Las Vegas real estate market report

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.

I have finished and uploaded the latest market study report for the third quarter of 2007.  This statistical analysis of the Las Vegas real estate markets should give you a good idea of not only what has happened but where things are going in this volatile market.

With is market currently in a state of flux, you will want to pay special attention to the trends and projections made by the experts. 

We will see much more change in the residential real estate markets here in Las Vegas over the next six months.  These changes offer some unique opportunities for Buyers that may not come available again for a very long time.

We all wish we would have purchased in the last real estate down cycle as those who did made a great deal of money.  This is not the time to wait for everyone else to start buying.  If you do wait prices will start to rise and you will have missed the trough in the down cycle.

You can find this video presentation by clicking on the Las Vegas real estate report video picture above.

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.

It appears that the foreclosure rates on sub-prime mortgages have continued to restrain the ability of qualified Buyers to obtain financing when purchasing a home.

   This has resulted in many fewer home purchases nationally.  As lenders try to determine how to estimate their portfolio losses and project further losses in the financial markets.

The Fed has reacted with short term interest rate cuts but this has not curbed volatility in the mortgage markets.

The losses in the mortgage sector could reach an estimated $2 Trillion dollars.  But in relation the dot com stock market bubble resulted in a $7 Trillion dollar loss.

The National real estate markets report some areas are still falling in pricing and volume while some areas of the country are actually appreciating.

See more by clicking on the picture above or this link to see this U.S. Real Estate Report video.

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.

The above chart shows price appreciation and depreciation in the Las Vegas residential real estate markets since 2001.  On average Las Vegas historically had a 5% price appreciation rate year over year until the boom in 2004. 

If the historical increases hold true and prices continue to fall it looks like we will hit a true un-inflated value of residential real estate some time in the first quarter of 2008.  This however does not automatically eliminate the over supply of home on the market.  It is very possible that in the short term prices will fall below the average appreciation line until surplus inventories shrink significantly. 

For those Buyers sitting on the side lines waiting for prices to re-adjust, this is good news as the wait may be only 3 to 6 months more. 

Remember as the new mega resorts on the Strip begin opening,  job growth will begin to spike.  Economists estimate for each new hotel room that opens in Las Vegas 6 new jobs are created to support it.  These jobs would include not only maids, casino, entertainment and restaurant jobs but also maintenance and support services for the workers that fill those jobs. 

This will create more people looking for home ownership at the new lower home prices decreasing excess inventories and eventually driving Las Vegas home prices towards appreciation once again.

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.

A few nuggets of FYI:

The downtown casino’s have settled on a new 5 year contract with the Culinary Union. Only a few holdouts remain in the Las Vegas Valley.  The most notable and problematic is the Tropicana which has had major problems with the unions since its takeover.  The word on the street is that the Union may soon strike putting further pressure on this old Queen that has yet to be renovated.  At this point Asatar has not come up with any decisive plan to rebuild on this site.  If this property were to have employment problems it could cause a great deal more red ink since the property cannot currently produce enough income to cover its debt load.  Hold on to your hat as we could see the Tropicana close while they figure out what to do with the property.

At the other end of the strip on the North East corner of Las Vegas Blvd. and Sahara, the old “Holy Cow Casino aka the Ivan Condo Tower” site has been sold to a quiet reclusive real estate investor from Arizona.  He said he has no plans for the site but felt it would be a good investment.  In my personal opinion this is investor speak for “I’m negotiating to buy more land around it or cut a deal with an adjoining property owner.”  It will probably be Spring before we hear any plans for this high rise zoned corner.

Near the Northwest corner of Sahara and Las Vegas Blvd. the Allure condominium Tower I is nearing completion and will start owner move-ins in the next few weeks.  The second tower has been moth balled until the market changes. 

The number of Las Vegas homes for sale keep rising as the Lenders continue to foreclose.  I personally have had several calls from home owners trying to figure their way out of the payment reset jamb from exotic mortgages.  It seems that the Companies such as Countrywide have not been returning their customers calls according to my source.  She stated that she has tried several times and left messages on their answering service but has yet to receive a return call.  It seems that perhaps the willingness of some of these companies to save people in foreclosure may be more “Public Relations” than earnest effort. Of course the above is my personal opinion and not any statement of fact.

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.

From 2004 through 2006 Las Vegas investors and residents took out approximately 150,000 high risk loans according to the Wall Street Journal.

As previously reported Las Vegas had an investor ratio of approximately 30% during that time. This translates into 45,000 investor loans and 109,000 primary and second resident mortgages.

Subpime loans amounted to approximately 23% of the total loans that were made during this 3 year period.

Most of these loans came with a 2 to 3 year reset period which translates into increased foreclosures in 2008 and diminishing through 2009.  

