Welcome to my Las Vegas Real Estate Blog! Below is considerable information on the condition of the local market starting the New Year.
About 70 percent of used-home sales in Southern Nevada now are traditional deals between private buyers and sellers, according to the Greater Las Vegas Association of REALTORS®. That’s up from 51 percent a year ago and 26 percent two years ago.
Bank-owned homes comprised almost half of all sales two years ago but now make up less than 10 percent, according to GLVAR data. Short sales—when banks agree to sell a home for less than what’s owed on the mortgage—comprised almost half of all deals a little more than a year ago but now make up 21 percent.
The peak of prices, locally, was June 2006 when the median price for a free-standing home was $319,000. The bottom was December 2011 when the median price was $119,000. Prices recovered to $186,000 last October and have been relatively flat since. Meanwhile, during last year’s third quarter, 40 percent of local homeowners with mortgages were upside down, meaning their debt outweighed their home value. That still was the highest rate in the country but far below the local peak of 71 percent two years ago.
Many sellers that would have sold and moved on to another home years ago are now finally in a equity position where they can make this move without walking away and letting their home go to foreclosure or resorting to a short sale.
My personal opinion is that prices are now at a point that can be “historically” supported. Prices increases for years averaged around 5% a year. With the craziness of the middle period of the last decade, prices well exceeded that. Then came the big drop and prices dropped well below that 5% annual increase trend line. They have now recovered to the point that barring some unforeseen catastrophe or another “bubble” they should continue to increase modestly. The good news, lots of inventory in a stable marketplace
Hello again from Las Vegas!
It is hard to anticipate how foreclosures will impact this marketplace in the future. The Las Vegas Review Journal had an article today with the headline ” Local foreclosure start surge. There has been a significant increase since June. Having said that as I review the foreclosure filings for Clark County for the last several months I see that from October 1012 until May 2013 the foreclosure filings averaged over 2,000 a month. There was a very significant drop in June and July but the figures for August, even though higher than for June and July, were still well below the previous months. Looks to me like the refrain ” the log jam is breaking on foreclosures” is premature.
Given the number of homes where the homeowner owes more for the their home than the home is worth, I do expect considerable activity in distressed sales into the indefinite future. How much that will impact prices given the still fairly strong demand is hard to say.
According to the Las Vegas Sun, investors are leaving this marketplace. A year ago there were at least 50 investment firms buying homes in this area. Now there are just 3 and even these 3 are much more selective. Home prices have surged over 35 percent over the last 12 months making it more difficult for investors to turn a profit. Rental prices are slipping also.
Some of this investor activity has been the result of the Fed’s easy money policy. Given the low interest rates available, many larger and smaller investors have moved to real estate where there has been the possibility of, along with higher returns via rentals, also the possibility of increasing values. If interest rates increase then even more investors will leave this marketplace.
The good news for buyers is that it is much easier to purchase a home without competing against these investor, all cash, buyers.
Below is information on the current state of real estate market activity in the Las
Vegas area. Also included are some of my personal observations. I hope you find this helpful.
Inventories remain unusually low with about a 1.3 month supply of homes at the current rate of sale. There were 3,642 closings in June compared to 3,884 in May. In June of last year there were 3,945 closings Closings are actually down even compared to the depth of the recession. There were 4,702 closings in June of 2009.
Sales jumped 31.2% over June of last year. There were 3,770 building permits pulled in the first half of this year. That is a big increase, but is nothing compared to the pre-recession averages of 3,000 to 4,000
Prices are up
From June 2012 to June 2013 there has been a 24.6% increase in the median selling price of a free-standing home.
As a result of price increases of the last 12 months, at least in my opinion, I can say that things are picking up with respect to some of the delayed or cancelled projects around the valley. I see the Blue Heron development off of Horizon Ridge Dr. in Henderson is now active again. The Old Manhattan West project on the west side is now active again under another name. The long delayed Summerlin Center project is now showing signs of activity. That is really good news as that construction site has been a a real eyesore and a living example of the real estate collapse of a few years ago. Mortgage rate increases may slow the price increase somewhat but they are still much lower than historical averages.
Due to the inventory situation and with still favorable interest rates I expect prices to continue a slow increase in the short term. Beyond that it is anybody’s guess. There are really too many variables, at least in my opinion, to make a accurate forecast. That’s it for now!
The basic scoop.
Summary: Prices are up, inventories are down.
The resale market now has an effective inventory of 1.2 months in the multiple listing service (MLS), pricing continues to escalate as the buying environment right now is closer to the 2004-2005 period as opposed to the lowest levels reached in 2011. The median resale closing price jumped another 32 percent from the prior year, reaching levels last witnessed four years ago. Cash buyers represented 58 percent of closings in the past month, squeezing out a number of owner-occupants seeking a home.
Builders recorded 581 closings during March, bringing the year-to-date closing count to 1,590. Closing volumes for the month were up 67.0 percent from the prior year and 87.3 percent for the quarter. Looking back over the past 12 months indicates 6,130 new homes were closed, an increase of 58.6 percent.
The median new home price was up 8.7 percent for the year. The average price per square foot on units with known sizes increased 15.9 percent to $114
The number of resale closings during March was 27.1 percent below the prior year (3,862 units). On a year-to-date basis, closings were off 22.6 percent (10,870 units). During the past 12 months, the number of closings is down 16.9 percent to 49,375. Lower inventories appear to be having an impact on resale closing volumes.
The median resale home price escalated significantly to $138,151 in March (+31.6 percent from the pervious year) as the mix of closings continues to shift toward non-distressed closings and away from short sales, auction and REO sales. Compared to the prior year, prices are up across all sales types. The average price per square foot was up 34.1 percent to approximately $90.
That’s it for now. Let me know if you have any questions.