Q3 Market Update
Las Vegas Market Update
Quarter 3
Happy Fall!
As we gear up towards 2020, we have had a nice, strong but horizontal growth year in the Las Vegas Real Estate Markets. If you remember last Quarter, I mentioned the market has been relatively horizontal for more than a year. We’re seeing this trend continue, but did have a spike to end the Quarter, when September saw values increase over 1%.
Our September Market Update VIDEO can be found here: https://youtu.be/uCxa7c_lerY
Sales Price
From May of 2018 all the way until August of 2019 (about 16 months), the Median Sales Price for Single Family homes hovered in a range of $295,000 to $305,000, popping up and down. Then, in September, we appeared to break out of that range, and finish the month, and Quarter, at $310,000. The $310,000 represents a 3.3% increase from September of 2018, which is in line with the expectations I set forth in December of last year for 2019 (I called a 3-5% increase). For the Quarter, we went from $304,000 up to $310,000, good for a 2% increase for the quarter, which shows some significant strength.
The average, which moves in a more volatile manner, ended at $361,912, up 5.8% year over year (compared to September 2018). We take more value in the Median price than the Average price.
Inventory
The most telling story of the Quarter was probably our standing inventory, which actually decreased during the 3rd Quarter, which is unusual. We finished Q2 with 8,880 homes on the market, and this quarter, we ended up DOWN a few hundred, with about 8,524 home on the market. The biggest difference is the increased. When we compared Q2 of 2019 to Q2 of 2018, we had close to 40% MORE homes on the market this summer than last summer. For Q3, the same comparison, we only had about 3.5% more homes on the market than the fall of last year, relatively flat. This is a good sign of inventory management, which also will help with the Median Price range, as evidenced by the gains we saw over the last 3 months. Take a look at the right side of this chart and the large drop off of inventory. That drop is usually reserved for the 4th Quarter when you compare it to years past.
Days on Market
A couple of my favorite stats and charts are Days on Market and Inventory levels (Months of Inventory). This is not a direct correlation to the market values, but it shows how large an appetite we have as a whole for single family homes here in the Las Vegas area. We are also seeing a slight improvement compared to months past, but a significant increase from last year.
Ending September, the Median Days on Market for a Single Family home in Las Vegas was 26 days, under a month, which sounds great. In fact, it’s down a full week from the multi-year high we hit in January, when it was 33 days. We are actually up about 3 days since the end of the second Quarter. The big difference, as anyone who has been paying attention to the market, can tell, is that compared to Q3 of Last Year, we are actually up 85.7%! Last September, the Median Days on Market was 14! 2 Weeks! When comparing to last year, the number feels very high, but overall, under a month as a Median point to sell a home, still shows significant strength to our markets.
If you look at the Average Days on Market, the shift isn’t as large. We are at 43 Days on Market (6 weeks), which is 48.3% more than it was in September of 2018 (29 days) and about 3 days longer than the end of Quarter 2!
Monthly Supply of Inventory
What this all translates to is our Monthly Supply of Inventory, or Absorption Rate. This is the stat that I look at more than any other stat. It shows the relative strength of our housing market. Essentially, as a reminder, the way this is computed is to determine how long it would take for all standing inventory on our market to sell, if no new listings were put on the market. The lower the number, the faster things are selling, and the ‘stronger’ the market is for sellers. Generally speaking, I consider 4.5 months to be considered a “NEUTRAL” market for both buyer’s and seller’s. Lower than 4.5 months is skewed towards Sellers and longer than 4.5 months is skewed towards Buyers.
For the Quarter, we ended up at 3.2 months of inventory, which is great. Our high for 2019 so far has been at 3.8 months, which is where LAST Quarter ended. So we are down about 2.5 weeks if you will, from last quarter to this quarter. The 3.2 months of inventory represents a slight increase from a year ago, when we finished at 3.0 months of inventory. Our multi year low was hit at the beginning of 2018, when we had 2.0 months of inventory.
To put this in perspective, when we were in the throws of the recession, the number peaked over 8.0 months of inventory back in the fall of 2010. Take a look at this chart!!!!
Looking Ahead
This is fun… take a look at what I wrote at the end of Quarter 2…
“Looking Ahead”
“I still think 2019 is a 3-5% growth in terms of Median Price. If that’s the case, I see us ending December with a Median Price for Single Family homes in the $305,000 to $311,000 range. I think our inventory levels remain in the mid 3 month range, for the next 12 months as well, and I think our inventory hovers on a monthly basis between 8500 - 9000 homes the next few months. Let me know what you think!”
Pretty spot on. I can’t agree more. I think that’s where we are and probably about where we will be. Only time will tell!
Until Next Quarter!
Geoff Zahler