The Las Vegas market in general is becoming tighter as few REO units have been listed lately.  REO’s have been over 80% of the market for the last 6 months.  Some units in Henderson have not moved since they require renovation. I have noticed that the REO owners are becoming more sophisticated and are starting to repair and clean these units up to receive a greater return on these previously substandard units.

Because of the heavy flood on investors now entering the Las Vegas market I do not see prices in continuing to fall in the under $250K bracket and we may see an actual increase in units currently priced under $150K because of their current undervalue and extreme demand for this product.  We are currently experiencing multiple bids on properties priced under $150K and approximately 35% of the Sales in the market are CASH. This flood of investors is due to the Las Vegas market moving from a 40% rental market to a 60% rental market as people loose their homes but not their jobs due to the economy and the predatory mortgage products.  Investors are finding it easy to find 5% to 10% R.O.I. on their investments in this market.  Un-employent is currently at 11.3% with the bulk of construction jobs no longer available. This indicates that as the economy recovers and tourism picks up new employment will be in lower paying sectors requiring housing with lower rents.  This will dry up the lower priced inventory and this is what investors are banking on for a 3 to 5 year hold.

I look for price brackets below 150K to continue to be competitive and possibly more expensive to acquire.  I see price brackets 150k to 300k to continue to accelerate as foreign nationals and retirees continue to come into the market place to buy second homes and retirement residences.  I see an increase of inventory in price brackets of $300k to $450k as job losses, Alt “A” loan resets continue to accelerate foreclosures with little demand to acquire this inventory.  I see price brackets of over $450k to continue its downward spiral as jumbo loans to purchase such properties are not available at reasonable rates and conservatism has over taken Buyers in all price brackets.

 

As to the Henderson real estate market in general.  I see an “L” shaped recovery with prices rising approximately 3% per year beginning in 2010.  This is conditional on the Feds continuing to control inflation.  Should inflation set in then this number will grow.