Clark County Housing Market Update
(You won’t read THIS in the paper)
Buyer Activity: If anything is steady, it is buyer activity. The foundation of a strong predictable market, buyer activity this year has been steady. Measured as lock-box openings, since mid-February we have seen a slow, steady and gradual increase in buyer activity. Activity levels have now matched those of the first half of last year, around 4400 showings per week. In my mind this is a huge indicator of market stability and is based on almost immediate and current data (rare- just 1 week old).
Without buyers, current conditions are not sustainable. A change in buyer activity is instantly felt by thousands in the county including agents, buyers and sellers not to mention title and escrow companies, lenders and many others. The level of buyers dictates if home prices are going up or down. If a market change is approaching, it will almost always be preceded by clues from buyer activity.
Price Reductions: The number of price reductions was as high as 1439 last August when the slowdown of last year was getting underway. In February price reductions were at 637. In April they increased to 791 and in June (again a current number) the number of price reduction rose to 1011. This indicator suggests we are moving to a neutral market. Buyer activity for now minimizes the importance of this indicator but is a reminder that caution is warranted.
The Average Price: For several months the average price of a home remained pretty much the same. Then in April the average price dropped to $391,000 followed by a rise to $410,000 in May. There seems to be a lot of bouncing back and forth. This is largely because it is an average of all home sales. If more expensive homes get purchased this month then the average price gets pushed up. One can put little value in this figure over the short run. Average price is more of a long range indicator.
Marketing time: Market time fell this month by 9 days to a total of 49 days. This is an additional small clue the market is strong.
Inventory Levels: Inventory levels (the number of months needed to sell current inventory based of solds this last month) fell just slightly to 2.3 months. This is an overall snapshot of the market although it is based on solds so it is about 45-day old data.
Listing Count: We started the year with much higher inventory than one year ago. This was the result of our slow-down last fall and winter. Our inventory of active listings in May was at 1850, 27% higher than the same time last year. That is the main reason our market is not quite as hot as it was this same time last year despite the nearly equal buyer activity levels. I appreciate this moderating factor. It helps retain some sanity in the market for the sake of both buyers and sellers.
Pending Sales: Our pending sales continue to show strength and offset the growing new listings. Thus the market remains robust. Pending sales rose from 877 in April to 904 in May.
What price ranges are most affected by the market changes?
Inventory (Inventory=months needed to sell off all existing homes at the current rate of sales.) Data gathered June 17 (so it is current data, the most current data we have.) Remember, the market overall is at 2.3 months.
Inventory (in months)
Price June 17
$2-300,000 .86 (very low number-crazy steep competition among buyers)
$3-400,000 1.6 (low number suggesting steep competition among buyers)
$4-500,000 2.6 (A more moderate yet very health situation)
$5-600,000 4.2 (Very close to a neutral healthy market)
$6-700,000 5.4 (A neutral price sensitive market)
$7-1 million 6.1 (Approaching a buyer’s market yet still unusually strong)
$1-1.5 million 29 (A buyer’s market)
It appears that all price ranges are enjoying a healthy market except for homes priced over 1 million. One might argue that somewhere around the 5 or 6 months inventory level we are getting into the neutral market range. While that may be true it is still a very healthy market and in the case of a properly priced home, a seller stands a good chance of getting the home sold and a buyer stands a chance of having some bidding competition.
Conclusion: Despite a growing number of listings, buyer activity levels and pending sales and inventory levels suggest that buyers are stepping up to the plate and buying faster than the number of listings is increasing. This surge in listings is a good thing as it is apt to preserve a stable market and keep things from getting too terribly hot. So far the competitive market pressure remains on buyers for the home they like within price ranges below $600,000. This number has been gradually rising since February as the result of a strengthening market recovering from the slow winter.
What can we expect?: The predictable market forces suggest that buyer activity will reach a peak in July just in time for the anticipation of school. The slowdown in buyer activity will be under 10% but, barring unpredictable market forces, will remain strong through the year until the holiday season when buyer activity may slow down over 25%.
Listings, the other side of the equation, will continue to grow until September where they will peak and then drop quickly losing around 25% the last 3 months until the end of the year.
It is fascinating how buyer activity and listings match each other almost perfectly as they move and adjust throughout the year. The slight differences in timing are usually so short that it does not result is any significant buying or selling opportunities, in general. There is one pretty reliable exception to this rule which I am happy to discuss if one is curious. Perhaps I will cover it in a future Market Update.