Here’s how rising interest rates have impacted our real estate market.
You’ve probably heard by now that interest rates are on the rise. What impacts will that have on the real estate market? Today we’ll discuss what we’ve seen recently and what we can expect from the future.
In our market, each property that sells becomes a new baseline for the market value in that neighborhood. Buyers are offering anywhere from 8% to 12% over list price to secure a home. A property listed for $500,000 today might be worth $550,000 by the time that escrow closes. After that, the next buyer who purchases in that neighborhood might offer another 8% to 10% over list price, taking home values up to almost $600,000.
Right now, we simply don’t have enough homes available in the market to match buyer demand. That, coupled with the rapid increase in interest rates, has put a lot of pressure on buyers to take action as soon as possible so they can lock in a lower rate and avoid paying a higher price by waiting.
In the Las Vegas Valley, we had been hovering around 2,700 homes for sale, but currently, we have 2,900 units available. Nine hundred homes hit the market in just the last week. However, in that same period, 1,500 homes have gone under contract.
“A home that you buy today will cost you less than it will tomorrow.”
If rates continue to rise like they have been, the time it takes homes to sell will probably increase. Some sellers may get tired of waiting and ultimately take their homes off the market.
In terms of new construction, we’re finding that home builders are simply getting smarter. You used to be able to buy dirt in Las Vegas and build a home on it, but that’s not the case anymore. Builders want top dollar for their properties, and given our market conditions, they know that they can get it. If you see that builders have spec homes, don’t mistake that for extra inventory. Builders have been specking out homes and selling them as they get closer to the time of completion to get a higher price.
So what does this mean for you as a buyer or seller? With rates on the rise and inventory so low, a home you buy today will cost you less than it will tomorrow. For sellers, that means your buyer pool may shrink over time if you wait to list. All in all, now is the time to act.
If you have any questions about the market or buying and selling homes, don’t hesitate to reach out to us by phone or email. We’d love to help you.
