[Ken Douglas]

Well I was wondering what everyone thinks of Las Vegas resale properties rising to the tune of 25,200 homes on market ?

Ken

[garth]

Not much. Everything is cyclical, even real estate. Sometimes, or in some areas, it's a big/long cycle. In other areas it's a small/short cycle. As is said "'stuff' happens."

Beyond that, the raw number of "homes on the market" mean very little. What matters is how much supply that number represents. I would guess that it means that there's a lot of months of supply, but we really don't know the absorbtion rate.

If we take the supply, divided by the monthly sales, we will be provided with some insightful information. It's that number that some of our real estate gurus on this board could put into perspective for us. I have my perspective, but it's not from the position of an industry professional.

[SHEPNYC]

Below is an article that made some sense of the L.V. real estate market, at least to my perspective.


The Las Vegas housing market won't reach its bottom until the second
quarter of 2009 when it could effectively fall in excess of 20 percent, but
once it does, prices should rebound 7.2 percent in 2010 and average 4 to 5
percent gains in subsequent years, according to the latest projection from
Moody's Economy.com.
Mark Zandi, chief economist at the Pennsylvania-based research firm, said
job growth, population gains and income gains would be important to its
recovery. Earlier this year, Moody's predicted that Las Vegas prices would
fall 13 percent from its peak of $320,000. In an interview, Zandi said Las
Vegas' seasonally adjusted median price through the first quarter was
$317,000 and projects it will decline to $278,000 by mid-2009.

The effective loss to homeowners, however, is even greater because of costs
for improvements and other expenses to entice buyers, he said.

'I think the correction is in full swing and has a way to run,' Zandi said.
'Affordability is a very significant problem for first-time buyers and
investors are looking to get out. Until it is affordable and those investors
do leave the market, you won't find a bottom.'

Zandi said homeowners are starting to realize that with the large level of
inventory, they will have to cut prices if they want to sell.

Las Vegas has been hurt by its large number of investors. That leads to a
high vacancy rate, which creates a glut on the market. Once it bottoms out,
the growth will be solid over the long run, Zandi said.

But even though growth will average 4 to 5 percent a year, homeowners should
expect plenty and boom and bust cycles along the way, Zandi said. Markets
like Las Vegas that are land constrained are prone to those cycles of huge
price swings.

'What happens is you have a good year or two, the investors jump in and
juice it up and then it's not affordable,' Zandi said. 'It creates a bubble
that bursts.'

That's what's happening in Las Vegas now, and although Zandi said he
originally thought Las Vegas would have price drops in excess of 20 percent,
he maintains that will be the effective drop for many sellers.

Many homeowners are making improvements to their homes such as painting and
carpeting in order to sell them. But they are unable to recover the cost of
those expenses, he said. They are also paying for closing costs and other
expenses, he said.

'I think the effective price is going to fall 20 to 30 percent,' Zandi said.
'If you do work to sell your home, it costs money but is not getting counted
in the data.'

Phoenix is projected to hit its bottom on the fourth quarter of 2008 and
then grow at 7.7 percent over the next 12 months, the firm projected.

Phoenix is in a better position because its job growth market is less
dependent on the housing industry than Las Vegas, Zandi said.

Foreclosures: Nevada has held its top spot for the fifth consecutive month
when it comes to the number of homes involved in the foreclosure process.
Nevada recorded one foreclosure filing for every 166 households, which is
four times the national average. The state reported 5,235 foreclosure
filings in May, a 40 percent increase over April and five times the number
reported in May 2006. Colorado had one foreclosure filing for every 290
households. The filings include default notices, auction sale notices and
bank repossessions. In May, Nevada had 2,870 notices of default, 2,626
notices of trustee sales and 739 bank repossessions.

When it comes to ranking cities, Las Vegas ranked No. 4 in the nation behind
three California cities: Stockton, Merced and Modesto.

Brian Wargo covers real estate and development for In Business Las Vegas and
its sister publication, the Las Vegas Sun. He can be reached at (702)
259-4011 or by e-mail at wargo@lasvegassun.com.

[jfkIII]

Garth explains the housing situation in a typical LV terms...apply his answer to stint at a craps table, and it's strangely the same!

