Las Vegas Home Value Stability impossible

to predict until Distressed Homes are gone.

Will Las Vegas home values go up, will they go down? Make sure you read my latest report on Las Vegas valley home values in response to a recently released study that predicts Nevada Home Values to fall another 12% before stabilizing.

The first time homebuyers tax credit is over and has been for several months now. Las Vegas real estate inventory available for sale is going back up and the total amount of inventory currently available on the Las Vegas MLS for Las Vegas, North Las Vegas and Henderson (aka the Las Vegas Valley) is:

• 15,939 Single Family Homes, Condos, Townhomes and Manufactured Homes
• 519 High Rise Condominiums. (Condos in buildings over 4 stories high.)

Unfortunately, the timing of the first time homebuyers tax credit was all completely wrong as distressed homes or homeowners owing far more on their mortgage then the home is worth were going through the process of foreclosure. In other words, Las Vegas home values were still in the correction process and working through the system while a program was put in place to entice buyers to catch a thrown knife.

I know plenty of potential home buyers that wanted to buy when the first time homebuyers tax credit was available, but lack of quality inventory of well priced homes prevented them from buying so they gave up after going through the frustration of competing with other buyers and multiple bids on the decent Las Vegas homes that were available.

Sure… plenty of Las Vegas homes were purchased during the available time frame for the $8,000 tax credit, but FAR more could have been purchased if the distressed inventory was allowed to be worked through and put on the market.

Now the tax credit is over (officially over on 04/30/2010 to have a contract of sale)… and the Bank Owned Inventory for Las Vegas available for sale is going back up.

Bank Owned Homes Available for Sale

Notice that in April there were 1,281 Bank owned Single Family Homes, Condos, Townhomes and Manufactured homes available for sale on the Las Vegas MLS.

Today.. there are 3,480 Single Family Homes, Condominiums, Townhomes and Manufactured Homes owned by the bank currently available for sale on the Las Vegas MLS or a 272% increase.

I’m not even going to mention all of the Las Vegas short sales currently available for sale. (Ok.. over 7,700…)

Here is a breakdown of the REO (Real Estate Owned aka Bank Owned Real Estate) currently available for sale in the Las Vegas Multiple Listing Service just covering the Las Vegas Valley. (Las Vegas, Henderson and North Las Vegas.)

• 2,689 – Single Family Homes
• 506 – Condominiums in buildings less then 5 stories high.
• 264 – Townhomes
• 56 – High Rise Condominiums (Buildings 5 stories plus.)
• 21 – Manufactured Homes
• 16 – Multi-Family Properties. (2 units or more.)

Total = 3,552 Bank Owned Properties for Sale on the Las Vegas Multiple Listing Service (MLS).

Obviously when banks do finally put a property up for sale after taking it back, they want it sold. When a homeowner is selling their home and owes far more then what it’s worth (Short Sale)… they want out of that overpriced mortgage and for the most part, will do what it takes to get it sold which often means reducing the price.

Foreclosure moratoriums only delay the inevitable. Eventually a distressed home is going to hit the market and it’s going to get sold one way or another.

So… when is it all going to end to return to a Normal

Real Estate Market in Las Vegas?

Impossible to determine as long as there are a large amount of Las Vegas homeowners out there with mortgages higher then what their Las Vegas homes are worth which is currently estimated at around 80%.

The good news is that the percentage of Las Vegas homes with no mortgage is also growing. Over 40% of the homes purchased in the last year and reported on the Las Vegas MLS have been with CASH.

It’s also fair to say that with home values so low and mortgage interest rates so low, that the homes purchased in the last year where a mortgage was taken out, that the monthly mortgage payment is far lower then the current rents in the immediate area. Sure.. there are probably plenty of them who have already lost equity and now owe more then the home is worth, but the mortgage payment is still probably lower then if they were going to go out and rent the same home down the street.

In other words, the 80% of Las Vegas homeowners owing more then their home is worth is not nearly as important as the number of Las Vegans with a mortgage payment FAR higher then comparable rents.

That’s the REAL number we need to know and I have yet to see any credible reports that have come up with some realistic number.

Are Foreclosure Reports Any Big Deal?

For Las Vegas real estate at this point of time I have to say no. Great for headlines from the national media and all of the foreclosure report services out there trying to make a buck with foreclosure searches (Search Las Vegas Bank Owned Homes for Free right here) but pretty much irrelevant for the Las Vegas home buyer and seller.  The correction is going to take place no matter what program is put in place. Maybe the program will delay the correction, but the correction is going to take place as evidenced by what has and is happening with Las Vegas real estate after all of the programs.

Sure… home values may go down in Las Vegas another 12% or even more but at this stage of the game that Las Vegas is in, does it really mean anything? Read Las Vegas Home Values still going down.. big deal and let me know what you think.

I’d be more worried about the numerous real estate markets out there across the country that have not had a chance to even reach half way through the correction process and it’s still cheaper to rent then buy.

In the new economy… it’s all about the cash flow.

Paul Francis, CRS
Prudential Americana Group, REALTORS
Las Vegas Home Values
702.592.3058