The once-booming Las Vegas real estate market was badly impacted by the ongoing pandemic. Amid the economic uncertainty and massive job losses with unemployment hitting a record at 28.2% its no surprise that the housing markets have suffered the pandemic as well. Although it has managed to avoid total collapse as the effects on the Las Vegas housing market have been deemed as short-term. But at the same time, it is yet to be predicted as to what the potential long-term impact could be.
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Impact Of The Pandemic On RE Market
With the pandemic taking its toll on every industry in the world, it was no surprise that it affects the real estate market all over the world. That was quite predictable too, as no one would expect people to be too invested in buying a new property while their health is at stake. As one would expect, looking into new homes wasn’t one of them. And that becomes very clear once one takes a look at the number that was becoming worse and worse during the past couple of months.
It all began when the Las Vegas house sales plunged from year-ago levels when the pandemic-sparked economic shut down right after the Las Vegas home prices were trending up to possibly make a new record in 2020 due to the strong demand for housing and persistently tight supply. It all began when home sales started dropping in April. Sales of existing houses in the Las Vegas area fell more than 30% in April compared to the same month last year, while prices dipped 2.8% from March.
The median price of existing single-family homes sold in Southern Nevada during April 2020 was $310,000, down by 2.8% from a record price of $319,000 in March. As compared to last year’s April, the median price rose by 3.3%. Due to the COVID-19 crisis, home sales dropped again in May but prices were higher as compared to last year. And then the house prices hit an all-time high in June.
During the first full month of the economic downturn prompted by the coronavirus pandemic, just over 2,400 houses, condominiums, and townhomes were sold, according to the Las Vegas Realtors trade group. That represented a 31% drop in house sales and a 42% decline in the sale of condos and townhomes. But there might be a light at the end of the tunnel for the real estate market in Las Vegas according to a lot of research conducted in the past months. Home values are remaining steady, and house hunters have been signing sales contracts at a steady and significant increase since mid-April, according to the statement of LVR President Tom Blanchard, a broker with Renters Warehouse.
Developers are seeing record sales of homes in Las Vegas and home prices hit an all-time high in June because of a surge in resales. And some experts even say the coronavirus pandemic is at the heart of it, but that it could also just be lower interest rates. The surge in sales is a combination of factors but one of the most important is the historically low-interest rates, according to real estate market experts.
What is next for the Las Vegas real estate market?
On the positive side, the national housing market is expected to bounce back faster than anticipated from the damage caused by the COVID-19 pandemic, according to Forbes. They also said that among the Las Vegas housing market is among those cites that are showing the most signs of a positive recovery. With the reopening of its economy, the Las Vegas real estate industry is looking forward to how the business can be conducted in the wake of the new normal.
While the supply situation isn’t improving much, and mortgage rates are not expected to rise, forecasts for home prices going forward are not quite as hopeful. If the pandemic worsens dramatically, it will cause another full economic shutdown, home sales could weaken as they did in March and April, and prices would reflect that. By next June, CoreLogic economists predict prices will be 1% lower than they were this year.
The drop in prices could be particularly sharp in markets like Las Vegas, where the economy depends heavily on entertainment and hospitality. CoreLogic predicts an 11% price decline by June of next year. Parts of Arizona, which are also seeing spikes in Covid-19 cases, are expected to see prices weaken.
The variables in all of these predictions are the path of the coronavirus, a potential vaccine, and supply and demand, the more fundamental drivers of housing. Homebuilders are seeing very strong buyer interest and sales, but they have not been able to ramp up production to meet that demand because of supply chain issues brought on by the pandemic.