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Las Vegas Predictions for 2022 Real Estate
Dated: January 7 2022
Experts agree that the Las Vegas real estate housing market will continue to favor sellers for some time, possibly for years, but with slower growth in home prices and decelerating inflation. The large discrepancy between supply and demand for new homes will take a while to balance out, and the supply chain will need to work smoothly for some time before things can settle.
Here are the three indicators to watch in 2022:
Although many other factors also create a seller’s market, the power dynamic between supply and demand is the main predictor of how things will turn out. Except in extreme cases, buyers and sellers can reach their goals regardless of who has the upper hand. However, sellers will get a better deal overall.
Seasonally, competition for homes and bidding wars tend to slow down in the winter. However, because competition has been so high overall, lowered levels this season are still high compared to years before the pandemic. Prices are expected to keep rising, so finding a home over the winter is probably wiser than waiting until spring.
Another factor predicted to cause major shifts moving forward is the adjustment of interest rates by the Federal Reserve. The American housing market is sustained through a complex system of loans and interest rates, flowing down from the federal level. When inflation is high, the Federal Reserve raises interest rates, which affects loans like mortgages in an aim to prevent further growth.
Higher mortgage rates mean buyers will have to pay more for homes, which could slow down the housing boom by discouraging some people. However, investors will benefit from these higher rates since they’ll be making back larger amounts of money from banks and homeowners.
Supply and Demand
Experts expect demand for homes to outpace supply for some time, so high competition and rising prices will continue to factor into buyers’ decisions. Rising interest rates may preclude some people from buying, which could tone down high competition rates. However, as incomes increase and employment rates move back to normal levels, the market should begin to balance out.
Changes in economic conditions are already affecting buyers. For instance, in 2021, lumber prices skyrocketed as demand for this building material outpaced supply. However, according to Kuba, lumber prices are expected to stabilize over the next year. This will make building new homes a more affordable option for many people.
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