudden a flood of Sellers enter the market with no new buyers, but even this is not expected, as pointed out in the Pending Sales; they are down, but not 0. We definitely can, and probably will, see the months of inventory, pick up, but not approach ‘Buyer’ levels, or probably even approach where were were last year! The demand is real. Mortgage Rates are low and getting lower. Buying opportunities persist. We know unemployment has hit a staggering number of people, but not everyone. And for those that did file for unemployment, the process of Buying a home is not Dead, it’s merely delayed.
Sales Price
This is always the Stat that gets the most attention, so I figured I would leave it for the main event. In actuality, while it’s a measure of the overall strength of a market, in terms of values, it has very little other value. We use the MEDIAN home price, which is simply the mathematical ‘middle’ of all the sales, in terms of price, for the month. That’s it. That’s what Median is. So whiles it’s statistically significant to define the health of a market, it has little to nothing to do with the value of your property specifically. If the Median price goes up 3%, that doesn’t mean your home did (you may have gone up more, you may have stayed the same, you may have gone down), and the same goes if the market goes down. There were 1968 Single Family homes sold in April. So the middle point is basically the 2 homes that were priced right in the middle. Nothing more. Nothing less.
Our Median Sales price for April for Single Family homes ended at $310,000. I actually called that number about a week ago, before the end of the month. The data was there, we just didn’t want to ‘face the facts.’ So the ‘bad’ news first. $310,000 was a drop of 2.8% in one month. We finished March at $319,000, so a drop of $9,000. That does NOT mean your home value went down $9,000, or 2.8%. It just means that is the middle point of the sales prices for the month of April. It is a decline, but one we see, and have seen, regularly. How recently did we see a drop over 2.5%, which sounds like a lot? You have to go ALL the way back to January of 2020… yes, just a few months. The decline from December to January was 2.6%. So again, NOTHING major. We see dips and hikes all the time. Looking at it this way; we’ve had 4 months in the books for 2020 so far. Two months saw an INCREASE in values, and two months saw a decrease. The two decreases were very similar. Compared to last April, $310,000 is HIGHER by about 3.3% than in 2019. If you look at the chart for the last 5 years, we have seen some down trends, some up trends, but the overall market has been solidly UP.
Look at the chart above a different way. If I told you this was an investment, but unlike a Stock, you could LIVE IN THE INVESTMENT, you could take tax deductions because of the investment, and you can seek shelter (Quarantine) in the investment, looking at the long term picture, are you going to be concerned about the months of decline? Look at the 5 year chart. There are a handful of dips (2019 had 3, 2018 had 2, etc), but overall, If I told you to buy something at $200,000 and 5 years later it was worth $300,000+, and you got to LIVE IN IT, would you be concerned? Would you be concerned if it went from $310,000 down to $300,000? No. You wouldn’t LIKE it, but what did it do for you during the last 5 years? That is how you have to look at Residential Real Estate. Because you’re not day trading. You’re in it for the wealth building, for the shelter, for the family raising, and for the comfort of home.
Closing
Again, all of this data is directly from the source, provided to us monthly. My job is to read it, digest and understand it, and present it with my opinion. Am I forecasting anything crazy? No. Is this doomsday, no. Is it the right time to buy? That depends on YOUR current situation. But let’s discuss that, one on one. The right plan for you is the right plan for you, not your neighbor, or someone with a different situation. There will be bumps in the road, as we are dealing in the unknown here. But I point to mortgage rates, I point to demand, and I point to the fact, at the end of the day, we all need shelter, we all need housing, and the benefits of home ownership will ALWAYS outweigh those of renting (I blogged about that here: Values of Home Ownership Blog. Take a look, and judge for yourself. Then, let’s talk!
More like this next month… until then, keep updated on our blog regularly. We are posting 3-4 original blogs a week to help keep you informed.
-GZ