LAS VEGAS, NV – The housing market in Las Vegas has experienced a historic degree of growth in the past year, with fierce competition for the city’s limited inventory resulting in fast sales, multiple offers – many well above the asking price – with cheap money in the form of low-interest mortgage loans fueling the activity to levels not seen before the mid-2000’s recession.
However, one vital piece of the puzzle – and one of the main driving factors – of that sales activity is quickly going away. Borrowing costs have been steadily rising as of late, and the resulting higher-interest home loans have been slowing down sales, both in Las Vegas and nationwide, reports say.
One year ago, the average interest rate on a 30-year home loan was just 2.98 percent; however, as of last week, that average is now up to 5.1 percent, which represents a significant addition to a borrower’s monthly payment.
As a result of steadily rising interest rates, the buying frenzy that the country has been in the grip of is starting to abate, according to Freddie Mac chief economist Sam Khater in a news release.
“The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand,” he said, noting that currently skyrocketing home prices should slow down to “a more sustainable pace later this year” as a result.
Overall, nationwide home prices have increased by almost 20 percent year-over-year in February, and while Las Vegas has experienced fluctuations in real estate activity on a regular basis over the years, the city’s increasing housing costs are still comparably higher than other major marketplaces across the country, driving concerns over affordability.
However, there are signs that the local market is beginning to show signs of stability; in March, sales of pre-owned single-family homes were down 12 percent year-over-year, and Southern Nevada builders recorded almost 1,260 net sales in March, the largest number in a year.
Shelter Realty is a Real Estate and Property Management Company specializing in the areas of Henderson, Las Vegas and North Las Vegas, NV. Feel free to give us a call at 702.376.7379 so we can answer any questions you may have.