With the outbreak of the novel Coronavirus (COVID-19,) the real estate industry is admittedly in complete chaos. The outbreak is responsible for the unemployment of millions of Americans across the U.S., and hundreds of thousands of workers here in Las Vegas, which is obviously impacting the Las Vegas housing market. Particularly, the shutdown of the gaming and hospitality will not only impact current homeowners but also people who were planning to buy here in Las Vegas in the coming.
How Long Will This Last?
It is not easy to predict how quickly the Las Vegas housing market can bounce back from the COVID-19 pandemic. The uncertainty and fear about the immediate future are holding back both buyers and sellers, which may slow down the market in the long run. Additionally, private lenders and banks are also establishing stricter requirements for the loans, further dampening the market. The same slowdown is expected for the gaming, hospitality, retail services, tourism, as well as the technology companies that service the gaming industry here in Las Vegas. In any event, there is a strong probability that the home values will drop amid the economic shock created by the COVID-19 outbreak. But considering all the factors, housing prices will correct over time.
This is Not 2008 Housing Market Crash
Workers in the housing market are in fear of a crisis similar to 2008. However, the current disaster is quite different from the financial crisis of 2008. Currently, developers are adding just enough inventories to keep pace with the demand and not flood the market with the housing products, which wasn’t the case in 2008. While it is true that prices are falling, they will probably bounce back in the next few years just like they did after the financial crisis of 2008. This housing market lasted for almost eight years, but the market just needed time for correction. Therefore, if the homeowners are not facing any kind of economic hardship and their ability to pay their mortgage is not affected, they can relax and stop worrying about the market value of their home in Las Vegas.
You are Safe from Foreclosure and Eviction
On March 29, Governor Sisolak issued a Directive stopping eviction and foreclosure proceedings, which will stay in place as long as Nevada is in a State of Emergency. The moratorium applies to traditional renters, those residing in extended-stay motels and weekly rentals, and to homeowners with mortgages.
It is difficult to evaluate how many people will not be able to pay their mortgage during the situation. However, many private lenders and banks are fortunately working with individual homeowners who have faced economic hardship recently and are allowing them to defer their payments up to at least 90 days (and hopefully more). Some banks may even extend that on a case-by-case basis also, depending upon how much funding at the federal level is available. There are also grant opportunities from the federal government (based on some criteria) for minority and low-income homeowners.
With this added safety net, you should not be afraid to discuss your current financial difficulties paying the rent with your property manager or landlord. Instead of running away from the problem and pretending it will just go away, you should have an honest and open dialogue with your landlord. Most landlords and property managers understand the current situation and that your failure to pay rent is out of your control at the moment. As such, many landlords are willing to work with their tenants by offering payment plans extending until after the moratorium is lifted. However, the longer you ignore the problem, the longer it will be until a solution can be reached.
The Las Vegas Real Estate Market Will Bounce Back
As soon as the crisis is over the industries such as gaming and hospitality will start bringing back their employees and so they will not have any problem paying off their mortgage. However, the problem lies with hotels, casinos, and other related industries that may not be able to hire everyone back just to err on the side of caution. Those distressed assets will be offloaded by banks in the market and add to the distress share of housing, which had gone down to just 6 percent of the resale market before the onset of the pandemic.
Las Vegas was already suffering from a limited inventory. Our inventory was already down to 1.7 months, and due to the pandemic, we may have gone up to almost two months in March. Even though the current situation is unsettling and doubtful, still we will definitely be able to recover as a city long-term. As mentioned above, the situation is vastly different from the financial crisis of 2008. In the current scenario, we are more pliant economically and even mentally more prepared as a community. The recent additions of Raiders and Golden Knights to our community in the last couple of years have made us able to come out of this economic shock stronger and move toward a rapid recovery. Existing home prices in Southern Nevada hit a new peak in March, despite the onset of a local and national state of emergency related to the coronavirus pandemic, according to a report issued recently by the Las Vegas REALTORS® (LVR).
Keep Your Spirit High
Overall, you must keep your spirits high. To fight the current economic shock, we have to be inventive. We have to think of new ways of doing things. We have to look at the big picture. This, too, shall pass…
Updated on 4.30.2020