LAS VEGAS (KLAS) – Mia Browning is settling into her new three-bedroom, 2.5-bathroom townhome in North Las Vegas, despite a mortgage rate that has more than doubled since she first began looking for a home.
The midwestern native says she’s lived on and off in Las Vegas for 10 years, and in 2019, began the hunt for a property of her own.
“You’re talking, putting offers in sight unseen, there’d be like 26 offers,” Browning said inside her nearly 1800 square foot townhome on Thursday morning. “It was stressful. Tears were shed.”
Back then, she says mortgage rates were in the “high twos, low threes,” which she thought was too high. Now, that rate hovers between six to over 7%.
“I kick myself for doing that because obviously, I would have been able to get more house or less of a house payment,” Browning said. “It’s worth it, but it is taxing.”
Her purchase comes as Las Vegas REALTORS (LVR) reports home, townhome, and condo prices are trending upward from the spring. But, according to the most visited real estate website in the U.S., Las Vegas is among the top metro cities with the largest declines in home value.
Orphe Divounguy, a senior economist for Zillow, said their data ranks the valley fifth for steepest home value drops across the nation relative to one year ago.
In May 2022, these prices were significantly higher in the valley and broke records for the highest median prices.
“Las Vegas is experiencing a much-needed rebalancing, market rebalancing,” Divounguy said outside the 8 News Now Studios Thursday morning. “Homeowners saw their homes appreciate roughly 43% from the start of the pandemic so that increase was obviously unsustainable.”
LVR’s report for the month of May shows the median prices for homes, condos, and townhomes all are up slightly from the month prior, with over 4,500 units available throughout the valley.
But, it’s all a far cry from this time last year when the median home price was $40,000 more than now and condos and townhomes were $10,000 more than now.
Divounguy acknowledges that more inventory means more competition, meaning more of a reason for prices to come down. He points to new development across the valley that could eventually cool off prices.
But, that requires standing homes to go on the market too, which he said may not be appealing to many homeowners after the pandemic.
“A lot of homeowners are, you know, sitting on record home equity. They probably had the opportunity to refinance during the pandemic at a very low mortgage rate,” Divounguy said. “They don’t want to trade, you know, a 4% mortgage rate for a seven percent rate, so they are likely going to sit out this market. So we’re going to need a lot of help from new construction.”
As to if any of this leads to a potential housing crash, Divounguy said that record home equity prevents it.
“At the start of the global financial crisis, what we saw were a lot of homeowners who could no longer afford their monthly payments listing their homes, and so we had a flood of new listings coming on the market. Today’s market, we’re seeing the opposite,” Divounguy said. “That slow price adjustment is going to help many first-time homebuyers come back into the market.”
Divounguy recommends new home buyers connect with mortgage professionals first to understand how much they can afford, along with utilizing an agent to navigate housing inventory on that budget. Zillow additionally has downpayment assistance programs to help ease the cost for first-time buyers.