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anuary 21, 2025 - 7:00 am

    A new report from Wells Fargo warns that the real estate market will face significant challenges in 2025, and Las Vegas is expected to be no exception. According to Jackie Benson, a vice president and economist for Wells Fargo, mortgage rates are likely to remain high, holding back both buyers and sellers.

    Mortgage rates currently sit at 7 percent, and while they may not drop significantly, the Federal Reserve's interest rate target of 3.75 percent will keep them elevated. This is a far cry from pre-pandemic levels when rates were zero percent. As a result, economy-wide interest rates are expected to remain high.

    Home price appreciation has softened in Las Vegas, but prices are still rising faster than the national average. According to CoreLogic, home prices increased by nearly 5 percent year-over-year in November, outpacing the U.S. average rate of 3.4 percent. However, housing supply remains constrained due to high mortgage rates.

    Realtor.com shows that active listings in the Las Vegas metro area have increased by 42 percent over the past year, but are still 17 percent below pre-pandemic levels. Wells Fargo notes that builders appear bullish on the market, with home building permits increasing by 23 percent year-to-date through November.

    A slowing labor market is also a concern for the housing market, as Las Vegas employers have reduced headcounts for six consecutive months. This has led to rising unemployment and further constrained the housing supply.

    Despite these challenges, some experts are optimistic about the prospects for the Las Vegas real estate market in 2025. Matt Hennessy, a mortgage advisor, notes that elevated mortgage rates can be a double-edged sword, while Lori Galarza, a Re/Max Central broker and owner, believes that the trend of increasing home prices is likely to continue.

    Galarza points out that local home prices are continuing to trend upwards, in line with average historical data. "The trend every year in real estate is usually an increase of 4 percent (in home prices) played out over a 10-year average," she said. "From November of last year to this year the median home price increased 6.7 percent, so we're obviously above the national average."