There are Always two ways
to look at something…
From today’s Las Vegas Review Journal:
Welcome to the RainForest Cafe
Las Vegas Housing Market Still Looking Gloomy, Analyst Says
“
Driven mainly by investors buying foreclosed homes, sales of existing homes in Las Vegas jumped 47.2 percent in 2009 to 44,885 closings, the second-highest number on record, Home Builders Research reported.
On the flip side, new-home sales plummeted to 5,271 in 2009, about half the number from 2008 and an incredible fall from a high of 38,957 just four years earlier.
You’d have to go back to the 1980s to get to 5,000 (new-home sales),” Home Builders Research President Dennis Smith said Wednesday. “Now, how soon will it be until we get to 10,000? Let’s just say it’s going to be a while. It’s going to be years.”
The Las Vegas housing analyst said he doesn’t know of any possible scenario that would suggest things are going to improve drastically over the next year. There are too many negative factors and not enough positives, he said.
Hmmm… well quite honestly… I’m surprised Las Vegas New Home builders sold that many new homes to begin with when you take in the big picture. There was no shortage of inventory for Las Vegas for the first six months of 2009 and New Home builders certainly were not competitive in pricing. I would bet right here that the majority of those new home sales started up in the second half of the year as the Bank Owned homes Inventory started dwindling and Quality Bank Owned homes were gone within hours of being listed for sale.
So… is it really an “incredible fall” from 38,957 just four years earlier? Or was that period of time Overbuilding to begin with? My money is on the overbuilding fueled by lax lending standards and false appreciation hopes.
Now… ask the majority of those New Las Vegas Homebuyers why they bought brand new in 2009 and you’ll pretty much get a resounding
Because We Got Tired of Losing Out on our Offers on the Bank Owned Homes or Tired of Waiting for Las Vegas Short Sales to be Approved.
I don’t think I had one request in 2009 to look Just for New Homes unless it was from a couple of investors who wanted to do bulk deals at a significant discount. Ok… let’s go on.. from the Article:
Some analysts predict prices will drop further in Las Vegas when banks release their so-called shadow inventory of foreclosures, or homes in default that have yet to go to trustee sale.
Las Vegas Realtor Robin Camacho doesn’t buy into the “double-dip” theory. She expects to see real estate-owned, or bank-owned, home prices remain flat for the next three to four months.
I agree with Robin here. If the Banks are holding on to this so called shadow inventory there is no shortage of buyers for Las Vegas Real Estate from all over the country to buy it. I’m wondering how many trees were wasted today on offers that will not get accepted from the bank. I think I wiped out an entire forest in December writing up offers. Sorry… blame it on the banks for the 90% of the offers that did not get accepted. (And they were good offers.)
Here are where my out of state requests for information on Las Vegas homes came from just today:
-
Welcome to Fabulous Las Vegas
Hawaii
- Alberta, Canada
- California
- Chicago, Illinois
- Mexico
Who knows if they will actually buy… but they are certainly looking and that’s a start.
“Las Vegas may see a slight drop in overall prices over the next few months, but this is because the price of short sales and privately-held homes are coming more in line with the price of recent REO sales,” Camacho said. “Since appraisals are based to a large degree on recent sales and the majority of sales are REOs, this is holding down values.”
This is one of those interesting statements concerning REO (Real Estate Owned, aka Bank Owned) homes… when over 60% of the sales are REO homes… are they bringing down the value or are they priced at market value? Just because it is an REO home… does not mean it’s going to sell. It’s all about the price… Banks are getting multiple offers on their nice properties priced right… trust me and the forest I wiped out in December. Buyers are determining market values at this point of the game which is why you’ll more often then not… hear a new Las Vegas Homebuyer say they bought new… because they could not get an accepted offer on a REO home. REO homes bring down values when there is no market activity and the asset managers give the order to whack the price down until the home does sell. One of the great things about real estate is there is always a price that will sell it as long as it’s not radioactive.
Now.. I certainly know there are so many factors going on with New Las Vegas Homes keeping them from having the ability to really price their homes competitively but I can certainly guarantee you if it was not for those outside factors and if they could price their homes even more competitively … we certainly would not have a gloomy headline created from what somebody paid by New Home Builders says.
Because… it’s all about the price when it comes to dynamic cities such as Las Vegas. Just like I Said way back in November of 2007 when it came to New Home Development in Lake Las Vegas.
Something else to Consider
Just for giggles… Let’s say prices do go down another 5% from Decembers Median Resale Price of $123,000… that equates to a loss of a $6,150. Quite a big difference from the days when the median sales price was around $300,000 or what would equate to a $15,000 loss on a 5% drop.
So a buyer decides to wait because they think prices will go down 5% for a home they like that’s priced at $123,000. They hit the jackpot with their thinking and the asking pricing drops to $116,850.. all financing scenarios the same… this equates to a win of saving around $33 on their monthly mortgage. Let’s say they get really lucky, hit the jackpot and the price drops 10% from the $123,000 price to $110,700… all financing scenarios the same… looks like they’ll save around $66 a month taking that chance. (Keeping it simple.)
I’m certainly not going to say it can’t happen… but at this point of the game… how much more is a buyer going to pay in rent waiting to take that chance?
Is the reward worth the risk of waiting?
Paul Francis, CRS
Prudential Americana Group – Realtors
Las Vegas Real Estate
702.592.3058
