Low home prices in the Las Vegas area are attracting more and more cash buyers and absentee purchases – those who buy and have the bill sent to an alternate address. These buyers, usually investors or vacation homebuyers from California and other regions in Nevada, accounted for 45.9% of June sales. Cash buyers made up 50.6% of the market and paid an average of $83,000 for a home. The Las Vegas real estate market has been struggling and a large percentage of sales were for distressed properties that are in foreclosure or short sales. These home prices drag down new-home prices, but even so these did not sell well in June. For more on this continue reading the following article from The Street.
Home sales rose more than usual in the Las Vegas region last month compared with May but fell short of a year earlier amid exceptionally weak new-home sales. The median price paid for a home dropped from both May and a year earlier as foreclosure resales and sub-$100,000 transactions accounted for a higher portion of all transactions, a real estate information service reported.
In June, 5,262 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County), up 15.1% from May but down 5.1% from June 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 9.5% between May and June since 1994, when DataQuick’s complete Las Vegas region statistics begin. June’s sales total fell 1.3% short of the average number of homes sold in June, but only because new-home sales were so low — the second-lowest on record for a June. The resale market performed relatively well last month: Resales of houses and condos rose 14.4% from May and 2.2% from June 2010, when outgoing federal homebuyer tax credits gave the market a final boost. Last month’s resales were 35.7% above average for the month of June.
Resale activity has risen year-over-year for six consecutive months, lifted by robust investor and cash-only purchases, including by many out-of-state buyers.
In June, 50.6% of the Las Vegas-area homes sold were purchased by cash buyers. That was down from 53.0% in May and a record 56.7% in February, but it was up from 41.9% a year earlier. Cash purchases are where there is no corresponding purchase mortgage in the public record.
Cash buyers in June paid a median $83,000 for a home in the Las Vegas area, down from $89,000 in May and $106,000 a year earlier.
Absentee buyers – mainly investors and vacation-home buyers – purchased 45.9% of all homes sold in June, down from 46.2% in May and a record 49.9% in March this year, but up from 37.5% a year ago. Absentee buyers paid a median $94,000 in June, down from $98,000 in May 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.
Of last month’s absentee buyers, about 34% had mailing addresses in Nevada, while 30% of absentee buyers are based in California. Most of the remaining out-of-state absentee buyers in June are based in New York(5.6%), Pennsylvania (3.0%), New Jersey (2.4%), Utah (1.9%), Hawaii (1.9%) and Florida (1.8%).
About one-third of all homes sold in the Las Vegas area last month were purchased by buyers with mailing addresses outside of Nevada. About 15% of all homes sold were purchased by people with California mailing addresses. Buyers with New York mailing addresses were the next-most-common, with close to 3% of total June sales.
Roughly 3% of all Las Vegas-area homes sold last month were bought by foreign buyers, based on public property records, where a foreign mailing address was available. Of those foreign buyers that could be identified, about 78% were from Canada and 11% were from Australia. Buyers with mailing addresses in Israel and China/Hong Kong made up about another 8% of the foreign buyers that could be identified. Foreign buyers paid a median $110,000 for resale houses and $67,900 for resale condos last month.
The heavy presence of investors and others paying cash, with their focus on lower-cost homes, helps explain why 41.1% of June sales were for less than $100,000. That’s up from 40.1% in May, 28.2% a year ago and 32.1% two years ago.
The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in June was $115,000, down 1.7% from $117,000 in May and down 17.3% from $139,000 a year earlier. It was the ninth consecutive month in which the median fell year-over-year, and the magnitude of the decline was the highest in since the median fell 20.9% year-over-year in January 2010.
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.
Last month’s $115,000 median was the lowest for any month since the median was $113,000 in October 1995, and it was 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).
June’s new-home sales represented just 10.2% of all transactions, compared with a monthly average of 30.1% of all sales over the last decade. June’s condo resales represented 19.0% of total Las Vegas sales, compared with a 10-year monthly average of 13.2%.
An alternative home-price gauge – the median paid per square foot for resale single-family detached houses – slipped to $68 in June, down 1.4% from May and down 12.8% from a year earlier. June’s median paid per square foot was the lowest since it was also $68 back in February 1995. June’s figure was 64.2% below the peak $190 paid per square foot in May and June of 2006.
In June, a popular form of low-down-payment financing for first-time home buyers – government-insured FHA loans – accounted for 42.4% of all home purchase loans. That was the same as in May but down from 53.4% a year earlier and a peak of 55.1% in September 2008.
Distress sales – the combination of sales of foreclosed homes and "short sales" – continued to dominate the market, representing 68.5% of the resale market last month.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 57.5% of the Las Vegas resale market in June. That was up from 54.9% in May and 45.2% 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 11.0% of Las Vegas-area June resales. That compares to an estimated 13.1% in May, 19.6% a year ago, and 7.0% two years ago.
The number of homes foreclosed on in the Las Vegas region in June fell from May but rose sharply from a year earlier. Lenders foreclosed on 3,673 single-family house and condo units last month, down 3.8% from May but up 39.1% from a year ago. The figures are based on the number of Trustees Deeds filed at the county recorder’s office.
During the first six months of this year, 19,460 house and condo units were foreclosed on in Clark County, up 36.9% 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.