The usual April surge in listings has not happened and home builders are unable to build houses quickly due to supply chain and labor shortages. This is the tightest real estate market ever recorded in Clark County. This same scenario seems to be playing out all over the country, with little exception.
In a normal healthy real estate market there would be about 4-6 months supply of houses. This simply means for example a 4 month inventory level: that if no new listings entered the market and the rate of closed sales remains the same, it would take 4 months to sell every listed home. Our current inventory levels are measured in DAYS right now!
Higher interest rates have eliminated many buyers from the market and that would typically slow the market down. But lack of inventory keeps the pressure on the market. If inventory doesn't start improving we may be in for yet another 15-20% price gain in housing.
The best thing for the real estate market right now is a steady increase in inventory levels. This coupled with a lack of buyers due to higher loan costs would help us to a nice soft landing rather than something more abrupt. The bumpy landings are much harder economically and can lead to other sectors feeling the impacts.
People thinking about selling but worried about where they might go is probably the biggest inhibitor to fresh listings. People moving out of the area are fine as they have a 90% chance of moving to a less expensive market. Yes we are definitely in the top 10% of expensive markets.
As is true in any hyper inflated market, sellers can wait too long to sell. I do not see a huge correction like we had in 2008 but I do see a significant correction if inventory continues to be tight and prices continue to rise. Rate are now back in the 5s which is still a low rate, but after several years of 3's and 4s many buyers that were able to buy, simply cannot at the higher rate. As these buyer leave the market the pressure will start to wane and if inventory starts to rise too late the market could see a fast slide down perhaps in 2023.
Right now thousands of households in Clark County are sitting on a massive amount of home equity, but that can be eroded if prices start to fall. Owning a home for several years makes it easier to buy the next house because you have your downpayment and perhaps more in the current home equity. First time buyers have to scrounge for that downpayment.
Hopefully sellers will slowly emerge this summer to take the edge of the market and help us ease into this inflationary cycle we are in right now.