For ages, the real estate market of Nevada has been a top attraction for both homebuyers and investors. Thanks to the rapidly developing economy, favorable tax environment, and amazing natural beauty, this state has experienced remarkable growth in its real estate market over the years.
However, the real estate scenario throughout the country has changed significantly in recent times. Nevada’s real estate market is also showing some volatility, which is hurting the transparency of its future. To get answers to your questions regarding this real estate market, let’s have a go with this article as we reveal the trends and factors driving Nevada’s housing market and analyze different prospects of its potential price growth.
Housing Market Trends in Nevada
Nevada's housing market reflects the nationwide trend of low supply and high demand, but the supply is increasing lately. Home prices took a toll as the number of home sales decreased across the state. After increasing in a steady manner for almost a decade, the prices have finally reached the affordability limit for a good number of prospective homeowners.
To say more precisely, Nevada’s real estate market has been experiencing a major change for the last few years. If we compare with the last year, the median sale price in Nevada went down by 8.1% in May 2023 year-over-year, and the number of homes sold declined by 19.4%.
Let’s look at the Southern Nevada housing market. It experienced some serious volatility during the last year. In May 2022, the median price of single-family homes touched an all-time high of $482,000. Throughout the rest of the year, the median home price decreased in 6 of the last 7 months and ended the year at $425,000
Moving to the northern counterpart of the state, we find that the median price of single-family homes in April was $495,000, which is 9% lower than the last year. However, even though the price went downwards in 2022, they seem to be increasing again over the last few months. In April, the median price increased around 3% from March in Reno-Sparks and greater Carson City.
Such behavior of the market is actually good news for buyers and investors who are interested in Northern Nevada. It indicates that they can buy homes affordably now yet expect the price to appreciate in the future. Purchasing a home in any of the finest reno neighborhoods can provide homebuyers with access to diverse resources and endless opportunities while offering investors excellent profit potential.
Let’s Have a Look at the Statistics!
i) Median Home Price
In May 2023, Nevada’s median home price was $428,100, which is down by 8.1% YOY. The sale-to-list price ratio is currently at 98.4%, which shows a decline of 2.8 pt YoY as of May, 2023.
ii) Home Sales
According to May 2023 data, 4,047 homes got sold in Nevada from May 2022 to May 2023. It shows a decline of 19.4% in the number of homes sold. The decrease of number of homes sold is putting more pressure on the sellers, and they are getting forced by the situation to cut their prices.
iii) Median Days on the Market
In May 2023, the median “on the market” days for homes was 43 days. This number is up by 24 days year-over-year. As the days on the market almost got doubled, the concern of sellers is getting even more serious.
In May 2023, Nevada had 12,820 homes available for sale, which is down 11.5% year over year. Nevertheless, the good news is that the supply is increasing slightly at this moment.|
Home Price Predictions for the Next 5 Years!
The housing boom that Southern Nevada experienced in 2021 is now slowing down in 2023. One of the main reasons behind this is the rising rates. As the Federal Reserve raised the interest rates, sellers have been left with no other option but to cut prices in order to match the buyers’ affordability.
The characteristics of the Southern Nevada housing market have also contributed significantly to shaping its path toward the future. For instance, Las Vegas is a housing market dominated by investors and tourist demand which do not fare well in recessions. We are already seeing that play out when we look at the inventory. Inventory in Las Vegas has skyrocketed over the last year, from 3,879 homes for sale in January 2022 to 8,465 in January 2023. This added inventory is putting more pressure on the sellers to cut the price.
This price cut is likely to continue for the upcoming one or two years, as Vegas is still 26% overvalued. The prices have gone down by around 10% already, and it is likely to decline by another 20-25% within the next two years. After that, the price is likely to get upward again in a slow and steady manner.
If we draw our attention to Northern Nevada now, we can see that the home prices have started to increase, but in a slow pace. You can expect this slow growth of price for the next few years as well.
Overall, home prices in Nevada have risen by 34.8% over the past 5 years, but this constant growth is expected to reduce gradually. An important thing to discuss here is that the 30-year fixed-rate mortgage averaged 6.79% in June, 2023; which is up from 6.57% previously. With the mortgage rates continue to rise, many home buyers have to postpone their home hunting for a few more years. On top of that, more inventory is likely to enter the market over this period. This “decreasing demand and increasing supply” situation will cause the home value growth rate to decrease.
There’s actually nothing to be surprised with the situation, as it was bound to happen sooner or later. As the prices appreciated at a rapid pace throughout the pandemic period, this adjustment was needed. As the adjustment is supposed to end later this year, we can expect the prices to start going upward once again, but at a slower pace this time!
The price correction that Nevada’s real estate market is going through was crucial to return a sense of balance to the market. Overall, the market is now moving toward a neutral condition, but leaning just a bit toward the buyers.
To conclude, Nevada’s real estate market has grown remarkably over the last few years. However, the market has reached its peak lately and situations like increasing interest rates and increasing supply is pacifying the price growth now. All the current factors suggest that the prices will pull back further before they stabilize this summer, and then they will start going upward again but at a modest pace. Despite all these facts and numbers that we have shown in this article, anyone who wants to get their hands dirty in this market should keep a close eye on the latest economic indicators, housing supply, and market conditions in order to make wise and informed decisions.