Perhaps no place in America was hit harder by the financial crisis than Las Vegas. Unemployment peaked in late 2010 at 14%. Home prices fell by an astounding 62% from their peak levels in 2006. Single-family building permits fell by over 90%. Even today, home prices are still 30% below their peak, and single-family building permits are still barely half of what they were 20 years ago. Yet at the end of November, the Greater Las Vegas Association of Realtors announced that the number of unsold housing units for sale had fallen 30% over the past year, shaping the Las Vegas real estate market forecast for 2019 up to bear sweeter news than it has in some time.
Strong sales demand and shrinking inventory
In October, the Las Vegas real estate market had roughly a 2.6-month supply of homes for sale. That is below the national average, and well below what is considered a “normal” market. The National Association regards a 5 to 6 month supply of inventory as standard. A snapshot of the market as of January 7, 2018, shows 3,864 free standing homes on the Las Vegas market, while the figure was 13,346 in May 2009. The rate of sales has increased substantially over the last couple of years with inventory shrinking considerably. Prices have responded, with Las Vegas joining Seattle as one of the only two metros with home prices that grew by double digits over the past year. It seems that after a decade of struggle and recovery, the real estate market forecast for Las Vegas in 2019 may just spell a boom.
New construction, new jobs: Las Vegas real estate market forecast for 2019
After years of declines in housing inventory and increases in prices with relatively little construction growth, single-family building permit activity is now at a 10-year high, with a significant increase over the past couple of months. With inventory as low as it is, there’s no reason this shouldn’t continue in 2019. In metros as dependent on housing market activity as Las Vegas, this is good news for job and wage growth too. Like most places, Las Vegas is facing a shortage of construction workers. And the only way the city will be able to increase its construction activity in 2019 will be by fuelling wage growth and finding more workers.
The Las Vegas real estate market forecast for 2019 could reveal the city as a potential key player in current economic recovery; a relatively poor job sector is one of the only barriers. Las Vegas’ current unemployment rate is 5.4% – 1.3% above the national average. That said, just a few years ago, Las Vegas had an unemployment rate of 9.7%. Without question, the job sector is heading in the right direction.
Las Vegas real estate market forecast for 2019: closer to long-term stability
Reports suggest that the Las Vegas real estate market in Nevada is closer to long-term stability than it has been in the last five years. The region has seen significant improvements in this time. Stimulation is due, in part, to the heavy presence of foreign and domestic investors looking to capitalize on the market. As of December 2017, the Las Vegas real estate market’s median home price was $270,000. The median list price was $272,000. Economists with Zillow recently forecast that the median home value for Las Vegas would rise by around 5.8% over the next 12 months, and this comes in the wake of a whopping 12.4% gain over the previous 12 months. That rate of increase has been roughly doubling over the last 18 months or so. Several years of historically high appreciation have increased equity in the Las Vegas housing market. According to the latest S&P/Case-Shiller, Home Price Index published at the end of October, home values in Las Vegas rose 8.6% during the most recent 12-month reporting period. That was the second largest year-over-year increase of all the cities tracked by the particular index.
Closing prices rose 10.2% in Las Vegas last year, according to experts who say prices will continue their march higher in 2019, but the rate of increases will slow. “Underlying the rising prices for both new and existing homes are low-interest rates, low unemployment and continuing economic growth,” noted David Blitzer, head of the Index Committee at S&P. “Some of these favorable factors may shift in 2019,” he added.