Las Vegas Home Shop

Las Vegas Home Prices Increased 2% in February 

The Largest Monthly Increase Since May 2006

The Case Shiller index of 20 cities showed a 9.3% increase in home prices since February 2012.  The price gains should cause more and more home owners to put their homes on the market which would alleviate our low inventory.  There were only 1.93 million homes on the market in March which was the fewest number since March 2000.

With mortgage rates at an all time low, an improving labor market, and more inventory, the real estate market could be the source for a better economy.

The 20 cities are showed a year over year increase.  Las Vegas home prices jumped 17.6% since last year.  Phoenix led the yearly increase with a 23% jump.

Check the map below for a breakdown by zip code appreciation.

The national housing market made a strong rebound in 2012 and that positive trend is expected to continue in the New Year.

What to expect in 2013?  

Although interest rates have been at historic lows, they have not been the driving force behind this recovery.

There’s no single factor driving this market; it’s been a combination of low prices, low inventory, improving consumer confidence and a huge pent-up demand.   That was true throughout 2012 and will continue to be true in 2013.”

Many consumers now understand what real estate professionals have known for the last year, a number of related factors have combined to create a favorable opportunity for home buyers and investors to purchase residential properties.

The 2013 situation is so unique that those of us who’ve worked in real estate for many years have never seen opportunities like this.

Top 10 Real Estate Predictions for the national real estate market in 2013 are:
1. More Home Buyers and Sellers come back to the market.
2. Homes Sales will rise by 6-7% and Prices rise by 3-4%.
3. The inventory of homes for sale will hit a bottom.
4. Higher priced homes begin to sell.
5. Distressed property numbers continue to fall.
6. Shadow inventory continues to fall.
7. The number of Short Sale closings will rise to a peak.
8. Record low mortgage rates rise slightly by year-end.
9. Lending remains tight.
10. Home affordability remains the best in years.

2013 could be the best year in real estate in many years.

Recovery is fragile and still faces some obstacles.  Tight lending, government regulation and the overall economy still have the potential to negatively impact housing.

If housing can stay on the road to recovery, it’s possible that it can pull the rest of the economy along with it.

We are advocates for the home buying and selling consumer, and real estate professionals. We support reforms aimed at helping troubled homeowners avoid foreclosure and streamlining the Short Sale process.

We need a continuation of mortgage interest deductions, an extension of the Debt Relief Act and more reasonable regulations on mortgage lending.

The Fiscal Cliff Agreement left the deductions mostly intact and extended the Debt Relief Act until the end of 2013.

These moves support the American dream of home ownership, help distressed families avoid foreclosure and promote a sustainable housing recovery.

The median price of resales in November was $133,000.  In 2011, the median price was $114,000.  That means our resale home market has increased by 16.6%.  And while the resale market is improving so is the new home sales market.  The new homes sales are impressive with robust sales and increased prices.  The median price of a new home is $219,285.  That is the highest since March 2009.  Last year the median price was $204,064 which is a 7.4% increase.

Usually this time of year we have a “holiday funk” in the new home sales market.  The normal “holiday funk” is a 50% drop in the sales for new homes.  There was no “holiday funk” this year.  There were 596 recorded new home sales in November.  The last 4 months new home sales averaged 600 per month.  That is a 39% increase over last year or 1,379 more sales.  If December ends up around 600 that will end the year around 5,500 new home sales.  2012 will boost a 40% increase in sales of new homes.

With land being a major ingredient of pricing, the experts see a 10% increase in prices in 2013 as builders will pay more per acre for land.  The increase in housing permits is an astounding 64% over last year.  Never have we seen an increase that high.

Lennar bought 167 lots for $5.2 million in  Northwest Las Vegas.  They are on tract to purchase an additional 160 lots early next year.  In some areas, land is selling for approximately $150,000 per acre which is up 10% – 20% from last year.   Despite the increase in the median price of a new home, the monthly mortgage payment for a 3 bedroom home is still less than rent with the low interest rates.

Zillow reports that Las Vegas is #4 in the sellers market stats in the country.  Simply stated that means low inventory, increasing prices, and less days on the market.

Las Vegas was one of 7 cities in the country that recorded positive monthly gains.  Across the US home prices are back to the 2003 level for both the 10 city and 20 city composite studies provided by Case-Shiller.

Investors as well as regular home buyers are finding that now is the time to make the move to buy a home in Las Vegas.

The graphic shows how fast the homes are selling across the country.  This information comes from the latest Realtors® Confidence Index.  Approximately 1/3 of REALTORS stated that recent sales are selling in less than 30 days.  59% of the listed homes were sold in less than 3 months.

WHY IS THE MARKET MOVING SO FAST?

Buyers are attracted to the lower prices and interest rates.  The interest rates remain at all time lows which makes home buying such a sensible move.  Investors are liquidating other investments and many are buying homes with cash.  The median price of a home in the USA is $183,000.  The median price of a home in Las Vegas is $140,000.  With 5% down, the mortgage payment would be approximately $671.  Las Vegas remains affordable for home ownership and makes sense for first time home buyers.  In many cases, their rent is more than their mortgage payment would be.

The return on investment for investors is around 8% after expenses.  The rental market remains brisk with the many displaced home owners who must sell their homes short.  Many of the displaced home owners are renting homes in their same neighborhood so their children can remain in the same schools.   Homes are selling because affordable housing is back and consumers feel it is the right time to buy.

AFFORDABLE HOUSING drives the market.  From the late 1980′s until the housing crash, affordable housing helped to build Las Vegas.  Affordable housing accommodated thousands of people who moved here for the weather, a place to retire, no state tax to pay, and jobs.  Las Vegas was and still is a new dynamic city with opportunities.   Money is being invested (see the previous Market Watch blog) and jobs will be created.  The climate is still a welcoming change to many who move here from other parts of the country and the world.

SHORT SALES ARE INCREASING

The charts below compare the home market in 2010 to 2012.  The charts show how the Las Vegas foreclosure market has shifted to short sales.  Short sales help neighborhoods and home values.  Even though the inventory is lower largely due to the lack of foreclosures, the short sales have increased in relation to the regular sales and the foreclosures.  The 10% increase in regular sales may indicate that home values are increasing along with consumer confidence.  There is much speculation as to where the real estate market is headed.   The national news media is saying that the market is improving around the country.

The chart below shows that the number of sales in Las Vegas has remained fairly consistent over the past three years.  Inventory is lower but sales remain steady.   Las Vegas buyers have less inventory to choose from so it takes less time to find a home.   According to the numbers the buyers are still buying.

 The Las Vegas Market Watch will keep you informed.

The Las Vegas Home Market 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 opionions 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.  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.  Now prices are higher than 2011 prices. 

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 a days.  The limited inventory causes prices to go up when the short sale sells. 

There is also the National Mortgage Settlement (NMS) fund 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. 

And there is 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 home.  There is 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. 

 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.  And, all of the 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!