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March may have come in like a lion in other areas of the country, but for the Las Vegas residential real estate world, it was like a lamb.

While Las Vegas’ March 13.3% unemployment may not be something to celebrate, it is the lowest mark since December 2009. The state reported a year over year employment increase for the first time in 39 months.

Unfortunately, first quarter residential housing statistics for the Las Vegas market contained little additional news that would suggest a recovery is imminent. Virtually every number that suggested change could be on the way was offset by a corresponding negative number.

For example, the number of existing home sales did jump (5.6%) to 5,114 in March, even as prices slid to their lowest totals in nearly two decades. But, significantly, more than seven out of ten of those sales were distressed properties. The 2,131 foreclosures sold at $106,500 represent 41.7% of the existing home sales. The 533 auction sales at $93,500 represent 10.4% of the sales. And, 929 short sales at $120,000 account for 18.2%. In short, existing home sales improvement was the product of distressed property. More than half were cash sales. Almost four out of five were vacant.

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New homes sales continued to lag behind last year. First quarter new home sales lagged last year by 41% at 781 total. The March tally of 279 sales was just 10 units above February and prices for new homes rose slightly to $195,950. (February was their lowest price point since 2002.)

While prices and sales are always major measures of a market’s potential, inventory is the most telling component. There were 2099 bank repossessions in March – the highest total since last April. Yet, the number of REO’s held by financial institutions continued its very slow decline, reaching its lowest point since last May (11,684).

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MLS inventory remained stable at 14,269 with roughly half of those homes listed as short sales. The number of new home subdivisions was also stable at 239, and the number of closings per subdivision averaged just over one per month.

Are these numbers likely to change? If so when, and what has to happen to make them change? Answers to those and other questions will be discussed at Crystal Ball this Thursday, April 21, at the Alexis Park Resort (375 E. Harmon). Speakers include Mayor Oscar Goodman, Frank Wyatt, president of the Southern Nevada Homebuilders Association and Larry Murphy, president of SalesTraq. There will be a question and answer period following the presentations.

You may pre-register for $29 on line at http://www.crystalballseminars.com/nev ($39 at the door) Each attendee will receive a complimentary copy of the SalesTraq Q1 Las Vegas Housing Summary, a $125 value.

Hope to see you there

Respectfully submitted,

Steve Bottfeld, Marketing Solutions

Larry Murphy, SalesTraq™

©SalesTraq 2011

There’s an old expression: “There’s light at the end of the tunnel.” People forget that sometimes that light could be an oncoming train.

For those who hoped Las Vegas would enjoy a speedy housing recovery, February data will come as a major disappointment. Nearly every facet of the residential market is at or near a bottom.

Perhaps the most damaging statistic is this: Just one out of every five existing homes sold in the month of February (22.5%) was non-distressed. The balance consisted of short sales (21.7%), auction sales (10.3%) and foreclosures (45.5%). Financial institutions repossessed a total of 943 homes in February. While that number is considerably lower than January’s, it is still 5% above last year.

The median price of an existing home rose slightly ($1,000) over January, but is still a depressing $110,000 – about the same pricing level the market experienced in the early 1990’s.

New home pricing dropped to a nine year low at $188,900 – a figure not seen since November 2002.

The number of new home subdivisions continued its slow rise in February to 236, one more than last month. Not surprisingly, sales of new homes were better in February than they were in January … but, again, not by much. The 269 unit total was 22.3% below last year. Note that January had the lowest average sales per subdivision in this century. February was only a slight improvement at 1.14 units.

Perhaps the most surprising statistic was that existing home inventory slid nearly 1,000 units from January’s 15,334 to 14,401 in February. In our view, that decline may have been caused by people taking their homes off the market until prices improve.

More than half of the homes listed on the MLS (52%) are identified as short sales. The inventory of foreclosed homes held by financial institutions also dropped slightly from January’s 12,420 to 11,716 in February. The positive here is that the inventory of foreclosed homes has decreased steadily since June. The negative is that the decrease is just 12.4% over that time period.

These statistics suggest attendance at the April 21 Crystal Ball Seminar at the Alexis Park hotel might be a very good idea. Called “Survival Strategies in Today’s Housing Market,” featured speakers include Mayor Oscar Goodman, SNHBA president and president of Pinnacle homes Frank Wyatt and Larry Murphy, president of SalesTraq. To register on line go to www.crystalballseminars.com.

