Low mortgage rates and sinking prices is driving activity in the Las Vegas real estate market, according to the latest statistics from DataQuick. Total home sales were up for the fourth consecutive month in October, with sales of resale homes up for the tenth consecutive month. New-home sales jumped 31.8% from last year, although those numbers still remain among the lowest on record. Lower-priced homes are driving sales in the region, and cash buyers and/or absentee buyers made up a large share of the purchases, indicating a strong interest from investors. For more on this continue reading the following article from TheStreet.
Sales of existing Las Vegas-area homes rose year over year for the tenth consecutive month in October, while prices edged lower.
The combination of super-low mortgage rates and continued price erosion kept investor and first-time-buyer interest high, triggering a 33% annual gain in the number of sales below $100,000, a real estate information service reported.
In October, 4,595 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County). That was down 2% from September but up 15.3% from October 2010, according to San Diego-based DataQuick. The firm tracks real estate trends nationally via public property records.
A dip in sales between September and October is not unusual. On average, sales have fallen 2.4% between those two months since 1994, when DataQuick’s complete Las Vegas region statistics begin.
Last month marked the fourth in a row to record a year-over-year gain in total sales and the tenth in a row to log an annual increase for resales (excludes new homes). Last month’s sales of newly-built homes rose sharply — 31.8% — from a year earlier but were still the second-lowest on record for an October.
October sales were most robust in the lower price ranges. The total number of transactions below $100,000 climbed 33.2% from a year earlier and made up 41.3% of all deals, compared with 34.8% of all sales a year ago. The number of sales below $200,000 last month rose 18.2% year over year and the number above $300,000 fell 4.4% from a year earlier.
This year’s big sales gain for lower-cost homes has put 2011 on track to have the highest level of resale activity in six years. The number of houses and condos that resold between January and October this year totaled 41,662, up 8.4% from last year and the highest since 2005, when 52,166 homes resold during that 10-month period. Overall sales (including new homes) totaled 46,120 during the first 10 months of this year, up 6.5% from last year and the highest since 2006.
The median price paid for all new and resale houses and condos sold in the Las Vegas metro area last month was $114,900, down 0.1% from September and down 8.1% from $125,000 a year earlier. It was the 13th consecutive month in which the median fell year-over-year.
Last month’s median was 63.2% short of the peak $312,000 median in November 2006. The median’s recent decline to levels not seen since the mid 1990s can be attributed to several factors: home price depreciation; robust sales of low-cost foreclosures; robust sales to investors, who mainly target low-cost properties; extraordinarily low new-home sales (new homes tend to sell for more than resale homes); and higher-than-usual condo resales (condos tend to be the least expensive homes).
In October, a form of low-down-payment financing that’s popular with first-time home buyers – government-insured FHA loans – accounted for 38.4% of all home purchase loans. That was down from 43.2% in September and down from 46% a year earlier. The current cycle’s peak was 55.1% in September 2008. Last month’s figure was the lowest since it was 36.5% in June 2008.
Cash buyers purchased 49.3% of the Las Vegas-area homes that sold last month. That was down from 51.2% in September and 51.3% a year earlier. The record was 56.7% this February. Cash purchases are where there is no corresponding purchase mortgage in the public record.
Absentee buyers — mainly investors and vacation-home buyers — purchased 46.5% of all homes sold in October. Foreclosure resales — homes that had been foreclosed on in the prior 12 months — accounted for 52.8% of the Las Vegas resale market in October. And short sales — transactions where the sale price fell short of what was owed on the property — made up an estimated 12.7% of Las Vegas-area October resales.
This article was republished with permission from TheStreet.