LAS VEGAS (KLAS) – New homes are being built by the thousands valley-wide, and realtors who spoke to 8newsnow.com believe new build incentives are making it harder to sell older homes to buyers.
For example, a 1766 square foot property sits in a 55+ Lake Las Vegas community that Henderson Realtor Trish Nash has been trying to sell for four months.
“We’ve had showings, we’ve had positive showings. People love the home,” Nash said inside the $630,000 property Wednesday afternoon.
The owners told 8newsnow.com they’ve reduced the asking price by $70,000 from the initial listing.
But, despite the $160,000 in upgrades the owners said they’ve put in, buyers are not biting.
“It’s ready to move in, and yet, we have the builder who is offering deep, deep incentives,” Nash said while signaling to a community developing nearby. “Many buyers are gravitating towards new construction, and that is the dilemma that we have right now.”
As Nash puts it, “Interest rates are holding buyers back.”
In a way, builders are cutting back those interest rates to incentivize buyers to move in, according to Andrew Leavitt, vice president of secondary markets for Pinnacle Lending Group.
“They pre-pay the interest. They get it down to 4.99%, and when rates are at six and seven right now, getting anything in the ‘fours’ is huge savings,” Leavitt said inside his Spring Valley office Wednesday morning. He calls it a 3-2-1 buydown.
Starting low, the buyer pays an interest rate that goes up gradually by 1% each year over three years.
In the meantime, the builders pay the difference, which Leavitt said can translate to thousands of dollars.
In the interim, he said buyers generally get raises at work that allow them to afford the higher rates year after year.
“You can do the temporary interest rates buy down on both (kinds of builds), it’s just that builders (are) willing to pay for it in the new homes,” Leavitt said.
But, he acknowledges that those taxes eventually catch up to the buyer.
Resale homes, on the other hand, have tax rates capped on the date of construction, which Leavitt said means less of a monthly payment.
“A couple hundred bucks each month. That’s where the payment’s going to be lower and make more sense and affordability,” Leavitt said.
The different incentives are leaving buyers, like Jason McDonald, with questions: whether to buy new and choose what they want to be built inside the home with the higher taxes later or to buy old and risk having to upgrade or replace certain aspects of the home with the monthly costs upfront.
“I do want to make sure I get my money’s worth,” McDonald said during a virtual interview Wednesday afternoon from Reno. “Just because you pay less, doesn’t always mean it’s better.”
Las Vegas Realtors told 8 News Now that the number of homes sold in the Las Vegas Valley is going down after skyrocketing during the pandemic. They list the median price for a single-family home at $425,000 as of March.