If you’ve been interested in buying a house in or around Las Vegas, you know just how hot the market is right now. Property prices have escalated dramatically over the past decade, and even more sharply in the past couple of years. When new properties emerge on the market, they’re typically gone in a matter of days – and they often spark bidding wars that drive prices to points above list price.
It’s a frustrating experience if you’re an eager buyer looking to pick up a nice home and a great experience if you’re getting ready to sell your house on the open market. If you’re a real estate agent, things are even more exciting.
But wherever you stand, it’s clear that the Las Vegas housing market is thriving. Why is this the case? And does it have the momentum to last?
There are several motivating factors for this trend, including:
1. Low supply
One issue present in the real estate market for the past couple of decades is the low supply. People aren’t selling their homes and new constructions are hard to come by. Construction companies still exist, but their building rates have dramatically slowed; they’re also looking for profitable opportunities, which don’t always align with buyer interest. As any basic economics student can tell you, a low supply will lead to higher prices if demand is consistent. Accordingly, with a swarm of eager buyers and a limited number of homes for sale, prices are driven up.
2. Limited land
Why don’t people simply invest in new construction if they’re concerned about the rising prices of existing real estate? The basic answer is that there’s a finite amount of land. Las Vegas itself is only so large; if you want to build a house, you’ll either have to tear down a property that already exists or you’ll have to move further outside the city, which not many people are willing to do. This reduces the available options for people who want to buy homes in Las Vegas, driving up prices further.
3. Low mortgage rates
One of the most important trends right now is the record-low mortgage rates that are available to buyers. Depending on where you live and what your credit score is, you can probably secure a 30-year, fixed rate mortgage for less than 3 percent. This makes it ridiculously easy to borrow large sums of money and still afford a low monthly payment. People see the long-term potential here; with such a low interest rate, you could easily buy and manage a rental property for a significant profit, or you could sit on the property for many years and capitalize on long-term gains.
4. Economic disparities
The COVID-19 pandemic has significantly impacted the economy, but it hasn’t impacted everyone the same way. The people hit hardest have been people in lower income brackets; they’ve lost jobs and have faced reduced income on already-thin earnings. By contrast, many middle-class and upper-class individuals have actually profited from the pandemic. The latter groups are the ones buying homes, and they have plenty of money to do it.
5. Increased mobility
The pandemic has also allowed millions of people the opportunity to work from home, in some cases permanently. Because of this, people can now live wherever they want – regardless of where they work. This increased mobility has led people to seek out homes in areas that were previously inaccessible to them.
6. Plans for the future
Vegas may not be fully open yet, but after the pandemic is over, it’s likely to be a thriving area where people can socialize and party once again. People are looking forward to it and preparing to be part of the action. Buying a home in or near Vegas now, before the coming boom, could put you in a great position.
7. Increasing buzz
The buzz around Las Vegas also results in a kind of snowball effect. Lots of people are talking about how hot the market is, which leads more people to investigate the situation; they also want to get involved before prices get any steeper, so they drive the prices up even further. The excitement grows by virtue of the fact that excitement is already high, resulting in a feedback loop of rising enthusiasm.
Where does it go from here?
So where does the market go from here?
That’s a complex question without a straightforward answer. Even the most experienced and knowledgeable experts in the real estate industry are powerless to predict the future. If interest rates remain low and inventory doesn’t budge, prices could continue to climb well into the future. If there’s a sudden turn to an economic recession, prices could begin to unravel. Or things may level out and stabilize in the coming months.
There’s no clear answer because there are too many intersecting factors, and all of them are variable. The next few months could lead to any number of developments for the market.
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