Las Vegas sees nation’s biggest drop in luxury home listings

According to a report from Redfin, an online real estate brokerage, Las Vegas saw a 36 percent drop year over year in luxury real estate listings in the second quarter, the largest of any of the 50 biggest cities in the country. The city beat out Phoenix (34.9 percent) and Detroit (34.0 percent), however only three major metros saw jumps in luxury homes listings during that time (Austin, Texas; San Francisco and Nashville, Tennessee).

Luxury home sales across the nation fell 24 percent year over year in the second quarter. Redfin defines a luxury home in the Las Vegas market as anything $850,000 or higher.

Lee Barrett, the president of Las Vegas Realtors, said Las Vegas’ situation needs to be viewed in a larger picture and he’s not ringing any alarm bells right now.

“The market has not depressed in listings, it’s going through a normal ‘cyclicatory’ change,” he added. “The (overall housing market) is trying to find a way to get back to an equilibrium and the luxury market is just a part of that.”

The U.S. housing market has been on a roller coaster ride since the start of the COVID-19 pandemic, which saw a buyer’s boom fueled by cheap money that subsequently sent prices to record highs in 2021 and the first half of 2022.

Then, in the second half of last year, Southern Nevada’s housing market came crashing down as rising interest rates — introduced to reduce inflation — led to a sharp jump in mortgage rates. This, in turn, forced buyers to pull back; however, prices remain high. Barrett said there was a point where it appears the market really started to cool off, but a supply pinch across the country remains a driving market factor.

“It seems like May was where there was a drop in all of them,” he said of both residential and luxury listings and sales. “So I don’t know if May was the magic date for everything to slow down a little bit, but then prices started to go up pretty dramatically after that.”

All home listings down

According to housing market statistics from LVR, overall listings are down 2 percent from May to June, however the median price rose almost a percentage point to $499,513. The median price for a single-family home seems to have bottomed out in January of this year, and has been climbing ever since, while overall availability for homes on the market has been dropping consistently since August 2022.

The median home price for a luxury home in Las Vegas sits at $1.15 million, a 6 percent drop in price from year over year, according to Redfin. Las Vegas has also seen a 19.3 percent drop in sales year over year, with the average luxury home sitting on the market for approximately 77 days, one of the highest in the country for metros.

Forrest Barbee, a licensed real estate broker for Berkshire Hathaway Home Services, said Las Vegas is part of a larger regional trend in terms of a drop in luxury listings which also includes the greater Phoenix area and parts of Southern California.

Barbee added there is still a massive exodus of higher income Californians leaving their state, and the spillover effect is hitting Las Vegas, which usually has more luxury homes on the market in terms of overall inventory.

“When it comes to the luxury market you don’t necessarily have that same scarce inventory situation here in Las Vegas in the high end than you do below that (for regular single-family homes),” he said. “That means that buyers and sellers are negotiating right now and neither side really has an advantage.”

Nationally, sale prices for luxury homes are still higher than they were at this time last year as the median price for a luxury home rose 4.6 percent year over year to a record $1.2 million in the second quarter of 2023. According to Redfin, “while homebuyer demand has slowed across the board this year, prices are being propped up by a lack of inventory, which is fueling competition in many markets.”

Barrett added the Federal Reserve raising interest rates once again, after pausing a rate hike, seems to allude to a disconnect between the government and the actual market.

“(The government’s) biggest concern and what they want to do is bring down that inflation rate to something they think is more reasonable. But we’re starting to see that people are becoming more aware of that, and they are making decisions based on the current rate thinking they can reinvest that money at a lower rate eventually by refinancing the property. And with the luxury market, there’s still a lot of cash (buyers), because I mean, if you can buy a house with cash you’re not really worried about the market as much.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.