“Las Vegas Housing Market ‘On Fire’” – “Las Vegas Housing Market Holding Fast.” These two recent media headlines describe an astonishingly resilient Las Vegas real estate market. Despite COVID-19, or perhaps in part as a result of it, the Las Vegas residential real estate market is seeing record breaking prices with historically low interest rates and strong demand.
According to a Las Vegas Realtors (LVR) report median home prices in July 2020 rose to a record $330,000 – a 1.5 percent increase from June and almost nine percent higher than July 2019. Southern Nevada’s housing market continued to defy expectations in August 2020 with the median sale price of an existing home in Southern Nevada hitting $335,000 up ten percent from August 2019.
Of course, historically low mortgage interest rates are a primary driver behind the continuing upswing in the Las Vegas real estate market. “With mortgage rates at their lowest in history, buyers can essentially afford double the house they could just a few years ago. And for renters, buying is now a more affordable option,” said Uri Vaknin, a partner with KRE Capital, whose company owns a collection of condominium towers in Las Vegas including Juhl, One Las Vegas and the recently sold out Ogden in downtown Las Vegas.
According to Freddie Mac, 30-year fixed-rate mortgage averaged 2.96 percent with an average 0.8 point for the week ending August 13, 2020. A year ago at this time, the 30-year FRM averaged 3.60 percent. The 15-year fixed-rate mortgage averaged 2.46 percent with an average 0.8 point. A year ago at this time, the 15-year FRM averaged 3.07 percent.
But low interest isn’t the only factor working in Las Vegas’ favor. Reports also note that the Las Vegas residential real estate market is benefitting from the growing number of people deciding to leave densely populated cities like Los Angeles to escape high taxes, a high cost of living and heavy traffic.
Vaknin says he’s seeing the same trend among those purchasing luxury condominiums at both downtown Las Vegas’ Juhl and South Las Vegas Boulevard’s One Las Vegas. “People who have transitioned to working from home and are confident in their continued employment have decided to relocate to Las Vegas because it’s far more favorable and affordable than almost any other major city in the immediate area. With no state income tax, no capital gains tax, extremely low property taxes, a high rate of affordability and lack of traffic and congestion, Nevada has become the new “golden” destination for those “California Economic Refugees” not just from SoCal, but from all over California.”
Vaknin and economists like David Grana believe that many of these transplants may bring with them new businesses that could eventually further diversify the Las Vegas economy, making it even more durable to events that may negatively impact tourism and travel.
While we are only eight months into COVID-19, the effects of remote-working and the pandemic on home purchasing decisions are already being documented by recent surveys such as the one conducted by realtor.com® and HarrixX, as reported in Real Estate Express. According to the survey, 63 percent of those who are currently working from home said that their decision to purchase a new home was directly related to their ability to work remotely. Another 40 percent whose buying decisions are being influenced by remote work say they will likely purchase a home within the next four to six months. And 13 percent said changes related to COVID incentivized them to purchase a new home. The most important home factor for these individuals – a home office.
While it may sound counter-intuitive to be optimistic about real estate investments in the midst of the worst pandemic in a century, experts like Vaknin say now is the time for eligible buyers to make the move.
“A lot of people (particularly buyers) thought this virus induced recession was going to be a repeat of The Great Recession, but those of us entrenched and experienced in the market know better.”
Vaknin points to the beginning of 2020 for reasons to remain optimistic about the Las Vegas housing market. “The year started off with gangbuster real estate sales. Forty percent of our luxury condo buyers at Juhl and One Las Vegas were paying cash. The remainder were either putting down significant down payments or had excellent credit – or both. About 20 percent of our buyers were from California. Those factors have not changed, plus the pool of buyers has increased due to remote-workers choosing to leave expensive, crowded cities for a Las Vegas lifestyle.”
Commenting on the Las Vegas experience and the city’s future, “Before COVID, Las Vegas was ramping up to cement its reputation as a world-class sports city in addition to being the Entertainment Capital of the World. The excitement and vibrancy of Las Vegas isn’t gone forever, it is just waiting in the wings,” said Vaknin. “Allegiant Stadium is still the new of home for the Las Vegas Raiders; the Golden Knights will eventually win the Stanley Cup on home ice; cheering crowds will once again pack the Las Vegas Ballpark, and the Strip’s neon lights will beckon the world to its doors.
“The virus has taught us that life is ephemeral,” Vaknin added. We’ve come to realize that our homes are our sanctuaries. People are more committed now more than ever to living their best lives. And they have decided to live life to the fullest in the best city, which in my opinion is Las Vegas!”