April 2022

CLARK COUNTY HOUSING

MARKET 

MONTHLY REPORT

The Effect of Rising Rates

You won’t read this in the paper.

The  RMLS stats for March are in. Let’s get started.

According to C/Net in an article written by Justin Jaffe April 19,2022 interest rates have risen to 5.27% for a 30 year fixed rate loan. The article explains that the feds have raised rates just once this year and are expected to raise rates a total of 6  times to control inflation. These rising rates may be affecting the market. 

As interest rates rise, the interest rate of a loan as well as the monthly payment increase. This effectively will reduce the amount of loan for which buyers qualify. When buyers can no longer afford the home they want, they quit looking.  This may be what we have seen the last few weeks. The number of home showings decreased 551 the past 4 weeks. This is more than a 14% decline and only the first of 6 interest rate increases expected by the feds. Buyer activity is now about 14% lower than this same time last year. Also, last year buyer activity was growing stronger and on a steady path upward. The past 3 weeks has been a steady path downward.

So, before anyone panics let me add that the last 4 weeks is only the first clue that the market may be changing. We still have strong pending activity, low inventory and we are still experiencing multiple offers for many properties. With 932 pendings in March and about 1,000 new listings,  it may be many more weeks or months before we see the market weaken significantly. It is still too early to be sure the market is pivoting and it is still too early to predict how fast this transition might occur. 

Buyer home showing activity has declined the past 4 weeks over 15%, likely due to increases in interest rates. More rate increases are expected this year.

But it does make sense that it is happening now because interest rate increases often do that. If just one rate increase caused this change and 5 more are expected this year then one might be inclined to predict that by the end of the year we will be in a much slower housing market. So buyers and sellers take note and keep an eye out for your opportunity.

(If I see the need, if I find any major market moves or clues then I may send you an interim brief update on changes.)

You may be wondering why this is not in the papers. Well, I am not sure why that is but the papers seem to focus on the number of sold homes. Sold homes are a solid known number. The problem with using just sold information is that it is usually 4-6 weeks old (a pending property often takes 4-6 weeks to close). When the market changes quickly, old news is not helpful news. 

The issue perhaps with pending information is that some homes fail to close. So pendings are not solid numbers. Some pendings will not become a sold. 

 I am puzzled why the papers do not use the buyer home showing activity stats because they are a valuable clue for predicting the market and are the most current data we have (only 3-10 days old). 

When we had the 2007 crash, I found that the data offered increasing clues of the changing market over several months but at a certain point the word is out. Once that happens then within a week the pivot away from a seller’s market occurs. Once the pivot starts, it happens quickly leaving little time to respond.


Thanks,


Chris Kelsey, Managing Broker 
GRI, MBA
Keeping you informed so
You can make decisions.

Keller Williams Premier Partners
Cell: 360-921-2203
chris@ckelsey.com
www.ckelsey.com

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