In the southwest Las Vegas Valley, a one-story house for sale boasts vaulted ceilings, crown molding, and an open floor plan.
It’s a “gem,” the listing declares — and amid falling home sales locally and nationally, the price was slashed by $25,000 on Tuesday.
It’s not alone. In Henderson, a house fell in price by almost $31,000 on Thursday, and in the northwest valley area, the price of a house was cut twice this week, shedding a total of $110,000, as seen on listing site Zillow.
A rising share of home sellers are slashing prices in Southern Nevada and across the country as higher borrowing costs make it even more expensive for people to buy a place, after a year of huge price gains.
In the Las Vegas area, 13.7 percent of active listings had a price cut in May, compared with 11.5 percent across the U.S., Zillow data shows.
Locally and nationally, the share of price cuts rose for the third consecutive month in May.
This doesn’t seem surprising. Rising mortgage rates have ended the cheap money that fueled America’s unexpected housing boom of rapid sales and record-high prices after the pandemic hit, and people also are paying more for gasoline and other goods amid high inflation now.
Zillow economist Nicole Bachaud said in an email that sellers are “finally being challenged to price their homes competitively” after a period in which buyers “seemed willing to meet almost any asking price, and in many cases bid over list price to beat out other interested buyers.”
She also said it’s “absolutely true that there is an affordability crisis in the housing market,” noting low mortgage rates had kept monthly payments “in check” even while prices rose at a record pace.
However, monthly payments on a typical U.S. home are now 65 percent higher than they were a year ago — and in Las Vegas, they are up almost 80 percent, she said.
Mary Preheim of Keller Williams, listing agent for the reduced-price southwest valley house, said prices are dropping throughout the valley and indicated she hasn’t seen a surge of reductions like this in years.
She contends that Las Vegas’ housing market is still on solid ground, as a house might sell in two-and-a-half weeks, not in “four hours” like it could have last year when mortgage rates were at record lows.
Plus, a lot of asking prices also “weren’t realistic” to begin with.
“We’ve been spoiled for the last year,” Preheim said.
The median sales price of previously owned single-family homes was a record-high $482,000 in May, up 25.2 percent, or $97,000, from a year earlier, according to trade association Las Vegas Realtors.
Just over 2,900 houses traded hands last month, down almost 9 percent from May 2021.
Builders notched 767 net home sales — newly signed purchase contracts minus cancellations — in Southern Nevada in May, their lowest monthly tally of the year, Las Vegas-based Home Builders Research reported.
Meanwhile, the average rate on a 30-year home loan was 5.78 percent as of Thursday, up from 5.23 percent the week before and 2.93 percent a year ago, according to mortgage-finance giant Freddie Mac.
The weekly rate hike was the biggest in decades.
With high inflation, fears of a recession and a sharp jump in borrowing costs, Las Vegas’ housing market faces an uncertain future, to say the least.
Still, housing markets are prone to changing directions, especially in Las Vegas, and there are always people looking to buy a place, especially at bargain prices, which have been rare the past few years.
It’s anyone’s guess where home values will head in the next several months. But as Tim Kelly Kiernan, a branch manager at Realty One Group, told me, there were a “crazy number” of price cuts over the past week in Southern Nevada — 1,447, up from 319 during the same week last year, according to figures he pulled from Las Vegas’ main listing service.
“You can’t overprice it anymore,” he said.