Market Trends Continue to Favor Buyers

Complied by Rod Sager using data from RMLS

With each passing month the market tips a little more towards the favor of buyers. Some segments are still tight on inventory and heavy on buyers and thus remain in the seller's corner. But large swaths of the local market are showing signs of softening.

The chart shows both the last 24 months and the last 6 months of data. Charted are sold listings and new listings and the percentage of new listings relative to sold listings over the period.

Over 100% indicates that sales exceeded new inventory and less than 100% indicated inventory levels grew.

The chart separates price ranges Under $300k, $300-400k, $400-500k, $500-750k, and above $750k. A low percentage is not good and you can see that the upper price ranges had very slow inventory turn.

This is not unusual as the market for higher end homes is much smaller than the market for mainstream and entry level properties. But even the ultra tight sub $300,000 market is now adding inventory. It has been so tight that it will take several months of this trend to flip to a buyer's market. The shocker for many, but not me, is the $300-400k band that flipped to plus inventory in April of 2016! It was so tight in 2014-15 that it is just now settling in to neutral conditions. If the surge of inventory continues, the segment could flip to a buyers market before the end of summer. Above 400k buyers are already in control but some buyers don't realize it, and many seller's agents are scratching their heads. They shouldn't be, the data has been showing the trend for several months and you can't keep adding surplus inventory without buyers catching on.

At $400,000 in Clark County buyer's have lots of choices. Sure there are pockets where $400k remains hot and tight on inventory, and these hyper-localized sub-markets are just one reason buyers should use a quality and experienced LOCAL agent.

The economy remains strong, jobs are plentiful and incomes should start increasing. Rising rates has put a soft brake to the market, but the economy will keep us in strong real estate sales. I wrote about rates and purchasing power a few weeks ago, here.

Although I have tried to point out that the market is NOT the raging bull some still think it is, it is not on a bubble either. The economy is pushing forward with a heavy head of steam and that bodes well for real estate. I see a soft landing from the crazy run up 2014-16. Now we should see modest growth in inventory and a softer rate of appreciation. In fact 2018 could end up flat, the first six months here in Clark county have been pretty flat.

I am hoping this slowdown will move to a nice steady market and let this excellent economy push new buyers into the market with better wages.

I still have the same warning for buyers however, rising rates will kill you faster than rising prices, so take advantage of the pause and lock in your sweet new home soon.

Hiatus For the Weekend

I'm taking a hiatus this weekend, I'll be back next week with a new post, in the meantime this is still relevant...

originally posted on February 9th, 2018, by Rod Sager

Bottom Remains Hot!

The entry level of the real estate market here in the Clark County area remains hot with a surplus of buyers bidding on a tight inventory of homes priced below the median. There has been a softening in the buyer pool and that may be due to a combination of higher rates and inflated value pricing people out of the market. However, inventory remains very tight in the bottom half of the market.

The middle and upper price ranges are seeing a serious slowdown in the rate of price growth. I am not seeing negative appreciation, but sellers are reducing their prices that they had up too high as the market has settled in a bit. The rush at the bottom produced a large swath of move-up buyers over the last couple of years, and that helped keep the pressure on at the top in 2015-2016 and part of '17. That wave seems to have subsided a bit and the battle in the upper price ranges has become neutral between sellers and buyers.

Interest rates will be the big story this year. It may be hard to believe for younger buyers that can't remember a time when interest rates were at 6% or more, but historically the average rate in fact hovers in the low 6% range. The treasury yields are a strong indicator for mortgage rates and treasuries are marching higher. This will ultimately result in higher mortgage rates that may reach 6% over the next years or so.

Higher rates tend to dampen the housing market. Our market however is so hot right now that a little cold water might do us some good. Just a little though ;) Buyers that have been sitting on the fence should absolutely get triggered on this interest rate issue. Rates will kill the ability to buy faster than rising prices. A little interest rate heat will also cool the "bubble" and that should help everyone rest easier. Most analysts are predicting much more modest price growth in real estate over the next year or two. This in between period where prices are a bit more stable and rates have yet to get traction to climb could be a great buying opportunity. It is a narrow window and rates will squeeze the buying strength. It's time to get on-board or stay home. The affordable house train is leaving the station.