Las Vegas housing market on verge of crazy flip in 2025

Who is buying up all these homes in Las Vegas and why is inventory still so low? And will we finally see relief for Las Vegas homebuyers at the end of 2024 heading into 2025? In this video, I'm going to answer all those questions with data from ReVenture Apps so you guys can make a more informed decision as a Las Vegas and Nevada homebuyer. To start off everyone, let's look at inventory data. In Nevada, there's 9,500 homes currently on the market for sale. You can see that this level is slightly below the long-term average. So there's still kind of a housing shortage going on in Nevada. We had this increase in inventory two years ago in 2022 when the downturn started. That has since reversed, which means that values are still going up. Home values in Nevada are up 5.8% over the last year. And the market that drives Nevada is Las Vegas. Las Vegas has over 65% of the inventory across the state. And what goes on in Vegas influences what goes on in the rest of the state. And what's going on in Las Vegas right now is that prices are still going up. Like on this listing in Henderson on the southeast side of the Las Vegas Metro, you can see it's a three-bed, four-bath on the market for $510,000. It's a townhouse. You can see that the value of this property peaked two years ago at $493,000. Then it went down to $420,000. There was a correction. And then since then, it's gone up a little bit. And then the seller seems to have gotten greedy and listed for $510,000, which is nearly double what this property sold for back in 2016. And the reason that the sellers in Las Vegas are getting greedy is because they can. They don't have that much competition on the market right now. There's not enough listings. There's not enough supply. And so that means that sellers can ask crazy high prices. And in some cases, there's still bidding wars in Las Vegas due to this low inventory. If we look here at a zip code map of Las Vegas, everyone, I want you to pay attention to what's going on. This data point is going to really help you understand the Vegas housing market. We're looking at a metric called the inventory surplus or deficit. So if an area is in red, that means there's excess inventory, excess supply compared to the long-term average. If it's in blue, that means that there's a shortage of homes, a deficit in inventory compared to the long-term average. So if the area is in blue, think there's a shortage. Like out in the western area towards Summerlin, we can see these zip codes are down 23% to 37% on inventory from their long-term norms. Like in this zip code south of Summerlin, we have 57 homes on the market. This is literally the lowest it's been in the last seven years. The ReVenture home price forecast score is a 62 out of 100, saying prices are going to go up. And so long as these inventory levels still stay so low, we're just going to see continued price appreciation. However, I have my doubts that this will continue because you have to understand what Las Vegas is as an economy and a housing market. And that's an economy and housing market that runs off tourism and the service industry. And it's an economy where income and wages are actually fairly low. The median household income in the Las Vegas metro is about $75,000, which is below the U.S. average. Now that income has actually gone up in Vegas over the last three or four years since the pandemic, but it has not gone up nearly as much as the home prices. So the result is that the home prices relative to the income are in a big bubble. With the current home value to income ratio in Las Vegas registering 5.7, a typical value of $430,000 divided by a median income of $76,000. Now you can see this 5.7 home value to income ratio is well above the long-term average of 4.5, indicating an overvalued market. The last time we saw this big of a bubble was 05-06 before the big, big crash. And so when you see this type of bubble in prices relative to incomes, it does suggest that there's downside on prices and that while in the short term, there isn't enough inventory to cause prices to drop, in the medium to long term, I think it is likely that values eventually drop in Vegas. And of course, at this point, we have to talk about what happened during that last crash. Because in the last crash from 2007 to 2012, Vegas's housing market got utterly destroyed. And I'm sure many of you who live in Las Vegas who are watching this video remember that happening. Home values in that last crash in Las Vegas went down 63%. There was a 63% decline, meaning a house worth $400,000 sold for $160,000 or $170,000 5 years later. And it completely eviscerated that economy and changed everything. There was a lost decade in Vegas because of that downturn. And I think, you know, history is not necessarily going to repeat itself in the same way. I don't think we're going to see a 60% crash again in Vegas. However, I think it's realistic to expect that this volatile historical housing market, which has experienced big crashes before, will at some point experience a correction when the economy slows enough and when enough people can't pay their mortgage and when there's enough force selling. I want you to look at this, everyone. In the last downturn, Vegas went down 63%. Nearby Lake Havasu City in Arizona went down 48%. If we go up to Reno, Reno went down 55%. Absolutely colossal declines. You can also see California went down a lot. And so how much might