Las Vegas real estate. The good, the bad, the ugly!
All the real estate experts will tell you how the Las Vegas market as a whole is doing. However the main driving force in the Las Vegas real estate market is R.E.O’s or Bank owned homes being sold off at huge discounts. I am going to give you the statistics on this important driving force in the Las Vegas real estate market. What these current statistic reveal is that things are already changing in the Las Vegas real estate markets.
Prices continued to fall through April 2009 (click picture for larger image)
Las Vegas single family home R.E.O. sales prices continued on their price dive through April 2009. The median price of a Las Vegas home including condos, townhomes and mobile homes was reported to be $125,000 by the Greater Las Vegas Association of Realtors. The above median price of $129,175 reflects only single family R.E.O. sales only for the month of April.
Number of R.E.O.s Sold for the year ending in April 2009 (click to enlarge)
The number of Las Vegas R.E.O. single family residences sold here have increased over 300% from April of 2008. This is now starting to dry up available inventories of R.E.O.’s leaving room for the expected new wave coming to sale in the next 60 days.
Las Vegas R.E.O. single family homes average days on market (click for larger view)
The average days that an R.E.O. is on the market is starting to fall quickly which is further indication of the increased sales in the Las Vegas single family homes.
Las Vegas homes Listed vs Sold monthly totals through April 2009 (click to enlarge)
The above chart shows the number of homes listed verses the number of homes sold in any one month in Las Vegas. Looking back around November 2005 we see the number of listings and the number of sales get very close signifying that their was very little inventory in the market place with relatively high demand. This was a primary cause of the Las Vegas real estate price boom that lasted through 2007. You will notice that in April 2009 these lines are once again converging. I am NOT suggesting that we are going to have another real estate boom in Las Vegas but what we are seeing is that demand is increasing while supply has been decreasing. If this trend continues then the supply of homes would dry up do to the increased demand. This would stop the decrease in prices as people scramble to find homes in the market. I may even increase prices slowly.
The above converging demand and supply should stop the declining real estate values in Las Vegas and help stabilize the market. Look for further increases in inventory but a matching increase in Buyers demand to get their homes while the prices are down in the Las Vegas home market.
“The Good”
The price of a Las Vegas home in April reached prices not seen since 1998. The median Las Vegas home price dipped to $125,000. With a $8,000 tax credit for first time home buyers and interest rates at an all time low of around 5% FHA. First time home buyers are with good credit, good jobs and 3.5% cash down payment are not passing up this once in a life time opportunity to purchase their home. For many they can buy and have a lower payment than rent!
Retirees are also coming with cash in hand to find that perfect Las Vegas retirement home/condo at wholesale prices. The price of a home here is 55% cheaper than it was in February of 2007! Many retirees are finding that even though their retirement funds have been hit by the stock market the deals in on Las Vegas condos and homes are just to good to pass up. The prices here are some of the best in the country and with lower property taxes, home owners insurance rates, no hurricanes, no humidity, and no personal state income tax Las Vegas is the best place to retire. Las Vegas also offers many more things to do than most retirement areas of the the country. Many retirees are selling their homes for 15% to 25% off what they could get 2 years ago and coming to Las Vegas and buying for 55% to 65% off what they could have purchased just two years ago. They are saving 40% in the process!
Foreign purchasers are also flooding the Las Vegas condo market buying their place in the sun and “the City that never sleeps.” Canadians in particular are paying cash and finding great condos for as little as $50,000. This gives them a place to come to for 5 months while their homes in the north are engulfed in snow and ice.
Investors are grabbing up property like it was a one day dress sale at a Bridal wear shop! They understand that Las Vegas is transforming from a City with 60% home ownership just 2 years ago to a 40% home ownership. This translates into 20% more (400,000 people) who will be renting now instead of owning. That is a huge swing in the rental market and savvy investors know this. They also know that property prices have dipped well below the cost of construction. This means that in a few years these homes will be worth a great deal more than they are today. The key is that investors are buying, renting and holding these assets for 5 to 7 years.
“The Bad”
It may not be the time to celebrate as so many people here in Las Vegas have been devastated by the Niagara stile fall of real estate prices here.
We will see in the next 60 days another flood of repossessed homes come on the market. This is a direct result of the moratorium on repossessions during the Christmas holidays and many mortgage companies waited for the new Obama administrations new policies before resuming repossessions. All this is now culminating in many more “Sheriff Sales” and as these properties, now owned by the banks, are moved from the repossession departments and into the banks asset management departments they will start once again flooding into the market.
“The Ugly”
Many people have been literally wiped out by: 1) The 55% fall of their home values in conjunction with the a 60% increase in monthly payments for many. 2) The huge loss of their retirement accounts value coupled with a simultanious increase in credit card interest payments. 3) The either loss of their job (10.4% unemployment) or facing a 25% cut back in their hours worked and devastating loss of income.
This 3 prong financial punch have left may hard working folks flat on the mate knocked out and now they must start over. Most home owners in Las Vegas owe more on their mortgage than their home is worth. And many are either waiting for foreclosure or have mailed the keys back to their lender after vacating. Yes, the tail of Las Vegas as the foreclosure capital of the world is not over yet. We will continue to see vast numbers of foreclosed homes flood the market as more and more Las Vegans loose their part of the American Dream.
Recently some of the largest employers here in the casino industry issued an edict to all employees to be happy during work and not discuss the problems for locals with the tourists. Although this is good business it shows the now hidden toll this financial crisis has taken on the people of Las Vegas.
You can see the dispare in their faces in the grocery store and on the street. It reveals it self the most in the well dressed people who have a vacant lost look in their eyes as they stroll the isles picking and choosing carefully their purchases to fit their new life’s budget. This crisis has not just wiped out those that over spent and should have never purchased a home. It has also wiped out those with excellent credit, hard working, responsible people with ethics, morals who now stand unemployed and without recourse as their worlds fall apart around them.
We need to help our neighbors, family, friends and strangers through this devastating time in our history.
