Housing Affordability Down, Inventory Up

Housing demand seemed to hit the wall in Las Vegas last August. And, despite stock market turbulence sending money into the 10-year bond and in turn lowering mortgage rates, inventory is rising at dramatic rates in Las Vegas.  

For those believing this is the pause that refreshes, James Stack thinks otherwise. “Housing could be heading for its worst year since the last housing crash," Stack, 67, told Bloomberg in a phone interview. “Expect home sales to continue on a downward trend in the next 12-plus months. And there’s a significant downside risk to housing prices if a recession takes hold.”

Stack determined a year ago that the housing market would slow based on homebuilding and mortgage company stocks nearly doubling the previous year.  Subsequently, builders stocks have peaked and fallen steadily.

Lower mortgage rates will not help says Stack who manages $1.3 billion from Whitefish, Montana.  "Even if mortgage rates level off or ease slightly in 2019, we are unlikely to see the psychology turnaround," Stack said. "Homebuyers have woken up to the fact that affordability is a major issue. Can they afford the home?"

Inventory levels have exploded (up 82%) in Las Vegas and have increased in other formerly bubbly markets: Denver and Seattle.