Forbes.com rate Las Vegas as a “Top Town for Empty Nesters” in an article published April 3, 2008.  It stated that Las Vegas has had a 156% increase in 55 to 64 year olds from 1990 to 2005.  This has been due to the excellent job market as well as wonderful recreation opportunities.

The State of Nevada recently published its findings concerning the in-migration of new residence for 2007.  It found that over 97,000 people moved to Nevada in 2007 which is over 8,000 new residence per month with the majority living in Clark County (Las Vegas) area.

In talking with other real estate agents on the street here in Las Vegas it appears the market is starting to pick up.  We are seeing more Buyers looking, possibly signifying that prices may be close to bottoming out.  With inventory levels shrinking and more sales pending we may be seeing signs of a bottoming of the market here in Las Vegas.  Keep in mind that we will see significant job growth in 2009 so many Buyers will try to beat the anticipated market appreciation bounce back by buying in 2008.

A major factor in the increase in Buyers is the new FHA purchasing guidelines which have started to allow Buyers to purchase a home.  The conventional mortgage market is still in shambles and has been hard for Buyers to obtain a mortgage.  FHA is allowing Buyers the security and assurance they need to complete their chosen purchase. 

Buyers looking in this market are finding wonderful properties that were well out of their financial reach just 2 years ago.  The selection of prime properties is plentiful and a Buyer can find excellent values for their money.

Now is the time to BUY in Las Vegas.  I am buying properties now.  Does that tell you anything?

Yes, the world of finance is in a tail spin and some Las Vegas condo projects are in trouble but it seems that many Las Vegas projects are above the financing waste land that has swept over the U.S. real estate markets.

This last week I noticed another condominium project has bitten the dust due to the slow market and terrible financing availability.   Stephanie Village has completed an $8 million dollar club house and infrastructure improvements and is now closed for business.  This is the second project to shut down in Henderson in as many months with Vantage Lofts being the first.  One has to ask what will happen to these partially completed projects?

But not all in Las Vegas is doom and gloom.  Las Vegas City last week gave its approval to a non-binding agreement with Forrest City to 1) Acquire land for a casino in the new 61 acre development site the city owns.  2) Build Las Vegas City a new city hall and lease it back at a much reduced rate.  3) Develop a new public transit facility close to the new City Hall.

This would allow the City to assemble approximately 20 contiguous acres of land surrounding the old City hall which would be a very valuable asset for a possible casino project with frontage on Las Vegas Blvd.  This would also guarantee a new casino on the 61 acre development site.  Together two new casino projects with the renovation of the Lady Luck and the expansion and renovation of the Golden Nugget, the new Entertainment District could all make Downtown a must see for people visiting Las Vegas and revitalize the downtown areas.  Besides the new casino on the 61 acre site there will be a new fine arts center, a world class brain institute (under construction),  the world diamond center tower,  the World Furniture Market (3rd phase under construction) and many other buildings.

The City also has not given up on building a new major sports stadium off Main Street between the Stratosphere and Downtown.  Also this month the Streamline Towers Condominium project will start closing its units with their new owners.  Mean while to the south of the new Justice Center Juhl Condominiums continues work on its building complex.  The structure on this project has been fully erected and it is bustling with subcontractors of almost every trade.

Goldman Sachs completed its purchase of the Stratosphere in January and there are murmurings on the street that it will seek to expand and renovate its new purchase using the 12 acres of undeveloped lands it acquired in the purchase.

Just to the north of the 61 acres is the Moulin Rouge, an historic site of the first segregated Casino for people of color back when whites only could stay on the Strip.  This site has recently received preliminary approval from the City for a total new casino/hotel package with tower.

So it looks like old Las Vegas may become New Las Vegas in the next four to six years!

Looking at the County (Strip)  I remember when I was a child the rumors that Elvis Presley really didn’t die but secretly vanished in order to live his life outside the lime light.  Well it looks like Elvis may never die!  FX has announced plans to build a new casino based on the Kings persona on the corner of the Strip and Harmon.  This puts it across from City Center and Planet Hollywood and surrounded by the MGM Grand.  Not bad company Elvis!

