Housing Market Seeing Gains in First Quarter
At the spring Las Vegas Housing Outlook, a panel of observers said that they believe that the housing market in Southern Nevada will make some decent gains in the next 18 months. In the first part of 2015, housing indicators, such as home closings and construction permits, stayed at the same level or even increased. These trends can indicate a continuing upward trend.
Real estate markets are on an upward trend – here’s why.
Increase in Housing Sales
According to the first quarter of 2015, weekly net sales increased from the national norm of 0.7 sales per subdivision to 1 sale per subdivision, which is a good start to getting back to normal. Unfortunately by May 24th, that rate had decreased back to the 0.7 rate, which is the same as a year ago. Summer is the biggest sales season, however, so the hope is that the number will increase.
Another indicator of housing trends amping up is the rate of closings or completed sales. In April, these numbers increased 7.4 percent to 449 units and for 2015, the numbers are on track to increase 6.3 percent. If the trend continues, closings could reach 7,000 in 2016.
Still one other indicator is the median price. In April the median price had improved by 7.5 percent over the previous year to $305,704. These prices are projected to continue to move upward, simply due to:
• Limited supply of land
• Low rates of notices of default
• Sluggish foreclosure rates
Builders are finding enough lots to create a rise in permits. In 2014, builders pulled 6,632 permits and the pace is on track to pull at least 7,300 permits this year. 2016 could see up to 8,000 permits. This is quite a big jump when you consider the 3,700 permit low in 2011.
Economic Recovery On Horizon
The gains in the housing market are in large part due to the recovery of the economy. The Las Vegas area’s job growth is almost double the national job growth rate. In addition, the population is growing and more affluent people are relocating to spend on homes. Las Vegas is projected to continue to see a growth in economy with their new building projects and renovations.
What Factors Can Aid the Recovery?
Affordability is one of the first things that needs to be considered. While wage growth has not seen a huge increase, home prices have seen a double digit increase since 2012. Rising interest rates could figure into recovery as well. Many economic forecasters have said that the Federal Reserve could boost interest rates by as much as half a percentage point before the end of 2015.
The signs all point toward a recovery in the real estate housing market. Only time will tell.