The key to success is knowledge. Unfortunately, we do not find these numbers encouraging. But, this is the reality we have to deal with. Now is the time to review your survival strategies. Hope to see you on April 21st.

Respectfully submitted,

Larry Murphy, SalesTraq™
Steve Bottfeld, Marketing Solutions
©SalesTraq 2011

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A few key points to consider in February’s numbers—

1. Inventory dipped below 15,000 units for the first time since September 2010. And the decrease in total inventory by over 500 units is quite significant when compared to the past year……even longer.

2. Total pendings increased for the second straight month after 8 months of declines. This may be evidence of the seasonal adjustment that we experience every year during the March through July months or maybe it is a sign of something greater. We will monitor this in the coming months.

3. Closings are up 10% versus last year at this same time. Remember, last year had the benefit of the homebuyer tax credit to fuel sales. The fact that closed units are up versus this same time last year, and there is no tax credit inflating those numbers is a good sign.

4. Cash transactions are still increasing—53% of all closed units last month. Wow! Investors are running wild. Smart money is on the loose. The positive cash flow opportunities in the Las Vegas real estate market are being noticed worldwide. And, they are being acted upon.

5. 85% of all closed units in the month were priced under $200,000. And only 44 total closings were priced over $500,000. I just searched for the number of listings currently on the market in Las Vegas, priced over $500,000. There are 878….or 20 months of inventory. Ouch! This is a pretty good sign that the luxury home market may see further downward pressure on pricing.

Finally, and unrelated to the numbers, last month, two clients unexpectedly received letters from a major lender that was their first lien holder at the time of their approved (but deficiency not waived) and ultimately, closed short sale. The letter basically stated that the lender had good news for them. The lender was announcing in the letter that they were not going to pursue the deficiency—that they were releasing the client from all future claims. Why is this happening? Single action State? Lender receiving economic incentive for doing so? I don’t know. I am asking you. If you know (I know you do, Steve), or if you have ideas, please share. Very interested.

Until next month………….be well.

Regards,

David

First, REO inventory declined in January to just over 3,000 units after climbing each of the previous 10 months. And, as could be expected, REO pendings also increased by about the same amount as inventory declined. Short sale pendings increased—first time in 9 months. And finally, overall pendings increased—also for the first time in 9 months. Signs that sales activity is not declining, but may be gaining momentum. We shall see.

Second, REOs only makeup 19.79% of the available inventory in Las Vegas. Short sales still dominate the landscape with over 50% market share of the available inventory. As we have been reporting, inventory is very stable—only increased a few units from the previous month.

January Las Vegas real estate stats

Closed units were down from the same time last year, but only by 2%. Another good sign. We will truly begin to see the impact that the tax credit had on sales during the first half of last year as we compare it to these next few months of 2011.

January Las Vegas real estate Pie

January Las Vegas real estate graph

Finally, and as you may have seen in Hubble’s excellent article from earlier this week, cash transactions finally crossed the 50% of total sales mark. Cash sales make up more than all other types combined. Wow. What will these investors’ exit strategies do to the future recovery? Not much being said about that to this point. But, it will certainly have an impact on the timing of the turnaround and at what pace prices will climb once they begin doing so.

Have a great month!

David Brownell

Broker-Salesperson

Las Vegas, Nevada

Happy New Year! Well…..another year of living the Las Vegas real estate dream has come to a close. And, we’re all still here. At a minimum, let’s raise our glasses to that fact. That alone speaks volumes. So………..Cheers!

2010 was a year without a lot of surprises. Things stayed pretty constant throughout. Those who projected the beginning of a turnaround (was there anyone who took that side?) were left to grasp a few glimmers of hope that came to pass and those who warned of another year of further crashes throughout the market – the Gloom and Doomers – were also off the mark.

The home buyer tax credit, which many worried was artificially propping up an otherwise much worse market, came to an end. And while we agree that we did see a slowdown in closed units in the months that followed, certainly, those numbers did not dip to the lows that were being presented at that time.

Hopefully, the 2011 Las Vegas real estate market will begin to show signs of a turnaround. However, I believe that we will probably see another year very similar to 2010. Of course, massive job creation or a spike in interest rates could move the pendulum in either direction, and quickly.

Here’s what I noticed as I reviewed the end of year statistics as well as each month’s numbers throughout the year:

1. Inventory is climbing. December was the first time that available inventory had declined since April, but it is up 50% from the same time in 2009. REO and Short Sale inventory climbed 58% and 68% respectively over that same period. The available inventory is showing signs of stabilization. From August through December, the available inventory has remained between 14,119 on the low end to 15,353 at the upper end.