Las Vegas Sands has its fingers in a three new projects.

Currently under construction is the new high end condo tower along with luxury retail right along Las Vegas Blvd.  They are also involved in a new major sports arena to be build with frontage along Koval which is the first road east of Las Vegas Blvd.  The third project just announced yesterday is a brand new 1.2 million sq. ft. convention center along with making room for an additional 7,000 new rooms.  This facility would be built on the east side of Koval. 

What I find interesting about all of this is that while the national press is busy saying how bad the residential real estate market currently is in Las Vegas they fail to see the $38 billion dollars of construction currently happening on the Strip which will completely dry up the residential real estate inventories as they finish construction and start hiring new workers.  Supply of homes in Las Vegas will be in short supply in 3 years, AGAIN.

Some Buyers and investors are beginning to see the future and coming back to purchase while prices are dirt cheap.  We are starting to see a lot more buying activity in the residential markets right now.  Many properties in the lower price ranges are beginning to once again receive multiple offers.  It looks like the market here may now be changing.  Historically the Las Vegas real estate market has made fast adjustments to market conditions and this market swing seems to be no different.

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

If you have been reading my blog you know I have been saying that the real estate market is going to come back strong in late 2009 and we should see prices climb to their previous highs by approximately 2012.  Job creation is going to spur this sudden resurgence in the market as the $33 Billion Dollars of development on “The Strip” finishes construction and will create new jobs by the tens of thousands.

Finally the press is seeing the potential of the Las Vegas real estate market again.  In the last few days alone two national news and information publishers have come forward naming Las Vegas as a great place to find a piece of real estate.

The first Entrepreneur dot com found Las Vegas to be the 4th Best Place for a real estate investment bargain.  They sited a 12% year-over-year population increase and a low unemployment rate. They FAILED to mention the employment growth rate which is the main reason investors are now buying property here in Las Vegas.

The Second article was in Business-week they describe Las Vegas a big city buying opportunity because of its average sales price reduction of -23.38% from last year. Once again they are describing Investors coming to Las Vegas to buy deeply discounted homes an renting them out.

If you will recall a few years ago when the national press focused on Las Vegas an its huge price gains.  The result is that we had Thousands of investors flood into the market and buy property.  It looks like once again the national press is beginning to shedding light on the Las Vegas real estate market as a place of opportunity.  Will history repeat it self? Are the days of deeply discounted homes here in Las Vegas about to change?

I know first had that many international Buyers are currently buying in our market.  I know this because I am dealing with several right now. I read several articles in the foreign news each week about how Las Vegas has become a real opportunity because of the devaluation of the U.S. Dollar coupled with the steep reduction in real estate values.

The bottom line is that in speaking with other real estate agents on the street here in Las Vegas we are all starting to see many more Buyers coming into the market place.  The Greater Las Vegas Board of Realtors is seeing an increase in Sales and properties being placed under contract.  We may be seeing the beginning of a change in the Las Vegas real estate market again. 

Historically the real estate markets in Las Vegas have changed much faster than in other areas of the country.  This would be normal in Las Vegas.

Well the big sports area in Las Vegas City may have just grown wheels under it.  What has developed is not surprising, its just typical big business. 

The players include the little guys that own property south and west of Charleston and Main Street.  They all got dollar signs in their eyes like little girls looking at pop idols dreaming that they would get rich quick by selling their property from 3 to 4 times its real value.

Then we have the City of Las Vegas trying anything to extend “The Strip” further in to the “Fremont Street Experience” where their City Casinos (Cash Cows) have not been doing well.  Most people do not know that the only major Casino located in the City that is on the Strip is Stratosphere.  All other Strip Casinos are located in the county and do not contribute tax dollars to Las Vegas City.

The third big leg to this stool is REI Group who proposed this Mega development to include a Sports Arena, Casino and Hotel.  They have recently announced a new partner in the development “The Cordish Co.” More on that in a minute.

