In June 2020, the World Bank declared the global economy has entered into a recession – the worst of its kind since World War Two. This is also the first economic recession that was caused by a pandemic. There were predictions that the economy will shrink by up to 5.2 percent on a global scale. The impact of Covid-19 is felt the world over and during times of recession like this, the housing market is one of those that are hardest hit. The same can also be said of the Las Vegas real estate market, even though it is one of the top performers in the US.
The Las Vegas real estate market is composed mostly of single-family units. The median price for home listings is at $300,000 with actual home sale prices at an average of $284,700. As for the rental market, there are plenty of apartments, townhouse units, and condos in Las Vegas, too. The average rental price is at $1,500. For years, Las Vegas has been considered as the number one real estate market in the US in terms of the housing supply, new home construction, and the economic trends over the past 5 years or so. But even a prime real estate market such as this is not immune to the effects of Covid-19 pandemic.
Discover how it has affected the Las Vegas real estate market and what the latest economic development means for the future of the housing market in the city within the foreseeable future.
Las Vegas Real Estate Market During the Pandemic
The Las Vegas real estate market suffered a slight decline in 2019 but it quickly recovered at the onset of the year 2020. It made a slow but gradual upward trend and many real estate experts predicted that it will hit a new record in 2020. The strong demand and the tight housing supply were factors that contributed to the recovery of the real estate market in Las Vegas. Within the first quarter of 2020, the home sales have surpassed the previous year’s performance.
It was in April when the peak of the pandemic was felt in the Nevada housing market, which caused home sales to drop. Despite the drop in home sales, the prices remained steady. Single-family homes, which constituted a huge percentage of property types in Las Vegas, averaged at $310,000 in prices. It saw a drop of about 8% from March’s $319,000 record price. This average sales price is still up by 3.3 in comparison to data from April 2019. The drop in home sales continued in May.
It is undeniable that the Covid-19 pandemic has caused a decline in the housing market. This was partly due to the unemployment rate in the city hitting 3.9% in February and then growing to as much as 34% by April. This number improved slightly by June (still at 18%) since the casinos and other businesses in Las Vegas have been allowed to re-open. While these numbers show a short-term outlook, experts cannot help but assume that this will have long-term ramifications. They point to the lack of tourism as one of the biggest factors why Las Vegas took a huge blow from the pandemic. After all, tourism in Las Vegas provides jobs and is the lifeblood of the city’s economy.
During the height of the pandemic, the Governor of Nevada has issued a moratorium on evictions among rental properties. In fact, the state has issued emergency rental assistance in April to support those that were left unemployed. In addition, many construction projects were put on a halt that also slightly affected the housing market. What all of this means is that a lot of landlords throughout the state of Nevada issued 30-day notice to vacate forms to their tenants when they didn’t pay rent just to have the state go around them and tell the tenants they could stay. This was inherently a bad deal for the landlord to say the least.
Forecast for Las Vegas Real Estate for 2021 and Beyond
How does the Las Vegas real estate market look for the future (specifically for 2021 and beyond)? Given the appeal of the neighborhood and the positive outlook for recovery among businesses in Las Vegas, experts are positive that things will look up for the market soon. Currently, it is feeling the impact of the pandemic with more buyers than sellers, which has resulted in home prices dropping and interest rates at the lowest they have been in years.
Expert guides such as Zillow suggest that Las Vegas is currently a buyer’s real estate market based on data from their Buyer-Seller Index. Due to the lack of demand, probably due to the growth of the unemployment rate and with some businesses closing, many homes linger in the market for a longer time. According to Las Vegas Realtor – Stephen Edge, this will result in homes and real estate properties being sold for less and that gives negotiating power to the buyers. Based on the market indicators for the last quarter of 2020 and for 2021 (at least), the supply exceeds the demand (there are more homes available for sale than buyers who may want to purchase them).
The boldest prediction by experts for the Las Vegas real estate market is that the home prices will stay as it is or will decrease by up to 1.3%. These numbers could change as the market is currently only feeling the short-term impact of the pandemic. Depending on how long the pandemic will continue, its impact on real estate sales activity could be more compelling than what the current forecasts suggest.