Greater Las Vegas Quarterly Update

 

ECONOMIC OVERVIEW

Employment in the Las Vegas market slowed modestly towards the end of 2016 after having performed very well for the past couple of years. November data showed that 943,100 people were employed in Clark County; this is up by 19,000 from November of 2015, representing a growth rate of 2.1%. In a further sign of an improving labor market, the local unemployment rate has dropped from 6.4% to 5.1% over the past 12 months

 

HOME SALES ACTIVITY

  • There were a total of 8,857 home sales in the fourth quarter, which was an increase of a substantial 14.8% over the same period a year ago. Sales were 12.5% lower than seen during the third quarter, but that is due to seasonality.
  • Sales activity was less robust in the Spring Valley, South Summerlin/Lakes, and Green Valley/Henderson sub-markets, but even in these areas sales rose.
  • Sales grew at the fastest rate in the North Las Vegas sub-market, which saw a 24.9% increase when compared to a year ago. There were sizable increases in sales in almost all of the sub-markets reviewed within this report.
  • Inventory levels remain woefully low, with 17.5% fewer listings than seen a year ago. That said, listing activity did rise in the Southwest, South Summerlin/Lakes, and Southeast sub-markets, which may indicate that listings will continue to increase in 2017, but I wouldn’t guarantee it.

 

 

HOME PRICES

  • Average prices in the region rose by 3.9% year-over-year to $237,487. This is a modest drop of 1.6% compared to the third quarter.
  • The relatively affordable Sunrise sub-market saw the strongest annual growth, with home prices rising by 11.9% to $153,667. We also saw notable gains in the Spring Valley neighborhood, where sale prices were up by 9.7% to $200,700.
  • Prices rose in all but two sub-markets compared to the fourth quarter of 2015, with several remaining above the region-wide average.
  • There were modest price declines in two sub-markets. The Whitney market saw a 7% drop to $163,000, and the South Summerlin/Lakes market saw prices drop by 1.1% to $339,000.

 

 

DAYS ON MARKET

  • The average time it took to sell a home in the region dropped by 15 days when compared to the fourth quarter of 2015.
  • It took an average of 45 days to sell a home in the fourth quarter, which is seven days lower than the third quarter.
  • All component sub-markets saw the length of time it took to sell a home drop when compared to a year ago.
  • The greatest drop in days-on-market was in the Downtown sub-market, which dropped by a substantial 27 days to an average of 41 days.

 

 

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economic factors. Employment growth in Clark County is slowing, but that appears to have had little effect on the housing market. Inventory levels are still lower than I would like to see in a balanced market, and because of this, home prices continue to trend upward.

Due to slower price growth and rising interest rates, I have moved the speedometer a little toward the buyer’s side. That said, sellers are still in the driver’s seat.

3rd Quarter Update November 2016

 

ECONOMIC OVERVIEW

Employment in the Las Vegas market saw quite a nice bump during the summer after having taken a bit of a pause earlier in the year. August data showed that there were just shy of 950,000 non-agricultural employees in the area, up by 5,300 from the prior month, and 26,400 higher than seen a year ago. The local unemployment rate dropped from 6.9% at the end of June to 6.0% in August. This is, in part, a result of the data not being seasonally adjusted, but also because we saw the workforce drop by 6,600 people. Employment sectors were a mixed bag, with sizable improvement seen in casinos and related hotel industries, but a decline in professional services, finance, insurance, and the information technology sectors.

 

HOME SALES ACTIVITY

  • There were a total of 10,126 home sales, which was an increase of 4.5% when compared to the third quarter of 2015. This was also 4.2% higher than seen during the second quarter of this year.
  • Sub-markets where sales activity was either slow or negative were limited to South Summerlin/Lakes, Anthem, North Las Vegas and Summerlin sub-markets; however the drop in sales was modest.
  • The fastest rate of growth in sales came in the Whitney sub-market, which saw a 16.8% increase compared to a year ago. There were also sizable increases in sales in the Sunrise and Southeast sub-markets.
  •  Inventory levels are still well below where I would like them to be, with 10.9% fewer listings than seen a year ago. That said, overall listing activity in the quarter was up by 21.9% from the second quarter of this year. The fastest pace of growth in listings was seen in the Southwest and South Summerlin/ Lakes sub-markets, where listings were 7.0% and 5.8% higher, respectively.