Now if you have been reading my writings for a while you know that Stratosphere sold to Goldman Sachs and that the sale included 10 acres of develop-able ground.  I told you Sachs had not indicated any expansion plans to date.  Well I think that just may have changed now.  They have made no announcement but it appears the new sports arena may have grown trailer wheels and moved south to snuggle up with Stratosphere.

It seems REI’s new partner The Cordish group has close ties to Goldman Sachs.  With the current tight development financing it may be tough to get a huge project done right now but what if you could drop the hotel and casino and just build the stadium which would take fare less land and still provide the needed support for a new Sports Arena.  And by doing so you don’t have to pay 40+ land owners ridiculous prices for their land.  Wow, that may just pencil. 

Yep, My guess is that Goldman Sachs and REI have know about this since Goldman initiated the deal to buy the Stratosphere.  I have seen very few deals go through by assembling 40+ land owners to make a project.  The problems are impossible as some owners will always blackmail and sabotage the project. So it appears the all those land owners can find buyers on their own to pay them the big bucks because it appears the party for the Sports arena just started and its at the Stratosphere.

The moral to this little tail is that if the 40+ owners really want to do a deal then they better get organized.  They better get their prices in line and form a joint land owners group under which their land is contractually packaged and they own shares in.  Then they have a bargaining tool.  I am not suggesting that the Sports Arena will come back on their site.  But with the Strip land being all sold off they could hold the site for the next major casino project in Las Vegas.

Although the real estate market in Las Vegas is still very week their are signs of life and the future is bright.  Las Vegas housing was simply over built in 2005 and 2006. This was due to heavy appreciation in the market place, easy credit in the mortgage markets, and heavy speculation by opportunity investors.

In order for the Las Vegas real estate market to get healthy again the following things must occur.

1) The existing excess inventory of new homes must drop.

This for the most part has already occurred .  Standing inventory of new homes have dropped to about 1,000 units (excluding age restricted neighborhoods that are not as affected by the down cycle).  Many builders have dropped their incentive programs of closing costs and upgrades and have replaced them with the lowest price and guarantees if the prices drop further between the contract signing and the delivery date of the completed home.  Building permits for the first 3 months of 2008 have dropped over 66% from 2007 levels. Of the 440 neighborhoods with new homes for sale in them 85 of these neighborhoods have 10 sites or less available translating into a drastic drop in available subdivisions in the next 6 months. All the above shows signs of shrinking the Las Vegas new home markets.

2) Repossession’s must slow.

Although Las Vegas home repossession’s have not slowed yet their are several signs that this may occur.  Many of the initial flood of repossession have been the inexperienced short term investor that bought homes at the height of the market in hopes of making a profit and got caught in the market turn around.  Most of these investors have now walked away from their properties and we are seening  these homes as REO repossession’s now in the market place.

One thing that the fed’s have done is to drastically cut the prime rates to banks.  Although the mortgage interest rates have not decreased as much as they have historically, a very little talked about result is about to show its self.  There is a huge number of ARM loans who’s interest rates are to reset over the next 6 months.  Most of these ARM loans are tied to prime rate so the lower the prime rate the lower the over all the percentage rate will be for the home owners that have these ARM’s.  This will result in more of these home owners being able  to make their payments and stay in their homes resulting in fewer repossession’s.  We will still have a flood of repossession’s over the next 9 months as the homes that are in default now will be cycled into the market place but look for repossession’s to slow by this time in 2009.

3) The mortgage markets must stabilize making money available to qualified buyers.

Once again the Fed’s have come to the rescue with new Fanny Mae and Freddie Mac guidelines allowing for them to enter the jumbo loan areas.  A more important change by the Fed’s have been the FHA programs which have been expanded allowing more flexibility in obtaining an FHA loan.  Lastly many conventional lenders that have repossession’s are making down payment concession to qualified first time home buyers allowing them to purchase one of their reposessed homes with as little as no money down.  The mortgage markets are showing slow signs of stabilizing although the conventional markets are still in an uproar.

