The southern Nevada housing market for 2019 reported a year to date appreciation of 2% on the Median Sales Price, at $304,000 thru June. This is up 4.8% from June 2018. The national housing market for June over a year was at 4.6%. At a year to date appreciation of 2%, we are running slightly below the anticipated rate of 3%. Does the flat line of appreciation mean we have changed from a Seller’s Market to Buyer’s? Let’s review the definition of a Buyer vs Seller Market. The calculation is based upon the amount of inventory divided by the number of sales per month.
- Seller’s Market: Inventory is less than 3 months
- Flat or Transitioning Marketing: Inventory is 3-6 months
- Buyer’s Market: Over 6 months.
As of June 30th, 2019 the inventory for southern Nevada was 2.69 months. With 7,815 available single-family units, 2,903 units were sold in June. We are still considered a Seller’s market, but we are approaching the 3-month line for a Flat or Transitioning Market. We expect it to remain in the 2-4 month range for a flat market for the remainder of 2019. June of 2019 was a slower month for the year, which is unusual for this time of year. However, early July figures appear to put July 2019 back in alignment with July 2018.
The number of units without offers, as we reported in our 2019 1st quarter report, has substantially risen in 2019. In June 2019 there were 7,815 single-family units available, this is a 135.6% increase from June 2018. The days on market continue to increase in this year with 57.7% of the homes selling in under 30 days vs 74.7% in June 2018.
What is the right approach for pricing a home to market? Price to market. Do not price above or stretch. The following two graphs indicate clearly that Seller’s receive a greater sales price when they price the home to market at DAY 1. As you see, the Buyer activity for homes is the greatest in weeks 1-2, it drops off in week 3-4, and after 30 days we enter the “discount buyer” stage. Buyer’s ask, “what’s wrong with the home? Why is it not selling?” There is no fear of loss or sense of urgency.
The National Association of Realtor shows Nevada in a Stable Buyer Traffic market with our neighbors to the east, Arizona, and Utah at Strong.
Looking to purchase a home in the next few months? Then taking advantage of the historically low mortgage rates should be at the top of your mind. We had clients close a 30-year mortgage this week at 3.5%, wow!! As we have shared with our buyers, a drop in interest rates of .5%, which we have seen this year, provides buyers with more purchasing power. This is good news for Sellers as well, as more buyers are qualified to purchase more.
Interest Rate Direct Impact on Buyers
Besides the obvious increase in payment, the more significant issue is purchasing power. For every .5% increase in interest rates, Buyers lose 5% of Purchasing Power. Meaning if their income remains the same, the amount they would now qualify for is 5% less. If we use the average sales price of $304,000, that would mean if rates rise by .5%, then Buyers would be looking at a $288,000 purchase price.
Crown Point’s Update for 2019
We still expect appreciation to be flat at the current 2% year to date appreciation. We expect days on market for homes over $275,000 to be close to 60 days, and over 60 days for homes over $500,000.
The core foundations for Buyers
When is the right time to purchase?
- I can afford the monthly payment with the down payment funds I have or have access to.
- This home will meet my needs & wants for the next 2-3 years.
- With the help of my Crown Point advisor, I have found the community/area that best suits my lifestyle. Including where I want to live, where I work, and where I play.
- I want to gain personal wealth by equity growth in my home at the market predicted rate of 4-5% over the next five years.
- I want to own my own home, to live in my style and my taste, and to make it my own.
- Homeownership as a critical part of my future retirement savings, such as owning a home free and clear when I retire, college funds, and nest egg.
The core foundation for Sellers
To sell their home at the right time and at the right price.
- Price your home at market value. Do not price with the assumption that you are going to achieve that one in a million Buyer who is willing to pay more than the last guy, or more than market. Hope is not a strategy for a successful home sale. If the time is right for you to sell your home, then let us give you a full market analysis value. We will guide you through a pricing analysis that leaves no money on the table, but sells your home within your intended timeframe. Then you will be empowered to make the decision. What if this is not only the right time but the market value is also the right price for you?