Friday, June 24, 2022

Economic Conditions are Reducing Seller Expectations

Our current condition of uncertainty in the economy is seemingly making sellers a bit less confident in pricing and marketing time. Buyers have been in short supply for quite a few months but low inventory levels made the market seem more robust than it was. As more and more sellers sense the top of the market more listings are pouring into the system. It will take a fair while for inventory levels to return to a more "normal" level of 3-5 months supply, but in the mean time, buyers may feel some of that market pressure ease a bit as we move through the summer months. Hopefully the Fed will let the latest rate hikes percolate in the economy for at least 3-6 months before pulling the panic lever and raising them more.

I suspect we will have a decent summer of sales and as the autumn approaches later this year, we may see a genuine softening in prices as inventory levels likely continue to rise. I am finding more and more of my clients are calling me for listing appointments. If that admittedly anecdotal evidence is is true across the board and several of my colleagues are feeling it too, then market neutrality is nearby.

Keep in mind that historically a deathly real estate Markey is a neutral market and in our Clark County market, 700-800 monthly home sales is solid business we are well above that right now.

Friday, June 17, 2022

Inventory continues its gradual rise

Here in Clark County, inventory is still creeping up. We are a long way from a buyers market but we have more than month's work now and a traditional healthy inventory is 4-5 months. Things remain tight but buyers are starting to pass on overpriced listings and properly priced listings are getting a few offers hovering in the vicinity of asking. 

Overall we seem to be heading in a more healthy direction. Buyers are struggling with rising rates and sellers seem to be sensing the top of the market. Economic conditions still seem favorable for housing but a recession is almost inevitable at this point and that may slow the market a bit more, possibly leading to a modest dip in prices or at least a flat market for a few months to a year.

The median home price in Clark County is hovering around $560k with median household income at $78,000. The median household can purchase the median home but they will have to have strong credit and few or no other debts to pull it off. With a recession on the horizon, wages may flatten out and that alone will tug back on this crazy bull run in local real estate.

I would advise buyers to be prepared to stay in their home for at least a few years just in case we have to ride out a market downturn. Owning a home remains an excellent way to build wealth but there are times when patience is required to make that dream a reality. 

Friday, June 10, 2022

Inventory is now back to 1 Month

After a the tightest inventory levels in Clark County history earlier this year inventory has been increasing the last several; weeks and now stands at a still tight, one month. But we were at 12 days a few months ago. Although the market is showing signs of a mild slowdown, one month of inventory still puts us securely in a seller's market.

This is particularly true in the single level detached home market. Small homes with one level are getting hit by two large demographics, the starter home buyer and the aging step down buyer. The pressure in this segment is still red hot. other categories such as condos and large two story homes are softening up a bit. Young first time home buyers are well advised to consider two story homes rather than single level as the older buyers tend to shy away from stairs.

With inflation continuing to pressure interest rates, buyers in the entry level price range need to act soon. Even if prices start to level out or even dip a little the effects of higher interest rates will make the home more expensive. Once priced out of the market it can be very challenging to get back in.

Here is some more data from the latest market action report on our local MLS.