While median sales prices remained low, Las Vegas posted increased home sales in October, as first time buyers and investors increased their purchases in existing homes and condos. Foreclosure resales still accounted for a large portion of transactions, but the percentage of transactions that involved foreclosures continued to decline, and the median sales price remained steady for the fourth consecutive month. For more on this, see the following article from DQNews.
First-time buyers and investors pushed Las Vegas-area home sales higher in October as the overall median sale price held at $130,000 for the fourth consecutive month. Other price measures registered slight declines from September, a real estate information service reported.
Foreclosure resales remained a major market force but continued to wane. In October, 66.8 percent of the Las Vegas-area houses and condos that resold were foreclosure resales, meaning those homes had been foreclosed on in the prior 12 months. That was down from 67.1 percent in September but up from 64.7 percent in October 2008. Foreclosure resales peaked in April this year at 73.7 percent of the region’s resales, according to MDA DataQuick of San Diego. The firm tracks real estate trends nationally via public property records.
A total of 5,068 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County) in October, up 1.1 percent from September and up 22.2 percent from a year earlier. It was the highest sales total for an October since October 2006, when 5,693 homes sold.
October marked the 14th consecutive month in which sales have risen on a year-over-year basis.
The October sales increase from September was a bit unusual. The average change between those two months is a decline of 2.2 percent, based on DataQuick’s complete Las Vegas-region statistics, which begin in 1994.
The relatively strong home sales (escrow closings) in the Las Vegas area and elsewhere in the West this fall have been driven largely by three factors: Short sales have become more common, and they often take significantly longer to close escrow. That means some deals that normally would have closed earlier instead closed in September or October. Sales have also gotten a boost from historically low mortgage rates, which have combined with lower prices to improve housing affordability. In addition, some buyers moved up their purchasing plans to take advantage of a federal tax credit for first-time buyers that was originally set to expire at the end of November. Recently that tax credit was extended and expanded.
The 3,612 single-family detached houses that resold in October marked the highest level for the month of October since 3,867 sold in October 2004. Sales for this home-type category have risen on a year-over-year basis for 19 consecutive months.
The 971 condos that resold in October also represented the highest level of sales for an October since October 2004, when, coincidentally, the resale condo tally was the same as October this year (971 sales). Resale condos have seen year-over-year sales gains for 16 consecutive months.
October sales of newly built homes remained at a record low for the month in DataQuick’s statistics, largely because builders can’t compete with discounted foreclosure resales. October’s 485 new-home sales rose 7.5 percent from September but were 34.2 percent lower than a year earlier. The lowest month for new-home escrow closings was January 2009, when 249 sold.
The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in October was $130,000, unchanged from September but down 33.7 percent from $196,000 a year earlier. The median sale price has been $130,000 since July (technically it was $129,900 in August). That’s the lowest level for the region’s overall median price since April 1999, when it was $129,000.
The overall median sale price has fallen on a year-over-year basis for 30 consecutive months and in October stood 58.3 percent below the region’s peak $312,000 median in November 2006.
The median price paid for resale single-family detached houses – by far the region’s largest home-type category – was $135,000 in October, down 1.4 percent from $136,900 in September and down 30.1 percent from $193,140 a year earlier. The October resale house median was 56.8 percent lower than the peak $312,250 median in June 2006.
Another price gauge analysts watch also fell slightly from September: The median paid per square foot for resale single-family detached houses was $76 in October, down from $77 in September and down 27.2 percent from $104 a year earlier. October’s figure was 60 percent below the June 2006 peak of $190 per square foot.
Meanwhile, the region has seen an uptick in the number of homes lost to foreclosure: In October, 3,491 single-family house and condo units were foreclosed on in Clark County, up 10.4 percent from September and up 14.1 percent from a year earlier. The October total was 6.1 percent lower than the monthly peak of 3,718 foreclosures in February this year. The figures are based on the number of trustees deeds filed with the county Recorder’s office. The trustees deed signals that the home was lost to foreclosure.
Investors and first-time buyers continue to purchase many of the homes lenders repossess.
In October, a popular form of financing used by first-time home buyers – government-insured FHA loans – accounted for 53.0 percent of all home purchase loans. Absentee buyers bought 41.2 percent of all Las Vegas–area homes sold in October – the highest figure for any month this decade. Absentee buyers are often investors, but can include second-home buyers and others who, for various reasons, indicate at the time of sale that the property tax bill will go to a different address.
Buyers who appear to have used cash to purchase their homes accounted for 47.1 percent of all October sales, based on an analysis of public property records. Specifically, these were transactions where there was no indication of a purchase mortgage recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply and sellers favor the relative speed and certainty of cash transactions.
Across the West, year-over-year declines in the median sale price – the point where half of the homes sold for more and half for less – have sometimes overstated the extent to which the value of the typical home has fallen. It’s because the median is being tugged lower not just by price depreciation but by shifts in the types of homes selling. For example, more of today’s sales involve foreclosures, which tend to sell at a discount and be concentrated in more affordable areas. Also, the August 2007 credit crunch made larger “jumbo” mortgages more expensive and harder to obtain, which has led to sluggish sales – in some cases the lowest in many years – in higher-priced communities. (A dropoff in high-end sales can pull down the median.)
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.