Las Vegas Area Real Estate 2021 In Review

Las Vegas area real estate ended 2021 on a high note. The average home price reached a new high of $395,021. As the chart below demonstrates, the total number of sales slid downwards pretty consistently since March of the year. With prices at all-time highs and decreasing sales, it is quite obvious that our market is experiencing a severe shortage of inventory matched with a great demand for homes that just aren't coming up for sale. In fact, MLS data indicates that the Las Vegas area carried around 2 months of inventory every month in 2021.

There are several reasons our market (and in fact pretty much every market in the US) is experiencing similar situations. The big surprise was that the US economy actually thrived during the pandemic and didn't stall like so many of us feared in early 2020 when it first became part of our lives. Younger home buyers, bolstered by increased earning potential and historically low mortgage rates, raced into the market. People who suffered financial woes during the Great Recession can now qualify for mortgages. New home builders had all but stopped construction during the Great Recession and only in the past few years have ramped back up. That decade of slower new home construction is probably one of (if not THE) main reason we have such a shortage of homes for the number of buyers who can now buy. 

On social media, we've been seeing concerns about a bubble burst like what we saw in the early 2000's. The situation now is entirely different than it was then. At that time, banks were a lot more free in their granting of mortgages to borrowers. Demand was driven in large part by investors who were flipping homes to take advantage of the skyrocketing prices. These days, banks are a lot more cautious about vetting mortgage applicants, and the market is being driven by historically low mortgage rates and home buyers who had been locked out of the home market by financial issues that plagued them through and as a result of the recession, but are now gone. This is not to say that there won't be any market downturn, but the only commonalities we really see between then and now is a dramatic interest in purchasing residential real estate. The rest is an entirely different ball game.