 

HOME PRICES

  • Average prices in the region rose by 4.6% year-over-year to $232,750. This is also 1.0% higher than seen in the second quarter of this year.
  • The Centennial sub-market saw the strongest annual growth, with average home prices rising by 8.9% to $240,300. We also saw notable gains in the Sunrise neighborhood, where sale prices were up by 8.4% to $151,000.
  • All sub-markets saw prices rise compared to the third quarter of 2015, with several above the region-wide average.
  •  As mentioned earlier, prices were higher across the board, but the Southeast and Downtown areas were essentially at the same level as seen a year ago.

 

DAYS ON MARKET

  • The average number of days it takes to sell a home in the region dropped by eleven when compared to the third quarter of 2015.
  • The average time it took to sell a home in the region was 52 days—one day less than seen in the second quarter of this year.
  • All component sub-markets saw the length of time it took to sell a home drop when compared to a year ago.
  • The greatest drop in days-on-market was again seen in the Sunrise sub-market, which dropped by 23 days to 48.

 

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates and larger economics factors. Employment growth in Clark County has resumed and I believe that it is this growth that is continuing to drive home sales. Inventory levels have risen substantially over the past six months and, while they are below the levels of a balanced market, they are headed in the right direction. Home prices are increasing at a reasonable pace but there are some sub-markets that are over-performing at the present time. This is not a concern, as I think buyers will start to be more selective regarding the neighborhoods that they want to move to. This process will allow some markets to appreciate at levels higher than the regional averages. I have moved the speedometer a little more in favor of sellers, as price growth is higher across the board and, even with the rise in listing activity, sellers still have the upper hand.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

2nd Quarter Update, August 2016

ECONOMIC OVERVIEW 

Job recovery in the Las Vegas metropolitan area took a bit of a pause during second quarter. May employment was down by 200 jobs from the prior month, but still 21,300 higher than seen a year ago. This matches the annual pace of 21,300 jobs seen at the end of last year, but is below the average annual rate of 32,700 for the whole of 2015. It is too early to suggest that this “slowdown” will be ongoing, but I will be keeping a close eye on the numbers through
the summer months.

The local unemployment rate rose from 6.1% to 6.4% between April and May, but it’s important to keep in mind that this data is not seasonally adjusted. (Seasonal adjustments remove the influences of predictable seasonal patterns to show how unemployment changes from month to month.) The employment rate has been fluctuating quite frenetically over the past
few months, but I believe that Las Vegas is still trending in the right direction, especially considering that there were substantial additions to the workforce during the spring.

HOME SALES ACTIVITY

■ There were 9,717 home sales last quarter, which is an annual increase of 9.7%.

■ Sub-markets where sales activity was slow were limited to the Southeast and Anthem areas, but the declines were very modest.

■ The fastest rate of growth in sales came in the Green Valley/Henderson sub-market, which saw home sales rise by 29.5% over the past year.

■ Inventory levels remain a major issue with the number of homes for sale 3.9% lower than a year ago, and 9.4% lower than in the first quarter of the year. There were four areas where the number of homes for sale increased, led by the Southwest sub-market which saw listings increase by 7%.

HOME PRICES

■ Average prices in the region rose by 3.8% year-over-year to $230,500.

■ The Whitney sub-market saw the strongest annual growth with home prices rising by 14.2% to $174,333.

■ All but three sub-markets saw prices rise compared to the second quarter of 2015, and two sub-markets registered double-digit percentage gains.

■ Prices fell in the South Summerlin/Lakes and Southeast sub-markets, but I don’t believe that one declining quarter is enough to suggest that this trend will continue.

DAYS ON MARKET

■ The average number of days it took to sell a home in the region dropped by nine days when compared to the second quarter of 2015.

■ The average time it took to sell a home in the region was 53 days.

■ The South Summerlin/Lakes sub-market was the only market where the number of days on market did not drop but it did not increase either!

■ The greatest drop in days-on-market was seen in the Sunrise sub-market, which dropped by
16 days.

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates and larger economics factors.

The Southern Nevada economy continues to grow, but the pace has slowed. This is not a cause for concern at the moment, but I will be watching the data through the summer to better understand the reasons for the current slowdown.

Inventory levels are not what I would hope for, and it is clear that more choice in homes for sale will lead to a more balanced market. Home prices are still rising, but at a reasonable pace. Because of this, I am leaving the speedometer in the same position as last month—still in favor of sellers.

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.