prices decline this time around if, you know, the worst case scenario hits? If we switch to the overvaluation metric on Reventrap, we can see a market like Reno is 20% overvalued. A market like Fernley is 32% overvalued. A market like Pahrump is 46% overvalued. Huge overvaluation in Pahrump. Vegas is 26% overvalued. So what this means is that home values in Las Vegas are 26% overvalued compared to their long-term norms. The typical price today is $4.31. Their fair home value is $3.41. Meaning that if prices were to go to $3.41, a 26% drop, I think we would see a big increase in buyers. We would see demand return to the Vegas housing market. Because we're in an interesting situation right now in Las Vegas. There's a shortage of inventory. Prices are still going up. But actually, demand is pretty low. The number of home sales in the Las Vegas housing market is still near one of the lowest levels on record. I want you to take a look at this data from Redfin, everyone. It's tracking the homes sold in the Las Vegas, Nevada metro area. This is very interesting. The yellow line shows the number of homes sold in Vegas is actually down 9% year over year. And you can actually see the number of homes sold through the end of September entering October is down about 40% from 2021. So we have a 40% reduction in home sales in Vegas from the peak of the pandemic. And so that's so important for you to understand. Buyer demand is actually low. Very important to understand that. I see a lot of people in Vegas coming up with narratives about it's all the people from California buying. It's all the investors buying. Actually, demand is low. Demand is very low. It's historically low. The reason it doesn't seem like that is because new listings and new supply is also low. After the Vegas housing market had that correction in late 2022, early 2023, where you can see we actually have like a pretty big decline in prices around this point in time. Values went down. I believe it was around 12% in this period. After that correction, there was a seller's strike. The sellers no longer wanted to list homes. And as a result, prices started going back up. You can see that reference through the new listings data available on ReVenture app. The new listing count, this is the number of sellers coming to market with new listings plummeted and has not recovered. So the reason Vegas is still tight, the reason prices are still going up is a lack of sellers and a lack of listings, not because there's a lot of buyers. And why I'm hammering home this point is because if Vegas's housing market and economy shifts to a point where maybe more people start losing their jobs, maybe more people start running out of money, we will probably see the number of listings increase, thereby causing inventory to go up. And if that happens, that's how we would unlock the 26% overvaluation and see prices go down. Now we can see that the heaviest overvaluation in Las Vegas is on the north side of the metro, north Las Vegas in particular. These are some lower income areas that people really struggle to afford the prices. In these locations, we can see the median household incomes in these locations are at 38,000, 45,000 where the homes are selling for 300, 400 grand. You say, how's that possible? Well, in the short term, it is, but in the long term, it's gonna be difficult to sustain. Meanwhile, out towards the west, down in Summerlin, we have the highest incomes in the metro, 166,000 median income in Summerlin. We also have some higher incomes if we head down to the south and southwest. Now, if we switch this data point to population growth, we can see the areas in Vegas that have the highest population growth over the last five years. By far, the highest population growth is again on these outlying suburban areas that have higher incomes. Actually, the population growth on the interior of Las Vegas is flat or negative. Interesting, very, very interesting. So we have fewer people in the center of the city, more people in the suburbs. So if you're a home buyer investor in Vegas, the story is mixed. In the short term, there's a lack of inventory. Prices are still going up. However, in the long term, the fundamentals of this market do not seem to support current prices. So make sure to watch out for any type of downturn in the local economy that causes more people to be forced to sell. And of course, make sure to go on www.reventure.app and track the home price forecast score for your zip code in Las Vegas because this home price forecast score is gonna tell you the direction of the market based on the current trends. If you see an upward arrow, that means price is up. A score above 50 means price is up. If you see a sideways arrow, that means a stable market. And we only really have a couple declining markets in Vegas right now, often mainly due to that inventory situation. However, you're gonna wanna subscribe and track this data monthly because as you can see in Vegas's history, things can turn fast and things can head towards a buyer's market pretty quickly once the market shifts. So head to www.reventure.app and sign up for a premium plan to access that ReVenture home price forecast score. The cost is $39 a month, ultimately a very affordable price compared to the cost of buying a home in Vegas is now up to about 450 grand. Before making that decision to buy in Vegas, you're gonna wanna have the data on your side so you can understand where prices are heading in the future.