Sin City saw homes sales soar in March to reach a five-year high, boosted largely by investors and cash buyers of discounted properties. Bargain foreclosure prices, depreciated values and even low new home sales have absentee buyers flocking to Las Vegas. For more on this continue reading the following article from The Street.
Home sales held at a five-year high for the Las Vegas region in March amid unusually strong activity among investors, cash buyers and others targeting sub-$100,000 homes. The median sale price fell as foreclosed properties accounted for a higher share of the resale market, a real estate information service reported.
In March, 4,953 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County) – the highest sales tally for any March since 2006, when 8,486 sold. March sales were up 27.3% from February and up 1.6% from March 2010, according to San Diego-based DataQuick. The firm tracks real estate trends nationally via public property records.
On average, the region’s sales have risen 29.0% between February and March since 1994, when DataQuick’s complete Las Vegas region statistics begin. March’s sales total was 0.1% higher than the average number sold in March since 1994.
Total March sales have risen year-over-year for three consecutive month, mainly because of robust investor and cash-only purchases.
In March, 54.0% of all homes sold were purchased by cash buyers, down from a record 56.7% in February and up from 47.7% a year earlier. The unusually high level of cash buyers reflects a combination of factors, including: Tighter lending standards that force some investors and other buyers to pay cash if they’re able; cash buyers’ ability to move to the head of the line with sellers when there are multiple offers (sellers like the speed and certainty of cash deals); a preference among some to invest their cash in real estate as opposed to competing investments; retirees or those close to retirement who downsize, selling a more expensive property and paying cash for the retirement home.
Cash buyers in March paid a median $88,450 for a home in the Las Vegas area, down from $90,242 in February and $103,750 a year earlier.
Many cash buyers are absentee buyers, which are mainly investors or second-home buyers.
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Absentee buyers purchased 49.9% of all homes sold in March – the highest level for any month since at least 2000, when that particular data series begins. March’s figure was up from 49.7% in February and 41.5% a year ago. Absentee buyers paid a median $99,750 in March, up from $97,563 in February but down from $110,000 a year earlier. Absentee buyers are those who indicate at the time of sale that the property tax bill will go to a different address.
The heavy presence of cash buyers and other investors, with their focus on lower-cost properties, helps explain why 40.0% of all March sales were for less than $100,000, up from 39.25% in February, 32.4% a year ago and 28.0% two years ago.
The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in March was $117,000, down 1.7% from February and down 10.0% from a year ago. It was the sixth consecutive month in which the median fell year-over-year. Since the median hit a 2010 high of $139,000 last June, it has either declined or shown no change each month compared with a year earlier.
The March median was the lowest since the median was also $117,000 in January 1996, and it was 62.5% below the peak $312,000 median in November 2006.
The median’s recent decline to a 15-year low can be attributed to several factors: 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).
March’s new-home sales were the lowest for a March since at least 1994, while sales of existing (not new) condos were the highest for that month since 2005. Resale condos represented 20.5% of March sales, compared with an average of 13.1% of sales over the past decade.
An alternative price gauge – the median paid per square foot for resale single-family detached houses – held at $70 in March, the same as in January and February but down 9.1% from a year earlier. The January/February/March figures are the lowest since the median paid per square foot was also $70 back in April 1995. March’s number was 63.2% below the peak $190 paid per square foot in May and June of 2006.
Distressed sales – the combination of sales of foreclosed homes and "short sales" – continue to weigh heavily on the market, representing about 69% of March resale transactions.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – rose to 57.3% of the Las Vegas resale market in March. That was up from 56.7% in February and 55.5% a year earlier. Foreclosure resales peaked at 73.7% of the resale market in April 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 11.7% of Las Vegas-area March resales. That was down from an estimated 14.3% in February and 13.7% a year earlier. Two years ago it was 6.4%.
The number of homes foreclosed on in the Las Vegas region in March rose sharply from both February and a year earlier. Lenders foreclosed on 3,331 single-family house and condo units in March, up 41.6% from February and up 52.1% from March 2010. The peak month was February 2009, which saw 3,718 foreclosures. The figures are based on the number of Trustees Deeds filed at the county recorder’s office.
During the first three months of this year, 8,341 house and condo units have been foreclosed on, up 48.7% from the same period last year.
The foreclosure totals can include units that the county assessor has designated condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of foreclosure filings has seesawed, and a single month’s increase or decline doesn’t necessarily indicate a new trend.
This article was republished with permission from The Street.