Ah, yes. The dreaded so called annual “Las Vegas Appreciation” map per zip code has been released by the Las Vegas Review Journal as promised in my Las Vegas Median Home prices post back on the 17th.
Obviously, you know my feelings about the media concerning Las Vegas real estate values. Let’s just put it this way, I’m a firm believer that if you want to learn about jewels, you don’t ask a brick layer. (If you know what book that came from, you are my type of client!)
As highlighted, there is a lot of confusion that comes along with this annual release that is distorted by the Las Vegas Review Journal in my opinion. The creator, Larry Murphy even highlights this fact with the following quote:
“I’ve said before that there’s nothing sacred about the ZIP code appreciation map,” Murphy said. “We just do it that way because it’s convenient and interesting.”
The Las Vegas Review Journal however loves to add headlines such as “REAL ESTATE: Down, down, down” and providing charts such as the one below.
As stated before in a previous post, these are a comparision of the median home prices in Las Vegas zip codes in comparison to the year before. For Las Vegas real estate, there are several sub factors such as neighborhooods within a zip code and it’s not uncommon to find a $5,000,000 home in the same zip code as a $200,000 home.
I found this statement by the Las Vegas Review Journal extremely humerous:
Some areas defied the odds. ZIP code 89109, with 178 sales in the second half of the year, showed 46 percent appreciation from $349,515 in 2006 to $510,000 in 2007. 89011, with 315 sales, was up 19 percent to $332,500. Both ZIP codes had boundary changes.
There is nothing defying about this if you read my previous post and why this is the precise reason as to why I dread this map to begin (Could this zip code possibly have ”defied” the odds because of the ”secret” opening of the brand new East Tower of Turnberry Towers in 2007? Call George Knapp to investigate!)
In my opinion, it’s very misleading and causes more confusion then anything and a big part of that has to do with all of the headlines that the Review Journal likes to associate with this map.
Defied the odds? Hardly — you just need to know why and I certainly know the reasons why these zip codes “defied the odds” and it’s a simple explanation that COULD have been included in the original news article.
In other words, the map is an interesting and “entertaining” way of looking at real estate values and I sincerely hope that true real estate professionals are not misleading clients with this information. Unfortunately, the subject lines of the e-mails from services such as title companies being forwarded to me suggest that this map really is a true sign of appreciation or depreciation for Las Vegas Real Estate.
Something very disturbing that came to my attention today is the use that the depreciation values are being used to calculate future values of Las Vegas homes. In other words: “Your home is worth this amount today but according to these depreciation values, your Las Vegas home is going down 20% per year so it will be worth 20% less next year.”
That’s as ludicrous as using the 40%+ appreciation rates for Las Vegas in 2004 to perform future valuations on Las Vegas real estate. “You can buy this home for $400,000 and next year it will be worth $560,000 because the appreciation rates are at 40%!”
I have not been a big fan of this ”appreciation map” for years and that certainly included the days when I would get calls from want to be Las Vegas real estate investors in ‘04 wanting to chase the hot zip code because it had the highest appreciation rates on ”the appreciation map of Las Vegas”.
For your entertainment value only, the latest Las Vegas Appreciation / Depreciation map is below.
Interestingly, I’m probably going to dig up the older versions of the Las Vegas Appreciation Maps and do a comparison on the amount of foreclosures in the previously “hot” Las Vegas zip codes as reported by the Las Vegas Review Journal.
Paul Francis, ABR,CRS | Coldwell Banker Premier | Las Vegas Real Estate | 702.592.3058
March 13, 2008 at 2:03 pm
[...] you a good idea of how much prices have come down. (Rhodes Ranch is in the 89148 zip code if the Las Vegas appreciation/depreciation map means anything to [...]