Buyers are able to get into a home without having to offer up a kidney and their firstborn…is the market finally cooling off?

Las Vegas has had one of the hottest and arguably over-valued markets for a while now, but all signs point to a shift or correction. So what does this mean if you’re hoping to purchase a home? Well – probably not as much as you’d think. Let’s discuss.

What Is Causing The Shift?

Interest rates have almost doubled since the beginning of the year. These higher rates are the main reason for the market shift. While interest rates are still low in the grand scheme of things, the large increase makes a huge difference to a buyer’s monthly mortgage payments who were already pushing their budgetary limits. Now, they’ve decided to put a pause on their home search.

Mortgage loan applications have dropped by about 17% compared to the first week of July 2021. Now that there are not as many buyers, homes are sitting on the market for longer, which increases the inventory.

Some sellers are reducing their prices, but not to a point where values are dropping.

Does This Mean Housing Will Be More Affordable?

Sadly, thanks to interest rate increases, even with the market shift, monthly mortgage payments have not decreased. The increase in interest rates has increased the monthly mortgage payment by hundreds of dollars. Home prices will need to drop significantly to get the monthly mortgage payment amount back to where it was before the rate hike. Unfortunately for home buyers, that does not look like it will happen any time soon.

If Prices Aren’t Coming Down, Can We Really Call This A Correction?

The state of our real estate market is a little controversial. Some say that for a market to have a “correction,” values need to drop by no more than 10%. A crash is when values drop more than 10%. As of now, values have not dropped at all – instead, they are continuing to increase. With more inventory available, it would stand to reason that values will come down. However, if the last two years taught us anything, it’s that nothing is entirely predictable anymore. What we do know is that buyers have more options and more negotiating power which is great.

Need Help Navigating This Market?

We know the real estate market of today is confusing. If you have questions about buying a home, please don’t hesitate to ask us. While we may not be able to predict the future – nobody can – we can guide you through the home buying process.

Contact us to discuss your real estate goals, we would love to help!