4) Las Vegas existing real estate inventory levels must come down.

The Greater Las Vegas Association of Realtors reports that in the first 3 months of 2007 new listing totaled 29,905 units.  For the same period in 2008 new listings were 25,752 units showing a slight decrease in listings of approximately 14%.  This downward trend in monthly listings actually started in November of 2007.  Although this is not huge turn around it does show an emerging consistent pattern in the market place.  Even with the huge number of homes being repossessed and placed on the market the total number of homes for sale in Las Vegas is slowly shrinking. As the number of Buyers increase this number of available homes will decrease at an accelerated rate.

4) The price of Las Vegas homes for sale must come down.

According to GLVAR the average price of a Las Vegas resale home in 2007 was $303,497 in the first quarter of 2008 the average price of a home was $262,332.  That is a drop of approximately 14%.  If you prefer to use the median price of a Las Vegas home then in 2007 it was $300,626 and in the first quarter of 2008 it was $246,500. This calculates to approximately an 18% drop in prices. Much of this decrease is due to the sale of Las Vegas REO bank owned properties which have amounted to over 56% of all sales in the first quarter of 2008. It is clear to we Realtors that deal in the market every day that REO bank owned homes are leading the market in sales.  Not all prices on all homes will ever come down uniformly but the opportunity is currently available for many excellent purchases at fire sale prices.

5) The Buyers must come back into the market and purchase.

Yes here also their are signs of real movement in a positive way.  With the devaluation of the U.S. dollar and the drop in prices we Real Estate Agents are seeing a flood of foreign Buyers.  They see an opportunity in our market and they are purchasing.  Many Las Vegas prospective Buyers are waiting to see if prices will continue to fall.  What most people don’t realize is that their are many great opportunities now that may soon disappear.  The whole Las Vegas resale market will never drop its prices across the board as each property is owned by different people with different motivations to sell.  Currently their are many properties on the market at prices that they sold for in 2004.  We are approaching pricing in many communities that are below the cost to replace them.  In my opinion we are near the bottom in price depreciation and because we are seeing some movement in the Buyers coming back into the market we may start seeing a firmer pricing policy by the banks that control the REO’s.  If we look at the 2005 property closing numbers which was a banner year in Las Vegas real estate sales we can see a surprising trend in comparison with 2008.  The first quarter of 2005 had 9,582 homes sold while in 2008 their were 8,907 homes sold which is not a huge difference in sales. We may actually grow in over all sales in 2008 if this trend continues and their is no reason to see a change in this pattern. 

An interesting statistic is the supply of homes in the market place.  This supply is figured by dividing the number of sales in a month by the number of homes on the market the result is the number of months of supply in the market.  As the number of sales increase or the number of listings decrease the number of months of supply decreases.  A balance market is considered to be a 6 month supply of homes.  In Las Vegas our Supply of homes in the market place in the last 3 months is as follows: 

Single Family Resale home supply based on home for sales divided by sales.
Dec. 2007  24.53 months
Jan. 2008  22.49 months
Feb. 2008  20.49 months
Mar. 2008  15.40 months

My personal observation is that we are seeing more and more Buyers quickly coming back into the market place.  This will result in the inventory levels to continue to drop and prices will stabilize.  If this trend continues at this pace we will see a balanced market of 6 months supply with in the next 6 months and that means prices will stabilize. This also means that we may start to see prices on new homes once again begin to rise around October of this year.  If your a Buyer and wait another 3 months to buy you may have missed the bottom of the Las Vegas real estate market.  I am not forecasting a huge jump in prices for this year or 2009 but we may see prices rise from their current 2004 levels to a normal appreciation rate of 4% per year which will mean by the end of 2010 with the demand surge because of all the new massive property openings on the Las Vegas Strip (120,000 estimated job creation) we could see a 15% increase in value over the fire sale prices we are seeing now.