Has the Las Vegas real estate market bottomed out?
The 2007 Las Vegas perspective booklet was released yesterday. It announced that Clark County population grew by 97,000 people last year putting the population at 1.9 million. According to the perspective this was a 5.3% increase over the 2005 figures. That is almost 8,100 new residents per month. If we have that size of growth this year the in 2008 we will be over 2 million people in Clark County. Some estimates project Clark County at 4 million people by 2040.
The average household size in Las Vegas is 2.5 residents per home. This would mean we will have need for 38,000 homes, condos or apartments. Approximately 50% of the residents in Las Vegas own their own home which means we are probably going to have 19,000 additional home buyers in the Las Vegas real estate market this year.
According to the Greater Las Vegas Association of Realtors March showed an increase in sales over February and it appears the April market is heating up even more. Perhaps the Buyers who have been sitting on the sidelines are now entering the market and making their purchases.
According to the Comprehensive profile the average new home cost 14% more than the average resale home last year. This year new home building permits are a fraction of what they were last year. If you can get 14% more for your money by buying resale over buying new then this market swing is just common sense.
Clark County had an average turnover rate of 8.6% for home sales in the last year for a total sales volume of 45,321 homes or 3,776 units per month. According to Fidelity title the Clark County recorders office registered 3,717 sales for March. This is just 59 homes shy of the average for the last 12 months. All indicators point to increases in the number of homes sold.
The job market is anticipated to continue to grow in Clark County at about 5% this year.
The over all real estate market has dropped in average sale price by -0.5% but this looks like the bottom as many of the zip code areas in the Las Vegas Valley are still showing increases in appreciation according to the Las Vegas Review Journal with zip code 89030 in the City of North Las Vegas showing an 18% increase in value over a year ago. The areas that in general are showing depreciation are the in the farthest reaches of the Valley with longer commutes.
We will continue to see flipper style investors continuing to put their investment homes on the market. We will also see many over leveraged home buyers that made bad decisions concerning their mortgage continue to be foreclosed. One thing to keep in mind is that we all have freedom of choice. The investor-flippers and people that use exotic mortgages to purchase homes made bad choices. In a free economy we are all able to make our choices based on risk and reward. If the real estate markets had continued to appreciate another 20% then all these people who are loosing their money and homes now would be savvy investors, but the market changed to quickly for them and now they are paying for their decisions.
Likewise the bargains that they produce create opportunity for savvy investors who understand that buying when the market is down and then waiting for the market demand to heat up again results in the profits. They are the savvy investors. Investing in stock or real estate requires commitment and studying of all the variables.
I smiled to myself this week as a read about Carl Icahn and one of his companies that entered into an agreement to sell the Stratosphere Casino. They purchase this property out of bankruptcy several years ago when the casino market was soft. They are now selling it for $1.3 billion with an anticipated gain of $1 billion dollars. Do you think they made this profit because everybody was in the market to buy casinos when they bought this property? No, they bought this property when the market was down and few were buying. They are now selling because the market is up and everyone is trying to buy property on the Las Vegas Strip. The moral of the story is buy when things are down, not when everyone is buying. If you buy when everyone is buying you have a good chance of loosing because your to late, you should be selling. As my grandfather always said, “If your not the lead dog on the sled your view never changes and looking at someone else behind never make you the winner.â€
By now while the market is soft and you have a good chance of making an excellent deal. That will make you a savvy investor.
For the Latest in Las Vegas real estate call Max at 702-334-2200. Or email me at:Max@MaxSellsVegas. com. Your comments and questions are welcome.