July 2017 Single Family Residential (SFR) closed sales were down 14.6% from June and 10.7% better than July 2016. Year to date 2017 closed sales are now up nearly 11% over 2016. The median closed sales price of a SFR edged up 0.6% from $258,500 to $260,000 while the average closed sales price of an SFR rose to $303,338 for a 2.5% increase. Residential resale activity was brisk again in July leaving us with approximately 1.8 months of inventory. SFR closings, Condos/Townhome closings, Hi-Rise sales closings and Luxury Sales closings continued to make gains as well.
Earlier this month a Fitch Ratings report declares our market to be overvalued by about 15%. I’m confident that Fitch has the data to support their statement, rather I simply challenge the way they are looking at the Las Vegas real estate market. The four charts below appear to tell a vastly different story. While there has been an accrued 55% increase in prices for SFR sales in the $250K and below market – that is not the case for the other price bands. I’ve had several Sales Executives ask me about this report, so I feel compelled to dispel the myth by looking at the trends by price bands. This is a great example of failing to understand that real estate market sales and price changes occur differently at different price points. And of course, market changes vary between communities and sub-divisions. It’s always interesting to look at the market from a macroscopic perspective as long as we don’t attempt to apply that to each and every community or zip code within that market.
There certainly seems to be ongoing price corrections in the upper price ranges. All price ranges above $250,000 are experiencing some degree of competition from new home sales. The same cannot be said for prices below $250K where there is intense demand and an underwhelming supply. Today’s buyers in those upper price ranges are generally looking for many more upgrades and sometimes more contemporary designs and floor plans than previously. I affectionately refer to this as the HGTV syndrome where every remodel, rehab, and makeover is simply fantabulous – leaving us a little less satisfied with what we have! Most homes that are ten years old are dated in the eyes of many buyers, in part because yesterday’s options are todays standards. Granite is the basic standard while quartz is the upgrade. The same is true of upgraded flooring, cabinets and appliances.
My theory is that there are resale sellers who have had to make substantial concessions to buyers who wanted to purchase their home, but were planning to do extensive remodeling once it closed escrow. Otherwise, they might be able to take the same amount of money and purchase an already upgraded new home. So I really question the sustainability notion for home sales above $250K while recognizing that closed units below $250K are diminishing and becoming less affordable.