Las Vegas Real Estate on Different Path than Rest of Country.

The recent information and data our from the National Association of Realtors is showing an interesting trend.  However, it seemed to be at odds with the data from Las Vegas, Nevada.  It is true that the national sales have slipped month over month but this number is less than 2 %.  Las Vegas has shown nearly 17% drop in homes sales in September 2012.  The other interesting statistic is just how much short sales and foreclosures are being sold at a discount compared to the traditional sale.  Here is a quote from the NAR:

Distressed homes3 – foreclosures and short sales sold at deep discounts – accounted for 24 percent of September sales (13 percent were foreclosures and 11 percent were short sales), up from 22 percent in August; they were 30 percent in September 2011. Foreclosures sold for an average discount of 21 percent below market value in August, while short sales were discounted 13 percent.

 

Short sales are being sold at a 13% discount nationally compared to the traditional sale.  As Las Vegas now has nearly 50 % of its sales closing as short sales or bank owned properties, it is clear there will be a log in pricing, even if the inventory numbers are low.  The problem is that Las Vegas is the place that needs the more appreciation to get owners above water and they are not likely to get it anytime soon.  As we see sales declining in number, partly due to lack of inventory and partly due to more strict foreclosure laws, the real estate market could grind to a halt.   Sale prices are artificially being inflated by the lack of inventory and the abundance of cash buyers, but it is by no means a reasonable, sustainable trend.  The idea that Las Vegas will show enough appreciation to get people out from underwater in order to sell is a pipe dream.  With the majority of home owners underwater by 50% or more Las Vegas homes will need to see a 100% increase in value before people can even consider breaking even. 

There also is a huge back log of short sales that are sitting in pending status each month and it appears to be rising.  The question is just how many of these short sales will close by the end of the year while the debt forgiveness act can still be applied.  Many of these homes will fall out of escrow once January 1, 2013 hits because people will not want to have the tax liability.  People may have decide to hold off another 6 months to see if the debt relief act will be renewed.  This could cause major havoc in the real estate market and leave many people in greater limbo including real estate agents who are waiting for commission checks. 

The NAR and brokers in the area seem to think that short sale is the answer to all the real estate problems and the most efficient way to clear the market.  This may be true since banks are now obligated to swear they have the original note and mortgage to a property before they can foreclose.  But is it really a solution or just a temporary fix to find a way to generate income? 

If sales in Las Vegas continue to decline at similar rates it will take several more years for the market to clear and become “normal” again.  One thing is clear:  there is still a long way to go before Las Vegas Real Estate sees better days. 

 

 

 

 

 

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