2. Contingent and Pending properties are down. Since April, this number has been trending downward, from 16,193 in April to 10,849 in December—a 33% decrease. For the year, the number of contingent and pending properties is down 17%.

3. They’re baaaaacck. The next wave of REOs may be upon us. In December, there were 1,880 REO closings—the highest number since March 2010. We shall see.

4. Final Short Sale numbers proved us wrong. Earlier in the year, I predicted that Short Sales would pass REOs as the largest portion of closed units in a given month. They got close, but did not quite make it. In June, REO closings were 38% of the closed units for the month and Short Sales were over 34%. However, the spread started moving back the other way in July, and at the end of the year, REOs were back to 50% of the closed units and Short Sales had declined to 26%.

5. There is one other thing to note about Short Sales in 2010. While the general perception is that Short Sale successes are on the rise, a closer look at the numbers shows this is just not the case. Overall, Short Sales are successful between 8 – 12 % of the time, or 1 out of every 8 – 12 Short Sales actually closes. This statistic has remained pretty consistent over more than just these past 12 months. Many theories abound. I will save that for another discussion.

6. Finally, distressed sales (REO and Short Sale) continue to dominate the market. They comprised 77% of the closed units in December 2010. This number has been as high or higher for some time. With the number of homeowners underwater at around 80% and Las Vegas having the highest percentage of distressed assets in the United States, look for things to remain the same for awhile. The turnaround everyone is looking for may still be a few years away.

Thanks for your continued support and readership. I really enjoy sharing every month. And again, Happy New Year!

David

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“The Cosmopolitan is about creating a resort experience set apart from anything that exists right now in Las Vegas,” says John Unwin, CEO of The Cosmopolitan. “When you combine spacious suites, high design from talent like David Rockwell, a carefully curated award-winning dining collection, unparalleled service and gaming, we know guests will enjoy an experience that harkens back to an era when guests felt connected, inspired and engaged by their resort.”

Situated at a desirable center-Strip location, The Cosmopolitan’s uniquely vertical multi-tower design on just 8.7 acres of land boasts sweeping views of the Las Vegas skyline, allowing guests to feel that they are truly at the epicenter of the vibrant city while maintaining a boutique style footprint.

The 50-story East and West towers comprise oversized hotel and condominium-style rooms ranging in size from 730 square feet to over 5,400 square feet in addition to ten three-story bungalow-style suites adjacent to the west pool deck. Contemporary bespoke room décor by David Rockwell will feature spacious living areas, luxurious bathrooms, a hundred small but unique touches, and many with expansive terraces with dazzling views of the Strip. Each room features state-of-the-art technology control panels, plasma-screen televisions, entertainment system, wireless internet and a custom in-room bar. The oversized bathrooms offer moments of unexpected tranquility combined with breathtaking views —Japanese soaking tubs, rain showers and marble floors complete the guest bath experience.

The Cosmopolitan of Las Vegas offers culinary concepts from some of the country’s top chefs and a roster of dynamic, new-to-Las Vegas restaurants. To date, the prestigious lineup will include: Blue Ribbon Sushi Bar & Grill by restaurateurs Bruce and Eric Bromberg; China Poblano and Jaleo, both by Chef José Andrés; Comme Ça by acclaimed Los Angeles Chef David Myers; international restaurateur Costas Spiliadis’ Estiatorio Milos; Holsteins, an exciting new burger concept from Block 16 Hospitality; Scarpetta and D.O.C.G., both by award-winning chef Scott Conant; and popular steakhouse STK from The ONE Group.

1. In June 2010 we saw 983 new home closings – - about double the 515 in May and the 408 in July. The reason: The expiration of the $8,000 home buyers tax credit was June 30th.

2. This month we saw Short Sales listings in the local MLS break the 50% mark for the first time. The reason: Banks are showing a preference for the Short Sale over the Foreclosure Sale.

3. This month we see 951 Bank Foreclosures, less the half of the 2,195 we saw in October, in fact, less than half of the 1,900 we’ve averaged for the first ten months of this year. The reason: the much ballyhooed but short lived foreclosure moratorium highlighted by the “robo-signing” scandal which broke in September and October.

Does that mean that we can expect bank foreclosures to snap back to their normal level of about 1,900 next month? Probably not, because of three factors:

1. It’s the Christmas season, and apparently even the Scrooge Banks have some heart . . . December 2009’s 1,325 foreclosures were the fewest for any month that year.

