Las Vegas real estate market report

I  just completed the May 2007 video report on the U.S. real estate market conditions. You can watch the video by clicking on the picture to the left. If you prefer to read you can find the script below.
RealtyTrac  a foreclosure service reported that 430,000 foreclosure filings, default notices, auction sale notices and bank repossessions were reported nation wide during the first quarter of 2007. That is one in every 264 homes. According to Moody’s analyst Mark Zandi 2.87 % of the total U.S. housing market is in some sort of foreclosure. Mr. Zandi feels the problem will continue through 2007 as subprime loans rest to new higher interest rates through the rest of this year.
 This figure represents a dramatic increase in for closures up 35% from the same quarter in 2006 according to RealtyTrac. Viewers should keep in mind that the greatest part of the 430,000 foreclosure filings include the initial “default notices” which is a letter sent out to owners that are more than 30 days late on their payment.  Please note, that a property may have up to 3 foreclosures taking place at the same time if the owner has a first mortgage, second mortgage and home equity loan on the property.  Less than 5% of these “default notices” become actual foreclosures as most home owners will then makeup their payment and late fees.
 
 More Than 430,000 Foreclosure Filings Reported in Q1 According to RealtyTrac(TM) U.S. Foreclosure Market Report 

Mortgage Delinquencies Reach All-Time High

On April 24th, Countrywide Financial Corp. Chief Executive Angelo Mozilo speaking at a Milken Institute Conference said he expects the mortgage market to improve in 2008 and be “Very healthy” in 2009. He said that 5 to 6% of the nations riskiest subprime loans may face foreclosure. He went on to say that 94% of these loans will not go into foreclosure.

Currently more people own a home than in any time in the history of the United States.  Much of this is due to the subprime or exotic loan market. Although foreclosures are at an all time high so is home ownership.  For someone to rent in today’s real estate market and save tens-of-thousands of dollars for a down payment and closing costs is unrealistic for most people seeking the American dream.  Many home owners today got their opportunity through these exotic and subprime loan programs and 94% will make good on their dream of long term home ownership.
Concerning the subprime mortgage companies that have gone bankrupt or are severely damaged by the market change.  We need to keep in mind that we live in a free market society and these companies chose to loan money at higher rates to these people.  Investors bought stocks in these companies and purchased bonds that promised higher yields than other more conventional investment. The investors in these assets choose to take the risk to receive the higher return, it just didn’t work out for them.
So in the end we have 94 families that now own a peace of the American Dream and 6 families who didn’t make it happen, for what ever reason.  Maybe some of these 6 were investors risking their credit on the appreciating real estate market.
Are we to feel sorry for the short term real estate investor taking their risks?
Are we to feel sorry for the Exotic mortgage company taking their risks?
Are we to feel sorry for the stock and bond investor taking their risks?
Should we really be upset with the 100 people that took out subprime and exotic mortgages because they didn’t have a down payment?
Right now there is a movement in congress to change the laws on loans.  If successful this might block future 94 people from obtaining their American dream of home ownership.  Mortgage Companies have already tightened their restrictions on exotic or subprime loans we don’t need any new laws.

If no down payment exotic mortgage loans are such a bad thing, then why have we Americans allowed our Veterans to have them ever since World War II.  No Down loan programs are not a bad thing as long as it is reasonably balanced with risk.  Should investors have no down loan programs? Probably not. This alone may make a large dent in that 2.87% repossession rate that the mortgage companies are now crying about.

We need to preserve every opportunity for our youth to obtain home ownership weather the real estate markets take a small re-adjustment or not.
On April 24th the NAR reported that the number of homes sold in the U.S. decreased by 8.4% from the 2006 figures.  A part of this lower sold rate could be attributed to the severe weather that occurred in February when homes that closed in March would have been placed under contract.
A positive sign showed the National inventory of homes for sale fell to 3.75 million units which is a 1.6% decrease in inventory representing a 7.3 months supply in the market place.
The median sales price of a single family home is down 0.9% from 2006.  If this were stocks it would be considered a minor adjustment but to hear the national press trying to sell papers and air time it seems a crisis.
David Lereah, chief economist for the NAR “We’re still looking for existing home sales to gradually improve during the last half of 2007.”
Weather Hits March Existing-Home Sales After Three Monthly Gains

Finally, I want to tell you about a report that came out of Las Vegas about one of Carl Icahn’s companies.  Mr. Ican is a well know corporate investor that buys when the market is soft and sells when it is strong  producing billions of dollars in profits. This last week a deal was struck between his company, owner of the Las Vegas Stratospher and 3 other minor casinos, and a real estate holding company owned by Goldman, Sachs & Company.  The Stratosphere was purchased by Mr. Icahn’s company out of bankruptcy when the market was soft, a Buyers Market.  Mr. Icahn’s company is now under contract to sell the properties for $1.3 billion dollars.  They announced this would lead to a net gain of $1 billion dollars.
The moral to this story is buy when others aren’t and sell when everyone else is buying.
It’s a Buyers market in most of the United States and excellent investments with excellent terms abound.  Interest is low and selection is plentiful. Weather this is your first home, vacation home or retirement home, now is the time to make a great deal on a home.  Don’t wait until everyone else is buying or you may be paying a lot more.

American Real Estate Partners, L.P. Agrees To Sell Its Nevada Gaming Operations to Whitehall Street Real Estate Funds for $1.3 Billion

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.

This entry was posted on Saturday, May 5th, 2007 at 3:11 am and is filed under Las Vegas real estate news, U.S. real estate market conditions, United States real estate report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.