Las Vegas Home Resales Good, Overall Market Struggles

Distressed homes sales made more than 70% of Las Vegas residential resales, made up of a balance of 59.5% foreclosed homes and 11.5% short sales. A large portion …

Distressed homes sales made more than 70% of Las Vegas residential resales, made up of a balance of 59.5% foreclosed homes and 11.5% short sales. A large portion of purchases were made by absentee and cash buyers of homes costing less than $100,000, which indicates a strong interest in investment purchases. Analysts note that new home sales continue to fall, however, with overall sales falling more than 13% for the month. The trough is partially explained by American’s worries at the time that U.S. policymakers would not find a way to avoid a national credit default, but buyer concerns over a persistent struggling market and low home values will likely continue to erode the numbers. For more on this continue reading the following article from The Street.

Home sales dipped more than usual in the Las Vegas region last month compared with June but rose above July 2010, which was last year’s first month to lose the boost of federal homebuyer tax credits.

Price measures moved little last month despite modest increases in both distressed property sales and the portion of homes sold to investors and cash buyers, a real estate information service reported.

In July, 4,535 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County), down 13.8% from June but up 5.2% from July 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 declined 8.4% between June and July since 1994, when DataQuick’s complete Las Vegas region statistics begin. The larger-than-usual drop in sales between June and July this year was likely the result of more potential homebuyers getting nervous about the worsening economic news, as well as concerns at the time that political leaders in Washington D.C. wouldn’t find a way to avoid a default on U.S. obligations

July’s sales total fell 9.4% short of the average number of homes sold in July, but only because new-home sales were so low – the third-lowest on record for a July. The resale market performed much better: Although July’s resales of houses and condos fell 13.9% from June, they rose 5.7% from a year earlier and were 5.6% above average for the month of July.

Resale activity has risen year-over-year for eight consecutive month, boosted by robust first-time buyer as well as investor and cash-only purchases.

In July, a popular form of low-down-payment financing for first-time home buyers – government-insured FHA loans – accounted for 42.1% of all home purchase loans. That was up from 41.6% in June but down from 46.9% a year earlier and a peak of 55.1% in September 2008.

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Cash buyers purchased 53.0% of the Las Vegas-area homes that sold last month. That was up from 50.6% in June and 48.2% a year earlier, and not far below the record 56.7% this February. Cash purchases are where there is no corresponding purchase mortgage in the public record.

Cash buyers in July paid a median $85,243 for a home in the Las Vegas area, up from $83,000 in June but down from $108,000 a year earlier.

Absentee buyers – mainly investors and vacation-home buyers – purchased 46.5% of all homes sold in July, up from 45.9% in June and 44.5% a year ago, but still below the record 49.9% this March. Absentee buyers paid a median $93,050 in July, down from $94,000 in June and $115,000 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 homes, helps explain why 41.9% of July sales were for less than $100,000. That’s up from 41.1% in June, 32.1% a year ago and 33.6% two years ago.

The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in July was $115,000, the same as in June but down 11.5% from $129,900 a year earlier. It was the 10th consecutive month in which the median fell year-over-year.

Since the median hit a 2010 high of $139,000 in June last year, it has either declined or shown no change each month compared with a year earlier.

The $115,000 median in June and July this year is the lowest for any month since the median was $113,000 in October 1995, and it is 63.1% lower than the peak $312,000 median in November 2006.

The median’s recent decline to a more-than-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).

July’s new-home sales represented just 10.3% of all transactions, compared with a monthly average of nearly 30% of all sales over the last decade. July’s condo sales represented 20.4% of total Las Vegas sales, compared with a 10-year monthly average of 13.4%.

An alternative home-price gauge – the median paid per square foot for resale single-family detached houses – slipped to $67 in July, down 1.5% from June and down 11.8% from a year earlier. July’s median paid per square foot was the lowest since it was also $67 back in February 1994. July’s figure was 64.8% 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" – continued to dominate, representing 70.6% of the resale market last month.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 59.5% of the Las Vegas resale market in July. That was up from 57.6% in June and 49.5% 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 11.1% of Las Vegas-area July resales. That compares to an estimated 11.0% in June, 18.8% a year ago, and 7.9% two years ago.

The number of homes foreclosed on in the Las Vegas region in July fell from June but rose from a year earlier. Lenders foreclosed on 3,161 single-family house and condo units last month, down 13.9% from June but up 17.0% from a year ago. The figures are based on the number of Trustees Deeds filed at the county recorder’s office.

During the first seven months of this year, 22,621 house and condo units were foreclosed on in Clark County, up 33.7% 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.

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