Las Vegas housing market ‘on fire’ as economy limps along

With a baby on the way, a strong credit score and money saved up, Veronica Markowsky figured it was time to buy a house.

So the 35-year-old renter recently joined a herd of homebuyers in Southern Nevada and signed papers for a soon-to-be-built house — all while the coronavirus pandemic wreaks havoc on the economy and her Las Vegas bridal shop business.

It’s probably not the best time to buy a place, Markowsky said, but she had her reasons.

“What’s the worst that can happen?” she said.

Las Vegas’ tourism-dependent economy has been devastated by the coronavirus outbreak. But the valley’s housing market, which initially was hit hard by the fallout from the crisis, has been accelerating lately with fast-rising sales and record prices.

The fervor has provided a surprising jolt of commerce in a bleak time.

“I didn’t expect any of this kind of activity,” said Tom Blanchard, president of trade association Las Vegas Realtors.

Cheap money

By all accounts, record-low mortgage rates — cheap money, essentially — are providing much of the fuel, as they let buyers lock in lower monthly payments. Amid the surge of demand, prices have climbed as the market’s low inventory of available homes further tightens.

Southern Nevada has seen record job losses during the pandemic, with much of the pain falling on the service sector, where wages tend to be lower.

Who is buying homes amid the turmoil? People who still have jobs, savings and other factors that let them qualify for a mortgage or buy with cash.

All told, the market has gained speed as buyers snap up homes from builders and on the resale market, with sellers fetching multiple bids.

“It’s craziness,” Blanchard said.

Las Vegas attorney Adam Breeden, who closed his purchase of a newly built house near the M Resort last month, listed his old house in May. He received three offers within three days, he recalled, including one at the full asking price.

“I was shocked the market was the exact opposite I thought it would be,” he said.

‘The timing was perfect’

It’s anyone’s guess how long the hot streak will last. The coronavirus is still raging, and Southern Nevada’s economy overall remains badly battered, with several resorts still closed though casinos were allowed to reopen in early June following state-ordered lockdowns.

Las Vegas’ jobless rate, just 3.9 percent in February, soared to 34 percent in April after the pandemic hit. By June, it had tumbled to 18 percent but still was among the highest in the nation, federal data shows.

The housing market, however, is “on fire,” said Blanchard, a broker with Renters Warehouse.

On the resale side, buyers picked up 3,325 houses last month, up 35 percent from June, and the median sales price reached an all-time high of $330,000, up 1.5 percent from the previous record, set in June, Las Vegas Realtors reported.

Lorraine Taraskiewicz, a 72-year-old retiree, recently moved from the northwest valley to North Las Vegas. She wanted to live closer to family, had heard mortgage rates were going down and says her investments are “doing great.”

Taraskiewicz found a buyer for her old house less than a week after it was listed, according to Zillow, and offered full price on her new house soon after it went on the market.

“The timing was perfect,” she said.

Zillow economist Jeff Tucker said buyers are competing for a smaller pool of properties, ratcheting up the pace of sales, and low mortgage rates have helped stretch their budgets.

Locally, around 4,800 single-family homes were listed without offers at the end of July, down 5.4 percent from June and 38.4 percent year-over-year, LVR reported.

Nationally, the average rate on a 30-year home loan was 3.02 percent last month, down from 3.62 percent in January, according to mortgage finance giant Freddie Mac.

The Federal Reserve has taken “very aggressive” steps to push down interest rates, and younger buyers who are still employed and were thinking about purchasing a home have especially jumped in to take advantage of the lower borrowing costs, said Frank Nothaft, chief economist with housing tracker CoreLogic.

Kameron VanWoerkom, a 28-year-old recruiter for accounting giant PwC, lived in Los Angeles for 10 years but decided to move back to Las Vegas, where he grew up, he said. He wanted to be near his family and realized he could buy a place here for much less than in Southern California.

VanWoerkom, who is buying a condo in Summerlin, said he felt secure in his job but was nervous about purchasing his first home during the turmoil of the pandemic. Still, at least one thing put him at ease.

“Interest rates helped quell some of that anxiety,” he said.

Volatility

Las Vegas started the year on strong economic footing, but, like other U.S. cities, rapidly shut down in March over fears of the new coronavirus. The pipeline of home sales shrank amid the chaos.

Among the buyers who pulled back, house-flipping companies that ventured to Las Vegas and other cities in the past few years halted acquisitions.

At one of the firms, Opendoor, some of its pending sales in the area fell through after Gov. Steve Sisolak ordered casinos closed to help contain the virus’s spread, company spokeswoman Mackenna Scripps said, though she declined to say how many. Buyers lost their jobs and couldn’t qualify for a mortgage, said Andy Swanton, general manager of Opendoor’s Las Vegas and California operations.

But the market was revived as many workers returned to their jobs and mortgage rates fell.

Homebuilders’ sales totals, which evaporated after the pandemic hit, quickly shot back up. Builders notched almost 1,200 net sales — newly signed contracts minus cancellations — in July, the highest monthly tally this year and up 58 percent from July 2019, according to Las Vegas housing tracker Andrew Smith, president of Home Builders Research.

Smith, for one, said he is not surprised by the market’s performance, noting builders “did not panic” and kept prices steady, and homeowners have not been selling at steep discounts.

Flippers have started buying again as well, including Opendoor, which resumed making offers for Southern Nevada homes this month.

Tucker, of Zillow, said pandemic-related layoffs have been concentrated among lower-income workers, and, as he expected, home sales tumbled after the outbreak started.

But the market’s rebound, he said, has “taken me by surprise.”

‘A rash decision’

Markowsky, the bridal shop operator, found out in March that she was pregnant and decided it was time to buy a home. The coronavirus also spread to Las Vegas around the same time, throwing her life, as it has for countless others, into turmoil.

Markowsky, co-owner of Creative Bridal Wear at 4077 Dean Martin Drive, said the business used to get plenty of customers from Strip resorts, and its revenue largely evaporated after casinos closed and tourism dried up.

“It’s literally day by day; I don’t know if we’re going to survive,” she said of the business.

Meanwhile, she said her husband, who is Canadian, went back there in March for work but got stuck because of pandemic-related border closures. He might not come back until October, she said.

Still, Markowsky noted that interest rates have slid to all-time lows, her credit score is “almost perfect” and she has savings.

She signed a sales contract with a homebuilder three or four weeks ago, she said, adding she is scheduled to move in Nov. 25, the day after her baby is due.

“I hope I’m not making a rash decision right now,” she said.

A previous version of this story incorrectly reported the amount of pending sales that fell through for Opendoor after Nevada’s casinos were ordered to close in March.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.