Nevadans flush with money and jobs are paying record prices for homes with offices, bigger yards and other amenities that ease the suffering of staying home, while hundreds of thousands of others are on the brink of losing the roofs over their heads.
“Even when we were at 34 percent unemployment, almost three-quarters of us still had jobs,” says Tom Blanchard, president of the Las Vegas Realtors (LVR).
“It’s a head scratcher,” says Diane Varney of Coldwell Banker, who is seeing a return to multiple offers and bidding wars as a result of the market’s shortage of inventory. “I’m a Realtor and I’m still in awe of the activity that is going on in our market.”
Despite more than 50 million Americans filing for unemployment since March, the housing market is shattering price records, further exposing the economic chasm laid bare by Covid-19, in which job losses disproportionately affect low wage workers.
Enhanced unemployment payments from the federal government are expiring, moratoriums on evictions and foreclosures are being “phased out” at the state and federal levels, and casinos are struggling to stay open amid a shortage of tourists.
Buyers appear unconcerned.
“They don’t seem to be because they are buying like crazy,” says Varney. “To a Californian who can buy a $600,000 house here, which is drop in the bucket — they don’t care about a dip in equity.”
Home resales jumped 20.7 percent in June, according to the National Association of Realtors (NAR) while new home sales climbed 13.8 percent.
Sales of single family homes in Southern Nevada fell by 15 percent year-to-year in June to 2,934, but the median price of a single-family home jumped 6.9 percent to $325,000 in the same time, according to LVR. New listings are down by about a quarter from last year.
“The homes that are being sold are just at a higher price,” says Blanchard.
The median price of condos and townhomes increased by 5.3 percent to $187,250.
The Reno/Sparks Association of Realtors reports the median price of 537 homes sold in June increased 1.8 percent to $407,000. New listings were up 7.9 percent.
“I wish I could tell you what the actual mojo is that’s causing people to buy and sell,” says Blanchard. “There’s been a lot of people who have been sitting in their home during those two months of shutdown and realizing this isn’t the property I want to be stuck in. Things that normally wouldn’t bother you start bothering you.”
A pandemic recovery survey of 100,000 members of the National Association of Realtors conducted in June reports more than a quarter of buyers are expressing more urgency to buy a home.
- About 40 percent say they put their purchase on pause because of COVID and are urgently searching now.
- 21 percent realized the benefit of a new home during the pandemic.
- 24 percent of buyers want a home office.
- 15 percent wanted more space for family.
- 13 percent wanted more space for themselves.
- 11 percent wanted a yard to grow a garden.
Is the homeward bound trend a passing fancy that will fade with the rollout of a Covid-19 vaccine?
“The pandemic and the work-from-home opportunities that come with it is accelerating migration patterns that were already in place toward relatively affordable parts of the country,” Redfin economist Taylor Marr said in a press release. “But for many people, the lure of large homes in wide open spaces will be a passing dream fueled by coronavirus-induced isolation.”
Varney isn’t so sure.
“They have a specific need,” she says of buyers. “Definitely the office space. Also, interest rates are really driving buyers because they can buy more house or they qualify (for lending) when they didn’t before.”
Government to the rescue
Until now, out-of-work Americans have enjoyed augmented unemployment payments from the federal government, as well as moratoriums on evictions and foreclosures, which are slated to expire September 1.
“I’m not one for big government but this is one time I think the government has done a pretty good job by patching a hole, letting people reconnect with their jobs, and by providing the funds they were able to provide,” Blanchard says of government assistance. “Add to that the forbearance piece — allowing homeowners to put the money they owe on the back of their loan — because let’s face it, the world went on.”
“When the moratorium lifts and we start getting into Phase Three, we’ll have more properties available because investors will put them on the market because they can show them,” Blanchard says, referring to restrictions imposed by Gov. Steve Sisolak that limit in-person home showings. “I don’t see the doom and gloom.”
“There’s no panic selling because almost everyone has equity,” says Varney. “Lots of people are in a holding pattern. If they can’t make payments and the bank adds the payments to the back of the loan, they are fine with that. Eventually they may become a listing, which is a good thing. But it won’t be a short sale or foreclosure.”
Meanwhile, the White House is suggesting extending relief for homeowners with federally backed mortgages, but has not announced protections for renters.
According to the NAR, property managers report 42 percent of tenants are paying rent, 40 percent are requesting extensions and are likely to receive them, 27 percent are unlikely to win a delay, and 16 percent will not receive assistance.
Private landlords report 63 percent of tenants are paying on time. About a quarter will be granted a delay in rent payment, 13 percent are unlikely to receive help, and six percent will not get assistance.