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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

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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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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

David Brownell Team
Keller Williams Realty Las Vegas
(702) 220-9696
David@LasVegasMove.com

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• This month’s report continues a few developing trends—inventory is growing (up another 1,000 + units and up for the 3rd consecutive month), specifically, REO inventory is up for the 4th consecutive month, and pending sales are down (nearly 600 units) for the 3rd month.
• Short Sale closings declined versus the previous month for the first time in 6 months. The gap last month between REO and Short Sale closings was only 2.5%. Now it is back up to over 10%.
• Blended inventory (3.58 months) and REO inventory (1.79 months) are the highest they have been in over 12 months.
• Total closings are down 20% compared to July 2009. And REO closings are down over 50% compared to that same period.

As always, I am here for any comments, questions, or concerns you may have.

Warmly,

David Brownell

Two key factors should have severely damaged May housing statistics for Las Vegas.
— First, Nevada had the highest unemployment in the nation.
— Second was the withdrawal of Federal funding for first time buyers at the end of April.

Surprisingly, the negative impact was much gentler than expected.

And concentrating only on those two statistics would make us overlook another factor – perhaps a more important factor: Las Vegas may have entered the second phase of its foreclosure crisis … and thus far it appears less damaging than it might have been.

Based on the first two factors, virtually all of the pundits suggested that prices would drop significantly in May. They were only partially correct. Virtually all of the market watchers predicted that inventory would expand exponentially in May. They were wrong.

And almost everyone predicted sales would drop like a rock in May. They were wrong again. And, nearly all of the naysayers were wrong about the level of foreclosures for May as well.

That’s not to say that May was a good month. We’re merely pointing out that it could have been far worse, particularly in view of what we have dubbed “the second phase of the foreclosure crisis.”

Here are the details:

SALES: Both new homes and existing home sales remained strong.

New home sales chugged along at a 515 per month clip – about 2.26 sales per subdivision. While 515 may not be a number to sing about, the sales rate per subdivision is like having the Beatles over for dinner. It’s the second highest rate in two years. And, it could be a strong indication that new home builders have discovered a formula that works – smaller homes at smaller prices.

The average sized home sold in the month was 1,852 square feet.

While the 4,186 existing home closings total was not as strong as last month (4,323), the numbers continue to exceed 4,000 – the third consecutive month in which that total has been exceeded. Perhaps more importantly, existing home sales are 12% above last year for the first five months.

INVENTORY: While new home inventory and the number of foreclosures declined, the number of available listings on the MLS increased for the first time in six months. New home permits dropped to 410 (from 474 last month).

MLS inventory increased to 10,176 from 9,400 last month. Still, at current sales rates that represents less than a 2.7 month supply … and the definition of a “hot market” is one in which there is less than a 90 day supply.

The number of new home subdivisions slipped to 228, tied for the lowest number in this century.

A total of 1,688 foreclosures impacted the market in May. That’s almost 500 less than April. For the first five months of the year, the foreclosure total is more than 20% below last year’s numbers. And, this may herald an important change in the market.

PRICES: Both new home and resale prices slipped in May.

New home prices fell 11% from last month to $193,278 – the lowest price since June 2003. However, price per square foot actually rose to $104.33, second highest this year. One conclusion to be drawn from those two statistics is – as we previously pointed out – builders are building smaller homes.

Resale prices slipped slightly to $122,847. Resale prices have been bumping along between $116,000 and $126,000 for more than 14 months.

How did prices “break out?”

SHORT SALES                  941 $120,000
AUCTION SALES           437 $102,000
REO SALES                    1500 $122,000
NON-DISTRESSED      1308 $131,000

Note that REO sales are priced higher than short sales (for the second consecutive month). While two months does not make a trend, we believe this probably means that we are now in the second phase of the foreclosure problem.

The first phase was created by those “investors” who well overpaid for housing product and by cheap mortgages lacking SEC oversight.

These new figures indicate that we may be taking a first look at people who can’t pay their mortgages because they’ve lost their jobs or had medical problems. June figures will be more revealing.

In any event, we appear to be ooking at higher priced homes going into foreclosure. Ultimately, this will lead to higher prices in Las Vegas. And, that’s not as good as it sounds.

It’s not pleasant, but May was not as bad as we thought it might be. And, we still have the rest of the year to anticipate.

Respectfully submitted,
Larry Murphy / Steve Bottfeld
Crystal Ball Seminars SalesTraq Marketing Solutions
© SalesTraq

Las Vegas Real Estate May Numbers

A vital and thriving market has returned to Las Vegas. Prices have flattened and in many communities started back up. Foreclosures are fading into the background as banks find better and more cost-efficient ways to handle these liabilities. Short-Sales rise 2 and 3 times last year’s volumes and deals are getting done.

The numbers are encouraging. By many indicators Las Vegas real estate hit bottom late last year and now seems to be headed back up.