Clark County Housing Market Update
(You won’t read THIS in the paper)
1) Coronavirus and the Real Estate Market.
I expected buyer activity to begin falling as the result of Coronavirus concerns but that did not happen. Instead buyer activity rose over 14% from the prior week in Clark County.
(Missing graph showing buyer activity up over 14%)
So I can only assume that the lower interest rates are the main fuel for buyer activity. The lower interest rates mean this is a great time for buyers. Admittedly, rates are jumping around big time right now. I suspect we will never see interest rates this low again. Once the coronavirus concerns fade in a few months (fingers crossed) interest rates will likely rise quickly.
Then a new report on buyer activity just came out today (March 19).
(Missing graph showing buyer activity down 15%)
This is the first report suggesting the Coronavirus is capable of slowing buyer activity. Since this seems so critical and such an early indicator of future market activity, it may be appropriate for me to give weekly updates on just this stat. Please expect that report.
There was an actual increase in February new listings (780) but these were quickly consumed (bought) by our aggressive horde of buyers leaving a net of 54 fewer listings than in January. This is an example of what I was trying to describe last month in the February newsletter. If lower interest rates are the main driver for today’s buyers then our shortage of listings may continue well into April. As I mentioned in the February newsletter, we usually see listing numbers rise and start to catch up with buyers beginning in April. Then again, this Coronavirus may throw all past rules out the window.
(The best indicator we have for the level of buyer activity is our lockbox readings. These come out weekly and provide us with the most current information on market activity. It is more current than closed units or even pending sales as these come out monthly.)
If you missed the February report then click here. February newsletter . In the February report I cite specific examples of how crazy buyers are currently. Since that newsletter I have another first-hand example.
I listed a home for $285,000 just over 2 weeks ago. Showings started on Saturday and by Sunday evening we had 19 buyers come through with two strong offers. After working each of the offers against each other, we ended up with an offer at $293,000 with no inspection, sold “as is”.
As expected, inventory levels from January to February moved from 2.4 to 2.1. This indicator suggests we are moving into a stronger sellers market. Keep in mind this is a lagging indicator, delayed by about 6 weeks. This indicator is really a reflection of what happened in January. This Coronavirus is causing such rapid and sweeping changes across the Country that I feel it best to focus on the buyer activity levels mentioned above. The conclusion below has some additional thoughts on this.
Our listing count remains low while buyer activity remains high. This is creating a strong sellers market. However, the coronavirus may soon begin reducing our buyer count and should be showing up in our numbers soon. At this point, this is speculation. The lower interest rates may override the effects of the Coronavirus….. Time will tell. This is all the more reason to use the seller tools discussed next and avoid the toughest challenges and unknowns ahead.
Seller’s Tools: sell now while it is hot and close later
If you plan to sell in 2020 and have the flexibility to sell now then you are advised to do it. If you are almost ready but need a few months to be fully ready then consider a delayed close. Secure your buyer now before the market changes yet delay closing and possession until you are really ready. This approach offers the best of both worlds – a creative tool for our hot market.
For example, I recently had a home sale where the deal closed quickly and the seller reserved the right to lease back for as long as 6 months thus cementing the deal during this hot period of the market. 2-3 months is a more common period to delay a closing. While the market is hot, you can easily find a buyer and delay your departure from your home. This tool is especially useful as this Coronavirus dilemma worsens.
Pending sales from January to February rose from 672 to 718, 6.8%. Yes, February was a good month as was January. Lenders I am talking to tell me April will be much slower because of the effects of the Coronavirus. Many folks are losing their jobs as business shut down for the next few months. Lenders are telling me many of their deals are failing already and this is just the beginning. I am saying, it is still a seller’s market but the landscape may be changing quickly. The early signs are showing up. I suggest selling quickly while the market is still showing strength. Even one week could make a big difference especially in the lower price ranges. The other option is to wait it out as reportedly we should start recovering in a few months, but who knows how quickly recovery will happen. See the conclusion for more on this.
Price Reductions: updates: start here………
Price reductions have been on a steady decline the past few months. They made a huge decline this last month: from 522 in January to 162 in February. WOW!
Last October they were at 757.
The Average Price:
The average price of a home in Clark County remained relatively steady from January to February, rising $3,200 to $417,500. We should see a sharp rise in the next reporting. But after that I suspect prices could begin dropping if only slightly at first. It usually takes many months of a slow market for the average price to show large drops. I am hopeful the Coronavirus will be waning after 4 months. I do not think that is enough time for prices to drop more than 15-$25,000.
Market time fell to 67 days and will likely drop again this next reporting period.
I have been promoting a “window of opportunity” the past few months. This is well described in my last newsletter. However, as the Coronavirus progresses the real estate market could be changing quickly.
Yesterday I spoke with two lenders. They both told me about many of their buyers with loans underway that are losing their jobs causing their deals to fail. We are now seeing reports in the NY Times (3/18/20 headline) how the number of layoffs are growing nationwide and that this situation will be getting worse before it gets better. We are not seeing these conditions affecting our Clark County buyer numbers yet but it seems likely to be coming in the next few weeks. This dilemma could be mitigated by Congress if they implement monetary measures. It is all very unpredictable and that is why I recommend the “Seller’s Tools” discussed above.
In the past, when we received multiple offers we used to look closely at a buyer based on mainly the type of loan they had and the offer price. Now, in this changing situation we might want to also look at the type of job they have and choose the buyer that is most stable. For example, the latest deal I put together involved a buyer who worked for a major bread maker. We considered his job secure because bread currently is in very high demand. Had the buyer worked in the restaurant or airline industry our decision might have been different.
I will look at buyer activity weekly and send out a report during these uncertain times.
Feel free to call if you should have any questions about your specific situation.