2. Some lingering, left-over robo-signing effect from previous months.

3. But the main reason: banks are finally realizing that they are better off pursuing short sales than they are pursuing foreclosures.

According to Fitch Ratings, “Loss severities are expected to increase between 5% and 10% on residential mortgage-backed securities in 2011 as loss mitigation costs and foreclosure expenses go up.” This is a national trend, and we believe it is part of the solution to our current housing crisis.

Just look at November’s numbers regarding types of sales in the existing homes market:

SHORT SALES 824 $125,000

AUCTION SALES 308 $91,000

REO SALES 1,597 $111,000

NON-DISTRESS 1,187 $119,900

Notice this; not only did Short Sales fetch more money than REO sales, they also sold for more than the Non-Distress (Normal) sale! When we look at a YTD comparison, we see Short Sales at a median price of $123,000 and Normal Sales at $125,000.

Here’s what’s happening, in our opinion; The fact that the majority (70%) of all sales are in the Distress Sale category dictates the pricing for ALL categories. This is unfortunate for the non-distress homeowner who is trying to sell his home, but the “inconvenient truth” here is that there are many homes for sale today in Las Vegas (78% of them vacant) and the buyer doesn’t care who owns it, or why they are selling it. All the buyer knows is that he can buy the typical home in Las Vegas today for $115,000 (the median price of all types of resale homes last month.)

Because we see another year or two of distress properties coming on the market (Remember 16% of homeowners are more than 60 days delinquent on their mortgage payment and 75% are underwater) prices are likely to remain suppressed for the foreseeable future.

However, we predicted at last January’s Crystal Ball Seminar that we “Would NOT see a tsunami of foreclosures” in 2010, and that has proved to be the case. We noted that the banks at that time appeared RELUCTANT to foreclose on homes expeditiously, and that many people where still living in their homes many months even a year or more after they stopped making their payments. Why? Because banks sensed the very precarious nature of the housing crisis. They realized that aggressively proceeding with foreclosing as their first remedy would be self-defeating, driving prices down both lower and faster. That’s the reasoning underlying the short sale. Leave the homeowner in the home, let him maintain the home, and help him out of his underwater condition.

All of leads us to this question, “If the banks today are willing to adopt a Short Sale philosophy (as opposed to a Foreclosure mentality) so that a buyer can purchase the home for less money than is owed against it, why are the unwilling to do (in effect) the same thing for the homeowner himself via an outright principle reduction?”

For the answer to this and other mysteries of the Las Vegas housing market, come to the Jan 20, 2011 Crystal Ball Seminar for only $29. Coffee bar and registration from 7:30 – 8:15 am, presentations from 8:15 – 10:00 am at View 215.

We wish you and yours a happy holiday season and a better New Year!

Respectfully Submitted,

Larry Murphy and Steve Bottfeld

SalesTraq™ and Marketing Solutions

©SalesTraq 2010

Yet, there is good news. Las Vegas visitation and room rates both increased in October. Airport traffic is up. Unemployment has eased considerably (down .9% over last month). And, a recent Harris Poll found Las Vegas to be the third ranked city that people prefer for relocation. But, October data shows the real estate market is still very far behind what appears to be the changing economic fabric in Las Vegas.

In October, median existing home prices slid to just $113,000, the lowest since 1994. That’s sixteen years ago! Seven out of ten (70%) existing home sales are classified as distressed (Auction, REO, or Short Sale). Almost four out of five (78%) of the homes sold through the MLS system were vacant, and 44% sold for cash. (Add those sold for cash at auction, which are not included in the MLS stats, and approximately 59% were sold for cash).

If we agree that the distressed sales are responsible for driving prices down, then when do we expect to see distressed sales abate? Not for some time, given the steady stream of bank repossessions which continue, month after month, year after year. For example:

2008 25,000

2009 24,000

2010 19,000 (YTD)

Add to that the estimate that 16% of all borrowers are now late on their house payments and there could be an additional 50,000 future foreclosures entering the pipeline. Prices cannot recover until distressed sales are a thing of the past. New home construction cannot recover until 78% of homes sold through the MLS being vacant are a thing of the past.

It should come as no surprise that October new home closings slid to their second lowest total this year. The 325 total was 31.6% below last year and 27.5% below September. And, 25 of those sales were Hi-rise or mid-rise product. Year over year existing home sales totals slid 21.5% to 4,053. That number is 5.9% below September and the third lowest total this year.