A great majority of the subprime loans will not reach the foreclosure auction block but if 25% due forclose that will result in approximately 37,000 homes needing to be resold with much tighter financing requirements.

The bright spot in all this is that in 2009 Las Vegas is going to have a shortage of employable workers and the 6,000 new residents it currently is welcoming may further balloon as people across the country learn about its need for workers.

My belief is that the last quarter of 2009 and first quarter of 2010 will once again see the market change and once again become a Sellers market.

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.

By now if you haven’t heard that the average price of a home in Las Vegas has decreased then its time you knew.

If you are like so many other investors or home Buyers you are probably standing on the sidelines waiting for the prices to quit falling and then you will swoop in and grab the deal of the century.

I have a few things you may wish to consider while sitting on the sidelines waiting for the market to change.

Let’s start by considering what is happening right now in the Las Vegas real estate market.  Five days per week there are approximately 100 properties being auctioned off at the Trustee Sale in downtown Las Vegas.  Of all these homes selling on the auction block only about 6 to 8 per week are being purchased by anyone other than the mortgage company who is doing the foreclosure.

With 500 homes going back to the banks per week where do you think they are being sold?  The Greater Las Vegas Association of Realtors Multiple Listing Service has a great many of these properties but they do not have them all.  Many properties are being wholesaled to Buyers at substantially lower than market prices.

The worst estimates by most economist suggest that Las Vegas real estate may fall in value by up to 16%.  If you could buy today at below a 20% discount would this mean its time to get back in the market?

What you need is a Buyers Agent in Las Vegas!

If ever their was a time you need a Buyers agent under contract to find you the very best deal, now is the time to hire one.

Yes, you may have to pay them a 3% commission but if they find you a deal at 30% below market that still figures a healthy gain for you of 27% in your pocket.  A deal like this would be virtually bubble proof.  These types of deals are available if your Agent knows how to find them.  Yes, they will require a lot of work but it will pay off for you in the end.

If you were the Bank selling these properties at 20 to 30% discounts and you saw indications that the market was leveling out or even starting to rise would you continue to sell properties at deep discounts causing your company more losses or would you change your policies and start requiring higher prices for your foreclosed homes?  If you care about your job you will raise the prices if they will still sell.

The point is the smart Buyer needs to buy while the market is headed down but in such a way as to insure that they have purchased low enough to insure that when the market bottoms out they have still make a great deal.  This is a possibility in the market today but as the market bottoms out, in the next 6 months, the market pricing will begin to firm up and deep discounts will disappear.

Use a contracted Las Vegas real estate Buyers Agent to help you find a home run deal today.

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.

If history repeats itself then the graph above can give us some sense of what is happening and possibly going to happen in the U.S. real estate market.  Case Shiller issued the above chart in July 2007. 

What makes this interesting is the historic last dip in the market we experienced in 1990.  If you will take note we seemed to find the bottom of that market in 1991.  This lead to another smaller decline culminating in 1993 and a second decline in 1996 which then brought the market back to a zero basis and the beginning of the last historic climb from late 1996 through 2005.

Beginning in 2005 the real estate markets began to slide and are continuing their decent and now with the lending markets in turmoil we will see further slides until either the mortgage companies wake up and decide to renegotiate their contracts with their debtors on all the exotic loans they handed out, or they simply go broke and other mortgage companies step in and take up the slack.

No matter what happens in the mortgage market it looks like from an historical perspective we will continue to see prices slide and the market continue to slow at least through the first quarter of 2008.

We in Las Vegas have other factors to consider in this real estate roller-coaster ride.  A major consideration is the investor factor.  In 2004 and 2005 we had almost as many short term investors putting money in our real estate market as we did visitors betting on the blackjack tables.  It is estimated the half the real estate sold in those two years was sold to investors.  This means that a vast amount of oversupply in real estate is on the market due to investor gambling and much of this inventory is not occupied.  These propeties are surplus inventory.

With 6,000 people moving in to Las Vegas each month you would think we will eat up this excess inventory in a hurry and eventually we will, when these new move-ins decide the market has bottomed out and its time to buy. But for right now most are renting!

So where does this down cycle end? For we here in Las Vegas it looks like we will be experiencing a shortage in the work force in 2009 when 45,000 new hotel rooms come on line.  Employment Security is estimating the need for about 110,000 workers and estimates a shortfall for the available jobs coming up.  This may lead to a competition for good workers leading to increased income.  This means we could see new qualified Buyers in the market place looking to Buy a home in late 2009 and early 2010.

Keep in mind that we still have all those Buyers that are out their renting now.  If they don’t purchase before this employment flood in 2009 they very well may find themselves not getting the deal they were waiting for but may have to buy in an appreciating market.

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.

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.

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.