Las Vegas real estate market report

By now it has become clear that the Las Vegas job market will get a big boost in job growth in late 2009.  Many of these huge condo and casino projects will be completing in 2009 and hiring new people to staff these luxury digs.

But for now unemployment is up to just above national levels. This is generally due to the closing of a number of large properties on the strip in order to build new giant projects thereby reducing the number of employees and secondly by the drop in residential real estate sales which have laid off construction workers, mortgage, title and real estate industry personnel.  Remarkably, the figures have not gone up near as much as the job loss because Las Vegas has been diversifying and is still creating a great many jobs in a variety of industries.

Las Vegas is still getting approximately 5,000 new residents per month according to the Department of Motor Vehicle statistics.  So why does Las Vegas still have a growing inventory of home for resale? 

The initial upsurge of listed inventory of homes for sale came as short term investors (flippers) started to realize that the market was turning and was no longer appreciating and they needed to get out.  This occurred, for the most part, in mid year 2006.  Some insisted on not discounting their prices and this left those properties on the market as others were added. 

Las Vegas for about 3 years was well publicized as a get rich quick place for real estate investing.  This created a buying frenzy with bidding wars for a very low supply of homes with people camped out at subdivisions just for a chance to buy one. As these people began to realize that the Las Vegas real estate market had peaked they all rushed to unload their holdings.  It is estimated that as much as 20% of the market is investor owned.

Because real estate was escalating in cost from 2003 through 2005 the mortgage industry loosened their requirements on loans and credit became very easy to get.  This allowed many full time residents that could not prove their full income due to cash tips, to now qualify for a home loan and stop renting.  Because many of these people had marginal credit and no down payment, they were given sub-prime (exotic) loans.  Many of these loans started out with at an extremely low interest and then reset in 2 to 5 years to a new much higher rate. 

So now we have investors and new homeowners competing for the same homes and thus escalating prices further.  Investors were also able to get no principle, stated income (exotic) loans with low down payments.  It seemed like everyone that came to Las Vegas even on vacation became a real estate investor.

Today all the available loose exotic mortgages are gone.  All the Buying short term investors (flippers) are gone.  All the employees that can’t prove their income are no longer Buyers because they can’t qualify for the loan.  Those people who may be in the market to buy a home often times are waiting to see if the market will discount further before they buy. This has left Las Vegas with far fewer Buyers.

Now add to this equation the home owners that took out exotic loans several years ago. Remember that the interest rates reset to a much higher rate?  Well right now and through 2009 we are going to see a lot of these loans reset which can almost double the home Owners monthly payments.  Many of these people can no longer afford their homes and they can no longer qualify to refinance.

So now we are seeing a flood of repossessions and foreclosures adding to the real estate inventories.  And these people will have to go back to renting and loose any credit that they may have built.

The Nevada legislature recently passed a law to help future borrowers here in Nevada.  It basically said that if the Lender didn’t prove the ability of the Buyer to be able to pay for their loan at the highest rate the loan could be adjusted too, then the Lender was guilty of a felony.  As a result many lenders will no longer be offering stated income loans in Nevada.  This gives homeowners trying to refinance and save their homes even fewer chances of doing so.  So in the end the State of Nevada is kicking many current home owners out their doors, by eliminating financing options that were available prior to the passage of this law.

It has been estimated that 50% of all home sales in Las Vegas were financed by exotic mortgages in the last 4 years.  It is further estimated that as many as 56% of these loans may end in foreclosure.  This would result in flood of properties being offered for sale in the Las Vegas real estate market.

So what will stop all this doom and gloom in the Las Vegas real estate market?  The change in the market will be stimulated by increased employment, foreign currency and a continued influx of new residents. 

In the short term from now until the last half of 2009 Las Vegas may be in for a rough ride.  With  population increases of approximately 5,000 new residents per month including retirees who do not need jobs. Heavy new job demands are forecast to actually fall short of the available employment pool in 2009. 

the value of the dollar in relation to foreign currency is making Las Vegas a real estate bargain for many International Buyers.  All of this can turn this market very quickly.  For the balance of this year look for some rough roads as this market shakes out. But in 2009 expect a Sellers market.

All this reminds me of the wealthy real estate investors mantra “Buy when everyone is selling and Sell when everyone is buying!”

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.

