By Shawn Cunningham
At Cunningham Group, we track activity in the MLS (Multiple Listing Service) each week, with the goal of sensing trends in the market before they happen. This helps us better advise our buyers and sellers about how to go about accomplishing their goals.
Lately we have noticed a rather sharp decline in the inventory of homes. This means there are more homes going under contract compared to homes coming on the market, leading to the lowest number of available listings since mid 2018. The last semi-“boom” market in Las Vegas was three years ago, since that time we have seen fairly stable 5-8% annual appreciation and a consistent soft seller’s market. This means homes that were priced well were selling in 1-2 weeks, those that weren’t priced well would sit without any activity.
In this stronger seller’s market, homes that may have been considered price high a few months (I.e. needing repairs or otherwise with issues) are selling anyway, and sometimes within 1 week. Homes that would’ve sold quickly in the last few years are now getting multiple offers.
Of course the question is: what does this mean to you? I always like to counsel my first time buyers especially to be sensitive to the market. That’s because the lower price ranges where FHA loans are possible (under $400K) are always the first to become competitive when inventory drops. Two months ago, a first time buyer without closing costs in the bank could buy a home and get seller assistance without difficulty. Now, with multiple offers on many desirable homes, this option is quickly disappearing. We instead prepare first time buyers to look at down payment assistance programs, borrowing gift funds from family or waiting to save up for the down payment.
You will soon see new home builders roll back many of the generous incentives of recent years as they no longer have to work hard to sell a lot- buyers are coming to them. They will also raise prices systematically as their own inventory declines.
We’ve been here before (and in much more difficult markets for buyers) so we have strategies, but its important to be prepared up front to limit frustration.
For buyers moving up or down from their current home, they will face similar difficulties although at a lesser degree the higher the price range (depending on location). Having more leverage as a seller can help with getting a rent-back to avoid moving twice, and more cash to help compete for the replacement property.
If you are considering selling your home, of course this development favors you.
But it’’s not all roses for home sellers. For those in higher price ranges, you will get more showings and find it a bit easier to sell, for those in the “FHA” price range under $400,000, you will find that top dollar is possible for homes that are ready to go, and you may encounter multiple offers.
We need to have a well-oiled marketing and showing machine ready upon listing to ensure we can show the home likely many times, and handle what could be more than one offer. More than offer doesn’t always mean they are all equal, we have to parse through offers to find the best situation for you.
We also have to be more weary of appraisal issues when the market heats up, which could derail a transaction 1-2 weeks in. We discuss the possibility of these issues with our home sellers on a case by case basis and plan from there. Also when the market creates greater urgency for buyers, sometimes the pressure can increase the number of deals that fall through. But in all, it’s better to be a seller than a buyer in this type of market.