When all signs point to a recession, you may be wondering, why buy real estate now? Interest rates have increased, and may go up again. Housing prices are higher than they used to be. So why should you still consider buying Las Vegas real estate in today’s market?
Rates Haven’t Topped Out
Home prices and interest rates might be higher than a few years ago, but that doesn’t mean they’ve reached the peak. “There are several overall economic reasons to consider buying now versus waiting,” explains Realtor Dulcie Crawford. “It is anticipated that interest rates may go up as high as 8% this year.”
Here’s how compounded interest works. As an example, using round numbers to make a point, if you were to wait to buy a house and ended up borrowing $600,000 at 8% interest rate, it would cost you almost $300,000 more than borrowing the same amount at 6% on a 30-year note.
So using these figures, is it entirely possible that in the next year or two, a property worth near a million dollars is going to lose up to $300,000 in value if the economy continues to struggle. However, if you’re buying now and planning to live in the house for at least five to 10 years rather than flipping it, you’ll more than likely still end up profiting.
The History of Housing Rates
The rule of “location, location, location” in real estate never changes. When you buy an excellent location, you will have made a great real estate investment.
“Of course, I cannot say I am some kind of financial guru, but I have been in the real estate industry for over 24 years,” Crawford points out. “I have worked in several different kinds of markets, and I got into real estate when interest rates were 9 going on 10%.”
Real estate was a lot cheaper in 1998, but it did not stay there long. That’s when Vegas began the second Strip growth expansion, and with that came a healthy growing economy that attracted many to relocate here.
“There weren’t enough homes for the amount of growth, and we began to see home prices increase with steady appreciation from 2000 to 2003,” Crawford recalls. “It exploded again at end of 2003 because of a housing shortage. Then unfortunately Wall Street manipulated the markets with cheap exotic hybrid loan programs that caused the crash of late 2008.”
But what caused the crash in 2008 is different than the vehicles now causing a market slowdown. The current inflation crisis appears to be at least partially self-inflicted by our current government administrative policies. While there might also be some worldwide factors playing into it, it’s more likely that we are in a temporary situation which will work out on its own once national policies change.
The fact remains that the United States is still in a housing crisis with not enough homes to meet growing demand in the majority of metropolitan areas. From late 2020 to May 2022, this housing crisis and cheap interest rates skyrocketed the cost of real estate all across the majority of the country, not just in the Las Vegas area.
Las Vegas Continues to Grow
Meanwhile, you can’t keep a good city down. Las Vegas has bounced back from recession after recession, from a mass shooting and a pandemic that shut down the entire city (well, to be fair, it shut down the entire country — but Las Vegas survives on tourism, so it was a bigger hit to Vegas than almost anywhere else).
“It’s my opinion that the Las Vegas economy will weather the storm better than many other metropolitan areas of the country for a recession,” says Crawford. “Just like how Vegas rebounded as a travel destination once COVID began to lift, the American dream of a short, quick and cheap vacation is more popular than ever. I feel Vegas is slated for some serious growth despite a looming recession.”
Las Vegas Sports Scene
As another layer to the entertainment mecca that is Las Vegas, the local sports industry continues to grow. Vegas has figured out how to diversify, which is key to continued growth despite a recession. And professional sports have brought in a steady stream of income to this city, helping it grow and prosper during and after the pandemic.
The city is now looking at bringing in an NBA basketball team to add to its NHL hockey and NFL football. We also have a WNBA basketball team, minor league baseball, minor league hockey, and more. And they all do exceptionally well in this city.
The Las Vegas Raiders NFL team reached the postseason this year after enduring extensive failure over the past two decades. The Vegas Golden Knights NHL team has been one of the most successful expansion teams in the history of sports. They went all the way to the Stanley Cup Final in its inaugural season, then made the playoffs three more times, including back-to-back trips to the Western Conference Finals.
Brand New Homes Market
The cost of construction is not getting any cheaper, and it may continue to go up with supply chain and skilled labor shortages, even if the recession takes hold. As a result, the builders are not building larger extended-family properties like they were before, and several have backed off completely.
Nonetheless, several new master-planned communities in Vegas continue to be built out, and still earn top ranking in growth and satisfaction. Inspirada is on that list, partially due to its proximity to the Raiders headquarters. Other communities earning top marks include Summerlin, Valley Vista in North Las Vegas, Cadence in east Henderson, and Skye Canyon in northwest Las Vegas.
Owning vs. Renting
If you choose not to buy a home because you don’t like the rising interest rates, your other option is to rent. But local rent for comparable properties is not cheap right now, nor is it a tax deduction. It’s definitely not an investment opportunity either.
A rental property will not be a home to create a permanent foundation. It will be hard to locate many decent next-gen floorplans in a good location. And more than that, the rental market is experiencing tight inventory levels as well. So it’s a temporary solution at best.
Let An Expert Guide Your Real Estate Journey
Yes, the country may slow down across the board for a recession. But Vegas has proven to be quite attractive for its growing economy, world-class amenities, beautiful weather year-round, and of course its tax structure. Because Las Vegas offers unique benefits in these ways, many will continue to relocate here.
It is possible to find a good home in a great location and start your own legacy for the future. For help finding your ideal dream home in the entertainment capital of the world, look no further than community expert Dulcie Crawford. Dulcie is a native of Las Vegas with over 24 years of local real estate expertise. She understands the city and its trends and opportunities more than anyone.
Dulcie has watched Vegas rise and fall and rise again, and can help you pinpoint and locate the perfect home for you.
To find out more about working with Dulcie and her award-winning team, or to get more information about the current housing market conditions, properties featured on this blog, or our Hot Market Listings, please contact Dulcie Crawford directly at (702) 505-2775.