All eyes will be on the Federal Reserve to see where the Las Vegas Valley real estate market heads next year, area real estate agents say.
“Inventory remains very low and the Federal Reserve has said it plans to cut interest rates three times in 2024,” said Mike Rowland, head of the Rowland team at Platinum Real Estate in Henderson. Ta. “These cuts will begin in the second quarter and appear to extend through 2025.”
Lee Barrett, president of Las Vegas Realtors, said he expects the overnight federal funds rate, currently at 5.25 to 5.5, to fall next year, but not to return to the 4.1% rate it was in December 2022. As of Dec. 19, the average interest rate on a 30-year fixed-rate mortgage was 7.2%.
“Rising interest rates and mortgage rates will be the new normal,” Barrett said. “It may go down a little because of the election, but I think it will be in the 6.5-7% range next year.”
The Las Vegas Valley real estate industry is on track for its worst sales since 2008, and local real estate agents who spoke to the Las Vegas Review-Journal say it’s unclear where the market will head in 2024. Told. “There are signs pointing to a transition to a buyer’s market in 2024 as pandemic-induced inflation subsides, mortgage rates fall and more people put their homes on the market,” Redfin said.
However, the valley has been plagued by a lack of inventory and affordable housing in the post-pandemic real estate market, with many homeowners who bought at low interest rates during the pandemic when the Fed cut interest rates unable to take out mortgages. This is because they are refusing to sell their homes due to rising costs. . Although sales have fallen significantly every month this year, home sellers are refusing to lower prices, creating a lock phenomenon in the local market.
Nationally, Redfin predicts that home prices will decline 1% in the second and third quarters of 2024, with the last decline in home prices occurring in 2012, when the housing market was still recovering from the Great Recession. This is the first time since then. The company also expects home sales to increase 5% as interest rates decline, resulting in an increase in the number of new listings.
important election year
According to Redfin, home prices nationwide have risen 20% since President Joe Biden took office in 2020, and a recent poll found that 65% of voters approve of the president’s handling of the overall economy. housing affordability was found to be the main factor. According to Redfin, the average U.S. homebuyer currently needs an income of about $109,868 to pay off a mortgage, which is the highest amount ever, and many experts predict that homes will be sold by 2024. We believe this could become an important issue in the 2019 presidential election.
Ilya de la Campa, senior economist at Redfin, said the current U.S. housing environment is a “perfect storm of inflation, high prices, high mortgage rates, and declining housing supply,” and that 2023 will see a He said it has become the most affordable housing market in 2019.
Barrett said there is one thing he is looking at when it comes to the local market predicting signs for 2024.
“What I always look at is how much product is on the market, how many months of inventory do we have, and is it moving from a seller’s market to a buyer’s market? As far as that goes, that doesn’t seem to be happening and home values will continue to rise, even if inventory is still low.”
Barrett said six months is the ideal goal for the supply of homes for sale, but he said Southern Nevada has hovered between one and five months since 2016. As of the end of November, the supply of homes for sale was just under three months.
Southern Nevada real estate statistics for November show the housing supply also continues to contract, with fewer homes for sale and prices higher than at the same time last year.
The median price of existing single-family homes sold in Southern Nevada in November was $450,000, up 4.4% from $430,990 in November 2022, according to data from the Multiple Listing Service. Local home prices remain below the all-time high of $480,200. , This is a mark set in May 2022.
Barrett said this is the name of the game for Southern Nevada real estate this year, and that the market has stalled and prices won’t move.
“Interest rates are now higher than they have been in years, and housing supply is at its lowest level.”
What gives?
Rowland said there are other scenarios that could play out in 2024, including the Federal Reserve keeping interest rates on hold for an extended period of time as it waits on inflation, or the U.S. economy bottoming out and the economy slowing down. He said it was one of many scenarios in which the country would go into a setback. Potential scenarios considering uncertain economic conditions. Rowland said the Fed could continue to raise interest rates if inflation is not contained.
“If interest rates continue to rise on top of inventory shortages and pent-up buyer demand, we expect the real estate market to expand dramatically,” he said. “Once demand starts to pick up, I think you’ll see hedge funds and cash buyers come back and push the market higher.”
A recent study by UNLV Reed Real Estate Center Director Sean McCoy found that investors (those who have purchased 10 or more homes in the past five years) own approximately 15 percent of Clark County’s entire single-family housing stock. It turns out. Virtually everything was converted into rental stock. This number has been increasing steadily since the aftermath of the Great Recession.
Las Vegas real estate agent Steve Hawks said he expects overnight fund rates will most likely fall, with the Federal Reserve rate potentially reaching 4.9% by this time next year. Stated. Redfin expects mortgage rates to remain above 6% in 2024.
“Interest rates have reached the peak of this cycle,” Hawks said. “The Fed is asleep again. With everything going on in the world, from China to the United States, there is now a 99 percent chance that interest rates will be cut next year. would be the most opportune time for buyers to come in, and a river crash would most likely occur as soon as the Fed lowers interest rates. Demand from buyers and hedge funds would surge, increasing supply. If they don’t, prices are likely to skyrocket.”
Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.