[garth]

Originally Posted by jfkIII

Garth explains the housing situation in a typical LV terms...apply his answer to stint at a craps table, and it's strangely the same!

I personally don't see the parallel with a Craps table, but then again I wouldn't because I don't gamble and certainly don't know the rules of Craps. Real Estate is all a matter of supply and demand. It's the months of supply number that will show whether or not there's more supply or more demand, which has nothing to do solely with LV terms. It applies everywhere, including such a market as Las Vegas.

SHEPNYC's referenced article certainly sounds reasonable. If it works that smoothly, I would be happy to see it play out that way, even though I have no interest in the Las Vegas market. It would, however, likely parallel other markets in the country so that's where my interest would lie.

[asik]

My opinion is that Las Vegas real estate prices will decline at least 50% over the next four years. A lot of people speculated on houses and there are a lot of vacant houses or houses renting for less than the mortgage. The owners won't sell at a loss, so prices won't go down until foreclosures go up and the banks sell the houses.
There was a lot of insanity here that must be rectified.

[ParkTwain]

50% down in the near future? I'd say there's a very low probability of that coming to pass. There are too many jobs being created in Vegas and too many folks moving into Vegas and sopping up the inventory of homes for sale, which is high right now. It's a good time to be a buyer, and with Vegas's inflow of new residents, there are always buyers. And current prices are still a good bit higher than 3 years ago and earlier.

Just look at zillow.com or a similar website. I'm seeing less than 10% nominal price decreases in the past year. Mid to late 2006 was the price peak. My home in Summerlin is presently showing a 3% nominal decline in 12 months. No bottom falling out around here.

[Buzz123]

I don't know where the numbers come from but it doesn't look like the stats take into account the 7000 per month that are still moving here looking for homes, or the fact that Las Vegas is landlocked and will run out of space one of these days. Plus the job market looks very strong.

If no more homes go on the market, and no more new ones built, new residents would eat up the inventory pretty fast. Of course, there are still new homes being built, so it must not be all bad. Even though new construction is down by more than half to around 1500 or 1600 per month, builders aren't suicidal. They must figure they can sell what they are building. I don't know what sales have been like but the model homes seem to get a lot of traffic.

Just because of our local economy, if prices drop drastically here, they will drop even more drastically everywhere else first. If they rise elsewhere, they will rise even more here. A rising tide lifts all boats...and vice versa.

[ParkTwain]

There is a generous helping of bogosity in all the reporting about the LV real estate market. I have not found the reports written by local reporters to be worth very much, including the In Business LV site (all the Greenspun media organs are basically lifestyle publications, IMO, even the Sun, whose news reporting is VERY THIN).

Let's say there were 100,000 home sales transactions two years ago, when prices were rising. Let's say there are 50,000 sales transactions or fewer this year, when prices are declining. All you are going to read in the newspapers is SALES ARE DOWN, PRICES ARE FALLING! AGGHHH! When, in fact, this is a relatively positive situation. That's because, as there are fewer sales transactions taking place, there are obviously fewer owners (including new owners) willing to sell while prices are falling. Those owners obviously believe that prices will recover in the "foreseeable future" and there is no good reason to sell in the meantime.

There is a legitimate argument to be made that a short-lived, significant drop in "home prices" (which is also a very nebulous term) will cause those in the worst financial shape to throw in the towel and exit the market. After that point, the only owners willing to sell will be those who are financially capable of waiting for higher prices.

Also take into consideration the land shortage for developing new large housing tracts and the continuing exodus from California.

The LV economy is growing. More jobs are being created, more retirees are arriving, more professionals are showing up. I would say that today's home sales data is telling you that the market believes home prices will resume the previous upward trend (not as steep, granted) before you know it.

(See also my recent post on another thread: //www.city-data.com/forum/nevad...t-like-13.html )

[Ken Douglas]

Just so you are well informed. Las Vegas now has about 25,400 properties resale properties on market. The people moving to Vegas are under 6,000 per month and it now has and has had a high crime rate for the past 3 years.
Las Vegas has a way of reinventing itself. Check out the High Rise properties along with all the conventions and occupancy rates regarding the hotels and codotels....Don't sell the volitility short......