Is the housing in a contracting or expanding market? And what does that mean for you as a home seller or buyer? Here’s the market update for the first quarter of 2019.
What does the contracting market mean? It means that it’s not growing at the same rate as the previous reported and compared period. In 2018, the greater Las Vegas housing market experienced a 10.2% single-family price appreciation over 2017. In our January 2019 report, we projected that the market in 2019 will experience a 3-4% appreciation. Appreciation at a 3-4% range reflects a healthy housing market and is a positive for the homeowner, but it is lower than the 10.2%, so we are now in a contracting market.
With so much noise in the market place and with negative news often rising to the top, what sources should a consumer be listening to? We recommend avoiding the headlines that are written to grab attention and obtain an emotional response. Take a look at the data. Data is boring and not much fun to review, but it does present a more realistic picture and sound basis to make a decision from.
What do the SENSATIONAL HEADLINES REPORT, those that are looking to grab at your emotional coat strings:
What is a recession: The technical definition of a recession is two consecutive quarters of negative economic growth as measured by the gross domestic product (GDP). For most people, we do not track the GDP, we are more concerned with what trickles down or up to our market and effects us personally.
Are these headlines crying wolf and what does a recession mean to home prices here in Nevada? The leading analysts are all indicating that 2019 housing, nationally, is expected to be in the 2-3% appreciation. CoreLogic is predicting a 2019 appreciation of 4.9% nationally, with the highest appreciations being in the Pacific Northwest. Nevada being on their top states for appreciation.
2nd: What does a Recession mean to housing prices? The graph below shows the last five recessions and the impact it had on home prices. As you will see, in three of the last five recessions, housing prices experienced appreciation. However, the great recession of 2007-2009 is the one we all recall vividly, and it did have a large impact on housing prices and it was a long recession period. Furthermore, most statisticians state the likelihood of a recession severely impacting housing prices even close to 2007 is very, very low. However, the correction to bear market is likely.
The Health of Nevada Economy
Clark County Economic Conditions
2018 Housing Market Recap
The December Median House Price was $300,000, a year over year increase of 7.1%. Year to date, Median House Price has increased by 1.6%.
For the second quarter in a row, the most significant factors in the housing market are INVENTORY (# of homes on the market) and Day on Market (the # of days a home takes from list date to closing date).
The number of units available without offers in March was 7,091, which was the year over year increase of 84.9%. The large increase of homes to recently enter the market is providing Buyers a lot more options and is reducing the number of multiple-offers scenarios substantially.
Days on Market
Increased with 51.9% of homes selling 30 days or less compared to 69.4% in March 2018.
What is the number one factor for sellers? Sellers need to be sure to price their home at the market value price. Often, Sellers come up with their price point by looking at listings they have previously seen in their community or by using a Zillow Estimate. If the home did not sell at that price point, then that price is not market value price. The market value is the price point the consumer (buyers) are currently willing to pay. Closed homes in your area are the best indicator of market value (allowing for condition, amenities, location, etc). Buyers are no longer making over list price offers to beat out other Buyers.
The market has now shifted to a level condition. The key is to price your home correctly at the time you initialy list it. Because of this, it will attract the most amount of qualified Buyers. As the home sits on the market, it becomes unlikely you will achieve list price and more likely you will receive a price point lower than you would have if it were priced correctly from the start. The key to getting a great price for your home in this type of market is to work with a company, like Crown Point, who will provide you with a solid marketing approach to sell your home.
What happened to rates in April? They hit a 14 month low at 4.17%. This drop had more to do with the global economic condition, than it had to do with the housing sector in the U.S. At the beginning of the year, most of the top banks had predicted interest rates to be at 5% by the end of 2019. However, their predictions have been lowered to 4.6%. What is causing the teeter totter on rates? We have read a lot of analyst reports, bank reports, and Federal Reserve releases and there is a vast amount of opinions. But no conclusive evidence or statical prediction that adequately addresses this result.
In the March Federal Reserve update, all indication was that rates were going to rise several times in 2019. Then in the April 1st press report, they are holding rates and expect a holding pattern for the next meeting. This was after a strong job and earnings report. It is the simple law of economics: demand is greater than supply. The demand for 30-year mortgage bonds is also high which helps drive down rates to the consumer. The great news for our Buyers is that they benefit from the lowest rates since 1975. This also provides relief to our Sellers. With these lower rates, their Buying power increases, allowing more Buyers to qualify to purchase.
Crown Point’s Update for 2019: EVEN ROAD AHEAD
We still expect appreciation to be in the 3-4% range. Days on market for homes over $275,000 to be close to 60 days and over $500,000 over 60 days.
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, where I want to live, where I work and where I play.
- I want to gain personal wealth by equity growth in my home predicted at a 4-5% rate over the next five years.
- I want to own my own home, and I to live in my style and my taste, make it my own.
- And I see homeownership as a critical part of my future retirement savings, such as owning a home free and clear when I retire.
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 miraculous Buyer who is willing to pay more than the last guy. 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. Then you will be empowered to make the decision. This not only the right time but the market value is the right price for you.