You may have seen some recent headlines about a decline in home sales and new mortgage applications. Does this mean the Las Vegas real estate market is cooling down? If you look at the data in today’s newsletter, you’ll see that the market is still white-hot, but there are two main reasons why the media is citing a decline in sales and mortgage applications.
First, inventory is low. There were 375 guard gated homes for sale in May 2021 compared to 622 in May 2020, a decrease of 39.7%. When inventory is low, buyers have a harder time finding a home that meets their needs. Plenty of luxury buyers are out there, just waiting for the right property to come along. So yes, there has been a decline in home sales, but only because there are fewer homes on the market changing hands.
Second, prices are high. Home prices have been appreciating significantly this year. Now is the opportune time to sell for top dollar, but some sellers have gone overboard with their pricing. Much of this overpriced inventory is not being looked at seriously. Combined with low inventory, rocketing prices are causing some buyers to sit on the sidelines, which explains at least some of the decline in new mortgage applications.
Even though sales volume is down, I don’t believe this is the beginning of a changing market. May showed a 12% decline in closed sales compared to April, but closed sales were up 192% year over year. Likewise, pending sales were up 58.6% year over year. If you want to take advantage of this pent-up demand and maximize your sales price, now is a great time to sell! If the home you’re selling was your primary residence for two out of the last five years, you may qualify for up to $500,000 in tax-free profit as a married couple and $250,000 as an individual. Make sure you talk to your CPA about the details.