Q3 2022 Nevada Real Estate Market Update

Nevada Home Prices

❱ Even with slower sales, home prices still rose 9.4% from a year ago to an average of $479,046. They were 9% lower than in the second quarter of 2022.

❱ The impact of higher mortgage rates has now started to affect both sales and prices. Median listing prices are down from the second quarter in all markets except Spring Valley (+0.3%) and Anthem (+1.4%).

❱ Year over year, prices rose in every neighborhood other than Queens Ridge. They fell in every area compared to the second quarter of 2022.

❱ The market has entered a period of reversion. The impact of mortgage rates rising 2.7% between the third quarter of 2021 and the current quarter has clearly started to have a dampening effect on the market.

Mortgage Rates

This remains an uncertain period for mortgage rates. When the Federal Reserve slowed bond purchases in 2013, investors were accused of having a “taper tantrum,” and we are seeing a similar reaction today. The Fed appears to be content to watch the housing market go through a period of pain as they throw all their tools at reducing inflation.

As a result, mortgage rates are out of sync with treasury yields, which not only continues to push rates much higher, but also creates violent swings in both directions. My current forecast calls for rates to peak in the fourth quarter of this year before starting to slowly pull back. That said, they will remain in the 6% range until the end of 2023.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The third quarter was one of transition as the market started to feel the impact of higher financing costs and more homes for sale. I expect the market to continue underperforming through the end of this year. However, as we enter 2023 mortgage rates should start stabilizing and moving modestly lower, leading to a more sustainable pace of sales and price growth. Although sellers may feel that the value of their homes is collapsing, that is not the case. Over 56% of Clark County homeowners with a mortgage have over 50% equity in their homes. Though any price correction might be painful to watch, it will not cause a major jump in foreclosure activity. Owners will see values return, but only after this period of reversion is complete, which will occur in 2023.

Given all the data discussed here, I have moved the needle more in favor of home buyers. However, they still do not have the upper hand.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.