Las Vegas Market - Unchartered Waters
Las Vegas entered unchartered waters at the beginning of 2012. It was believed that the first half of the year would be an improvement over the past couple years.
The second half would be "iffy" because of the banks and the loan servicers response to the National Mortgage Settlement Fund (NMS) and Nevada's Assembly Bill 284.
It is apparent that the low home inventory has benefited the new home inventory. Never before has there been such an absolute change in the supply and demand of homes in such a short period of time.
Numbers Numbers - And More Numbers
462 new home sales were recorded in July. The increase over last year is 515 or 26% more new homes sold! The total of new homes sold through July is 2,517. The median price of new homes is now $194,270.
Last year the median price was $198,518. The median price declined 2%. Las Vegas is still considered a declining market. The value opinions vary from appraiser to appraiser and underwriters have their opinions as well.
There were 543 new home permits issued last month.3,437 new home permits were issued through July. The year to year increase is 49%! There were 4,043 recorded resale homes in July.
29,669 homes have been sold through July. The year to year increase is 11%! The median price of the resale home is $122,500. The median price has increased for 5 straight months this year.
Year to year, that is an increase of $12,600 or 11.4%. For entire metropolitan area this year, the median price has risen by $17,500 or 17%. In many sub markets the increase is greater and in others it is less.
Multiple Listing Service - Listing Prices Are Increasing
The Multiple Listing Service (MLS) data shows that the new listing prices are increasing. The price per square foot of a resale home rose 3.2% on a month to month basis. Year to year, the price per square foot rose by 15.1%.
The gap between the new and resale median prices is getting smaller and smaller as new home prices decline and resale prices increase.
In a normal market the gap is less than $30,000. The current gap went from $88,618 to $71,770 in July. Las Vegas has a way to go before the market can once again be called "normal". In 2010 the median price was $124,000. In February of 2012 we bottomed around $107,000
Prices - Now Higher Than In 2011
This report shows the category of the homes that were listed on the MLS as of July 2012.
Active means that the home is available for purchase without an offer.
Contingent means that there is an offer that is contingent upon the Buyer's due diligence for inspections and/or financing approval.
REO homes are the foreclosures.
Regular homes are homes that are not REO or short sales.
The Las Vegas housing market is 68% short sales per the chart above. The average time to close a sale is 108 days. Foreclosures are down to under 10% of the active market.
The banks have concluded that foreclosures are not as good for their bottom line as short sales. There is a different mindset with the banks now. The limited inventory causes prices to go up when the short sale sells.
National Mortgage Settlement - (NMS) Something To Consider
According to the Wall Street Journal, $20 billion in "credits" consisting of $17 billion in principal write-downs, and $3 billion for refi's are available for the banks to receive from the government to help homeowners.
There is also another $5 billion for cash payments to borrowers who were foreclosed on from September 2008 through December 2011 at $2000 per borrower.
Nevada's share of this fund is approximately $1.4 billion. How will this affect the home market in Las Vegas? The NMS ends in 2015. We will continue to have more demand than supply. A continued slow growth looks promising for Las Vegas.
Many other factors will contribute to the future economic growth and jobs including the up coming elections.
Small buisnesses will boost employment depending on the elections. Increasing demand for housing will keep new home builders hiring contractors.
The short sale swing also puts money into the local economy. People who are not making mortgage payments are either saving their money or making purchases.
There are signs that credit scores are not as affected with short sales as earlier suspected. That makes purchasing a home easier.
There is a growing number of home owners that want to move up to a larger homes. Also a growing number of first time home buyers that are ready to purchase now that they see the prices going up for the past five month instead of the prices going down.
Return On Investment - Attracting Cash Investors
The investors return on real estate investments (ROI), continues to attract cash investors who are keeping the rental market healthy and competitive.
Around 50% of the homes sold are being paid for with cash. Cash is solidifying the Las Vegas real estate market. Cash insulates Las Vegas from a future foreclosure market. All of these sales are boosting the property tax income for the local government.
Buying a home today in Las Vegas looks like a heck of a good deal!