What else happened to sales in October? The expiration of the $8,000 homebuyer tax credit on June 30th imposed a negative impact on the second half of the Las Vegas real estate year. Simply stated, that program appears to have stolen buyers from the future. Indeed, June was the zenith for both new and existing home sales for this year. October, November and December will all feel the impact of that program’s demise.

Not surprisingly, both New and Existing home inventory increased in October.

There were just 277 new home permits drawn in October, the second lowest total of the year. Builders appear to be playing 2011 very close to the vest. The number of available listings on the MLS rose 4.9% to 15,789. That number is 49% larger than October of last year. And, at current sales rates, there is at least a 4.6 month supply.

As we said earlier, the number of foreclosures has a major impact on the market. In October, foreclosures increased 10.1% over September to 2,196, but were 5% below last October.

What will change this situation? How do we deal with a future that promises great difficulty? Those questions will be addressed at the next Crystal Ball on January 20. To register now, go to www.crystalballseminars.com

In order for the housing market in Las Vegas to recover, first the Las Vegas economy must recover. We are seeing signs that this is, in fact, happening. Along with economic recovery comes job creation, and with job creation comes something we’ve been missing since 2008: POPULATION GROWTH! Clark County has actually lost population in the past two years. Combined with a larger average household size (people sharing living quarters), this has resulted in fewer household formations. All this has translated to lower demand for housing at a time when we already have excess inventory.

It will take knowledge and inspiration to face the new year. In spite of today’s situation, there are still things for which we can all be thankful.

We wish you and yours a Happy Thanksgiving.

Respectfully submitted,

Larry Murphy and Steve Bottfeld

SalesTraq™ and Marketing Solutions

©SalesTraq 2010
(used with permission)

Once again a major news orginization has sought out David’s opinion regarding the Las Vegas Real Estate Market and Las Vegas economics in general. Eric Sorensen, Washington Bureau Chief for GlobalNationalNews of Canada, interviewed David recently. The video may be found here: GlobalNational News Quotes David David’s insight and data intensive studies have given him a deep understanding of the Las Vegas Market.

Brandon Fischer
VABenifitBlog.com

The Las Vegas metro area has long been a prime destination for home seekers nationwide. Despite the economic difficulties of the last 18 months, prospective home buyers with solid credit are finding great deals throughout the area. Government home loans are proving especially powerful for those wanting to own a home in the Las Vegas area.
The popular VA, FHA and USDA loans are making it possible for families of all incomes and backgrounds to achieve home ownership in preferred locations. The loan programs include a variety of benefits.

VA Loans

Many veterans use the VA mortgage program because of the zero money down option, low monthly rates, and other significant financial benefits. In addition, there are no prepayment penalties, private mortgage insurance charges, or upfront costs. Veterans can save about $100 to $300 over conventional borrowers on monthly payments because of these attractive features. Qualified borrowers can secure a loan up to $417,000 without a down payment. Sellers can cover up to 6 percent of closing costs and concessions.

Applying

Interested applicants must fill out a Certificate of Eligibility, which details to what extent a borrower may participate in the program. It’s important for Las Vegas service members and veterans to find a mortgage lender qualified to work with VA loan.

USDA Loans

The U.S. Department of Agriculture offers a unique loan guaranty program for persons looking to buy a home in rural areas. The USDA mortgage program is also a no-money-down loan. It allows for 100% financing, does not require mortgage insurance and has lower monthly payments than many conventional lending options.

Applying

The potential new home must be in an eligible rural district of Nevada. Las Vegas itself would not apply, but surrounding suburbs might. Applicants must meet credit and salary requirements.

FHA Loans

The FHA loan does not have a no-down-payment option, but it is open to everyone. The minimum down payment on an FHA loan is 3.5 percent. These government-backed loans offer competitive interest rates, low closing costs and less stringent qualifying standards. Low and middle-income families can apply because there are no income limits. If a down payment is difficult to manage, families can choose to use gifted or borrowed money from relatives or friends.

Applying

Fill out the FHA loan application. The Federal Housing Administration has many resources. They can point interested applicants to knowledgeable FHA lenders. Lenders look for adequate, not just exceptional, credit ratings. They do require families to prove that their debt is not too high in comparison with their income.

Making the Move

All three programs have a lot to offer. Las Vegas is an excellent place to take advantage of those benefits. Think it over and talk with expert lenders in your area.

Thanks and I wish you all the best,
Brandon Fischer
VABenifitsBlog.com