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The Fed decision arrived with a Big Change! The Fed surprised most economists and traders with a one half percent cut in both the Fed Funds and Discount Rates. Stocks soared higher and enjoyed their largest gain since 2003.

What does the Fed interest cut mean? Rates on consumer car loans, consumer loans, and Home Equity lines will all benefit. But because Las Vegas Home Loan rates are tied more closely to inflation, it is not uncommon to see less of a reaction…or even an opposite reaction in mortgage rates.

This cut also hurts rates of return on investments.  This gives foreign investors less incentive to invest in US securities. This action by the Feds has resulted in sending the Dollar much lower against the currency of most major foreign countries. This makes foreign goods more expensive for us to buy, which adds to inflation pressures.

This Fed interest cut is good news for the U.S. economy, but may nudge inflation a bit higher.

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.

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Would you consider buying a Las Vegas home today if only you had your car and those two credit card balances paid off?  That can be arranged through a new tool called a Grant program that is perfectly legal if properly executed.

Here is how it works. Let say that you currently owe:

$13,500, or $405 per month, on your car 
$10,000, or $163 per month, on one credit card 
$4,000, or $65 per month, on another card.
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 $27,500 with total monthly payments of $633. 

You have been in with a loan officer and qualified for a monthly payment of $1,850 per month which will get you into a $250,000 home with your savings of $12,500 as a down payment.  The problem is is when you add these two debts together totaling $2,483 per month it doesn’t leave you any breathing room in your budget.

Well there is a new program that can wipe out that old debt and trade it for that house payment that you can use the interest deduction on your taxes.  You are not adding the debt into your mortgage balance but you get your debt paid off and you get to send the checks!

Here is how it works.  You submit the debt you want relief from to the Grant Company.  The Grant Company then sends me your Las Vegas real estate Buyers agent the Grant request to be included as a part of your real estate purchase agreement (offer to purchase).  The Grant is to be paid by the Seller from the closing proceeds and will be sent to the Grant Company.  The Grant Company will send you checks made out to your creditors within 3 business days for you to send to pay off your debts.

You now have your new Las Vegas home and are free from your former debt!

This new tool is useful right now while we are in a Buyers market.  With all the concession Sellers are making to sell their homes this is a great tool if you are interested in buying a home right now.

If you have any questions please give me a call, Max 702-334-2200.

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.

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In the last year we have seen Stations Casinos make a play for land around the “Strip.”  With a location on the South Strip near South Point Casino. 

Major land acquisitions around their original flag ship casino, Palace Station and now they are assembling 70+ acres around their Wild Wild West Casino on West Tropicana.  Currently Stations is building a $600+ million dollar casino in North Las Vegasat Aliante Master Planned community.  After it looks like they are headed near the Strip with one of these 3 properties to build on. 

Stations will compete well with its service oriented marketing plan. It has carefully and successfully fine tuned its marketing on the local residents who are not easily impressed.  They now have an upper end product which they initially rolled out with Green Valley Resort followed by Redrock and now the Aliante unit.  This concept has caught fire both with the local residents as well as travelers who love the pampering these properties offer.  It only make sense that Stations should head for the Strip where the lucrative tourist dollar is more abundant.The major cross roads on the strip are starting to get more attention from gaming.  For years we have seen small casino operations struggle to stay afloat, even the

Rio struggled for a while and offered suites at room prices.  Things seem to be changing in a big way as we see the major success of the Palms and other off near strip casinos are doing much better now.

Other properties on major cross streets are starting to move. I was watching the local county commission meeting a few weeks ago when the County approved a casino site on the south west corner of Spring Mountain road and I-15.  That is a very short distance from the location of the proposed Dragon City Casino of a few years ago.  These casinos if built would connect the Strip with China Town and bring new life to the industrial area that currently sites between them.  Purchasing property just off strip looks like a great investment for the future as their is very little land left on the strip and it commands a huge price tag.

Near Strip condos will also benefit from this expansion as new casinos are built and existing communities become better locations. Pinnacle condominiums would be benefited if Stations build a new Casino on the Wild Wild West location.  This would make the neighborhoods between the two projects a much more desirable location for business and may trigger a change in the area.Normally I don’t directly write about hot areas.  I generally keep this information private for my clients.  I do so now to let you know that understanding the real estate market can make you money, even in a down market.  Every real estate deal has its own set of considerations and understanding those factors is what I do best. 

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.

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