The Las Vegas luxury real estate market trends over the last year indicate that the market will become more competitive moving forward.
Active listings in April were up 7.5% over March, while closed sales were down 7% month-over-month. This trend marks an increase in supply and a decrease in demand. With inventory increasing and closed sales decreasing, the competition is becoming more fierce by the day.
Likewise, the year-over-year trends show us that 2019 is not shaping up to be as strong as 2018. In April 2019, active listings were up 17.8% over 2018, while closed sales were down 18%. In fact, we’ve had several months in a row with inventory up and closed sales down year-over-year.
Another statistic to consider is the absorption rate, which is the length of time (in months) that it would take to sell the current inventory. This is calculated by adding the number of homes for sale and the number of homes under contract, then dividing this total by the average number of monthly sales for the last 2 months. By performing this calculation in different price ranges, we can estimate how long it might take to sell all the homes in that price range.
Some homes, especially those in the higher price range, tend to sit on the market longer. For example, the absorption bate for homes listed for over $4MM was 140 months in April. While this doesn’t mean your $4MM+ home will take over 11 years to sell, it does give you an idea of the supply and demand for homes in that price range. On the lower end, homes listed for $500k-$750k had an absorption rate of only 6.6 months in April 2019—a much more active market, but still 2.5 months longer than than the absorption rate in April 2018.
Regardless of which price range your home is in, supply is increasing and demand is decreasing across the board. Las Vegas real estate prices have been on the rise since 2013. In contrast to the strong “bull market” we’ve experienced over the past six years, we may be heading into a “bear market.”
Real estate timing expert Robert Campbell says, “Bear markets in real estate don’t start because property owners become convinced that valuations are going to fall. Instead, they start when buyers get scared they will lose money if they buy—and it seems we are in the early stages of that phenomenon today.”