08/11/2023
Home listings dropped 52 percent in July from a year earlier, according to new data from Las Vegas Realtors.
Hawks said the local inventory is at a historical low for several reasons, including the Federal Housing Administration’s forbearance program which allows homeowners to pause or reduce mortgage payments.
“In Las Vegas, thousands of forbearances have allowed homeowners to take their house off the market or not put their house on the market,” he said.
“Instead they’re doing a forbearance where they don’t have to make a mortgage payment for say six, eight, 12 or 18 months. The FHA made forbearances mandatory for servicers last April.”
Plus, he said, low inventory has combined with rising interest rates to create a perfect storm in the valley housing market.
“So many people have low interest rates between 2% and 3.5 percent, it doesn’t make sense to sell your home and move up or move down when your rates are going to be 6 or 7 percent,” Hawks said.
“What many sellers are doing is they are buying another house and they’re keeping the house they live in and renting that out. In the past they would most always sell and buy. Now it’s rent and buy.”
Homeowners are using that extra cash flow to subsidize the payments on the new house, he said. “It’s ironic somebody can rent out their old house and have a renter pay off their old house and help them pay off their new house.”
Hawks said government intervention has affected the U.S. housing market when it comes to interest rates and a number of other measures, and not for the better.
“The Fed has really caused chaos in the real estate market,” he said. “Then you add the government programs like the forbearances and ERC (Employee Retention Credit), which is pumping more money into the economy and keeping inventory low for the foreseeable future.”
New players coming into the market have caused an imbalance as well, according to Hawks. Investors and companies buying real estate is nothing new to the city, as reports as far back as the start of the pandemic note the emerging trend due to historically low interest rates.
Hawks said this is hurting average buyers.
“Another major reason (for the unaffordable marketplace) is hedge funds own tens of thousands of starter homes in Las Vegas. Those homes are never coming on the market, making inventory in homes under $500,000 scarce forever.
It’s very sad that entry-level homes have been wiped out by these cash rich Wall Street landlords. They have destroyed the American dream for many as they are forced to rent from Wall Street landlords.”
A local realtor cited many factors for the historically low inventory, including interest rates and homeowners renting out their houses instead of selling.
