Several Factors Holding Back Recovery In Las Vegas Real Estate

Las Vegas home sales continued to slide, as November 2010 sales figures were significantly below the region’s historical average. A slow economic recovery, lack of job growth and …

Las Vegas home sales continued to slide, as November 2010 sales figures were significantly below the region’s historical average. A slow economic recovery, lack of job growth and the loss of federal homebuyer incentives were among the factors affecting the Las Vegas housing market. See the following article from DQNews for more on this.

Las Vegas region November home sales fell nearly 23 percent below a year ago and dipped more than usual from October as investors and first-time buyers continued to dominate the market. The overall median sale price rose slightly from October but fell below the year-ago level for the second consecutive month, a real estate information service reported.

A total of 3,693 new and resale houses and condos sold in the Las Vegas-Paradise metro area (Clark County) last month, down 6.8 percent from October and down 22.9 percent from a year earlier, according to MDA DataQuick of San Diego. The firm tracks real estate trends nationally via public property records.

On average, the region’s sales have fallen 4.4 percent between October and November since 1994, when DataQuick’s complete Las Vegas region statistics begin.

Last month’s sales tally was the lowest for a November since 2008 and fell 15.1 percent below the November average since 1994.

Sales of newly built homes rose 15.6 percent from October but dove 42.2 percent below the year-ago level, making it the slowest November for new-home sales in DataQuick’s records. Last month’s sales of existing (not new) single-family detached houses fell 7.3 percent from October and fell 20.9 percent from a year ago. Resales of condos fell 14.4 percent from October and dropped 14.1 percent from last year.

Beyond the lost government stimulus (i.e. home buyer tax credits) this year, the housing market has suffered from a painfully slow economic recovery, the lack of significant job growth and potential homebuyers’ concerns about job security. Also, many homeowners are “upside down,” meaning they owe more than their homes are worth and therefore aren’t in a position to move. Other potential buyers have been foreclosed on in the last few years and can’t yet qualify for a loan to re-enter the market.

Even among those ready to buy, there’s little beyond today’s ultra-low mortgage rates to spur them to purchase sooner rather than later. Many are just waiting – waiting for a job, a greater sense of job security, a sign prices have finally hit rock bottom or that mortgage rates are heading much higher.

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The median price paid for all new and resale houses and condos sold in the Las Vegas metro area in November was $127,500, up 2.0 percent from $125,000 in October but down 5.5 percent from $134,900 a year earlier. It was the second consecutive month to post a year-over-year decline in the median. Since the median hit a high for this year – $139,000 – in June, it has either declined or shown no change compared with a year earlier.

Last month’s median was 59.1 percent below the peak $312,000 median in November 2006.

The median price paid last month for resale single-family detached houses – the region’s largest home-type category – was $134,900, up from $132,000 in October but down 0.1 percent from $135,000 a year earlier. The November resale house median stood 57.7 percent below its peak of $312,250 in June 2006.

The median price paid last month for resale condos was $67,000, up from $65,000 in October but down 5.0 percent from $70,500 a year earlier. The resale condo median has hovered a bit above or below $70,000 each month for more than a year. November’s resale condo median was 68.0 percent below its $203,000 peak in July 2006.

An alternative price gauge – the median paid per square foot for resale single-family detached houses – held steady at $74 last month, the same as October but down 2.6 percent from a year earlier. The median has dropped year-over-year the past two months, following six consecutive months of annual gains. Prior to this April, the median paid per square foot had declined year-over-year each month since late 2006. November’s figure was 61.1 percent below the peak $190 paid per square foot in May and June of 2006.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – rose to 53.3 percent of the Las Vegas resale market, up from 52.9 percent in October but down from 64.2 percent a year earlier. Foreclosure resales peaked at 73.7 percent of the resale market in April 2009.

The number of homes foreclosed on last month fell sharply from October – a trend seen across the West – and also dropped below the year-ago level. In November, lenders foreclosed on 1,662 single-family house and condo units in the Las Vegas region, down 43.6 percent from October and down 17.8 percent from a year ago. The peak month was February 2009, when lenders foreclosed on 3,718 homes. The figures are based on the number of Trustees Deeds filed at the county recorder’s office.

In the first 11 months of this year, 22,680 Las Vegas region houses and condo units were lost to foreclosure, down 15.9 percent 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.

Many of the region’s foreclosed homes sell to first-time buyers and investors, who often compete for distressed properties.

In October, a popular form of low-down-payment financing for first-time home buyers – government-insured FHA loans – accounted for 44.7 percent of all home purchase loans. That was down from 46.0 percent in October and down from 55.1 percent a year earlier.

Absentee buyers purchased 43.8 percent of all Las Vegas–area homes sold in November, up from 43.6 percent in October and 36.2 percent a year ago. They paid a median $105,000, up from $100,000 in October but down from $106,000 a year earlier. 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 49.1 percent of all November sales, down from 51.5 percent in October but up from 42.9 percent a year ago, based on an analysis of public property records. The median price paid in these seemingly all-cash deals in November was $96,700, up from $95,000 in October but down from $99,900 a year ago.

Specifically, these all-cash deals 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, recorded purchase mortgage, and in some cases they might be taking out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who can’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Home “flipping” has generally trended higher this year. Last month 3.7 percent of all homes sold had previously been sold on the open market within the prior six months. That was up from an October flipping rate of 3.3 percent and 2.7 percent a year ago. The region’s flipping rate peaked in September 2004 at 8.9 percent.

This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.


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