‘Definitely A Buyers Market In Las Vegas’: USA Today
A pair of reports on markets in the Nevada area. “The Lake Tahoe home market continued its slowdown through the first six months of 2006, according to a report released by a Incline Village-based real estate firm. Through the first half of this year, the amount of existing single-family homes sold fell 41 percent from the first half of 2005, to 404 units, for the combined East Shore, South Shore, Tahoe City and Incline Village areas.”
“Homes of more than $1 million have fallen 16 percent, to 106, through the first half of this year compared with the same period of 2005. Sales of less than $1 million have dropped to 298 so far in ‘06, down 46 percent from ‘05, according to the report.”
“Lake Tahoe condominium units sold, on 140, is down 37 percent through the first six months of last year. ‘I don’t think we need to be concerned until we see the median and average prices starting to drop drastically,’ Sue Lowe, VP for Chase Intl. said. ‘We are going back to our typical market. We have more inventory and a longer period of time to sell your home.’”
The USA Today. “Real estate looks like one of the biggest gambles in Las Vegas. About 60% of home buyers from January to March took out high-risk loans that give them the option of paying only the interest or even less each month, according to LoanPerformance.”
“The number of condos listed for sale is up 67% from last year. And a dozen projects are under construction or have recently been completed. ‘The condo market, there are your investors; that’s the whole story of the market,’ says Dennis Smith of Home Builders Research, a data firm.”
“At least five condo projects have been canceled in recent months. Sales of single-family homes were off 17% in May. And with a 7½-month supply, it’s definitely a buyer’s market.”
Looking at the graphs on the USA Today link, it shows sales in Nevada down 24.8%, which is even more than LV. I recall the LV realtors reported record inventory in May, and the Tahoe report doesn’t give counts of homes for-sale. Maybe some locals can provide some insight into Nevada.
you would think that with all the press that it would be difficult to finance these things. however, the subprime community continues to “innovate”, from my email this morning:
“NEW 50/30 LOAN OPTION
· Available on EZ Grade, EZ Score, 80/20 Combo and Quick-Fi
· 2 yr, 3 yr and 5 yr ARMS and 30 year terms available
· Up to 95% LTV available
· Full, lite and stated doc
50/30 option amortizes over 50 years with a balloon payment due in 30 years”
NO BK SEASONING DOWN TO A 540 FICO!!!”
good god, what is a quik fi, i’m not sure i want to know.
Is a lite doc - low in calories or low in TRUTH???
a quik fi is when you “f”" an idiot,quickly.
This “innovation” you are speaking of only proves that the money spigot from the fed/derivative/gse/wall st. money machine is wide open and running full-throttle. I often wonder where all of this money will land now that housing is crashing. Will it simply vanish with all of the bad debt? If so, get ready for the big D. Personally I doubt there is an asset big enough to absorb the current bubble.
vegas gal where ru
I love how quickly the months on the market figure can change. I believe it is calculated from the previous 12-months of sales versus current inventory. 12 months ago we were selling at record levels and every month we move forward with a drastically lower sales figure with the drastic increase in inventory, that 7 1/2 month figure could 9 months next month and a year by December. How’s Learah gonna spin that one?
Well my guess is
Thank goodness its a normal market. We just couldn’t keep up that pace for too long…we would all be rich!
Oops strike that last “rich” commnet!
We must live in a parallel universe as this recent articel paints a rosy picture for the LAS market. I would link the article, but I found it on LexisNexis.
High times ahead
“Jun. 29–The housing market in Las Vegas is entering a period of extraordinary transition with the first real influx of high-rise condominium sales in May, a local researcher said Wednesday.
Larry Murphy, president of SalesTraq, said May’s housing statistics offer “intriguing clues” as to why the much ballyhooed housing bubble has not burst in Las Vegas.
While the inventory of homes for sale reached an all-time high of 20,515 in May, about double from a year ago, it’s a supply of six to seven months based on sales through the Multiple Listing Service. That’s a relatively healthy market, Murphy said.
Prices have yet to diminish, as many predicted at the beginning of the year, he said.
Median resale prices are hovering around their all-time high at $284,950, a 5.5 percent increase from May 2005, and new home prices jumped 11.8 percent to $324,757. The number of new home subdivisions in the market declined for the second consecutive month.
Forty-eight high-rise condos closed escrow in May, including 40 at SoHo Lofts in downtown Las Vegas. That compares with 64 total sales in 2005 and 11 through April of this year.
“While the number was relatively small, it’s a harbinger of things to come,” real estate consultant Steve Bottfeld of Marketing Solutions said. “They’re going to be closing all of building one at MGM Residences, 580-some units over the next two to three months. Panorama is closing, SoHo, Sky (Las Vegas). So suddenly this has all been coming and coming and now it’s here. Start looking for that to be a regular and increasing number.”
Combined with the slowdown in sales of lower-priced condo conversions, the uptick in high-rise sales will drive home prices significantly higher by the end of the year, he said. There were 352 condo conversion sales in May, a 29 percent decline from a year ago and less than half of January’s sales.
Bottfeld forecast a drop in condo conversions at SaleTraq’s housing seminar in January. He said the slowdown in conversions would push vertical construction, particularly midrise, to the market’s forefront over the next two to three quarters.
The number of high-rise units coming onto the market will continue to rise as the first wave of new projects are completed, said Aaron Yashouafar, developer of the 45-story, 409-unit Sky Las Vegas condo tower on the Strip.
“Obviously, this is going to shoot up total sales volume in the Las Vegas area,” he said. “This is a very exciting time for the Las Vegas residential market.”
New home closings rose by a fraction in May from the same month last year at 2,933, according to SalesTraq. Year-to-date new home sales are up 8.9 percent. On the other hand, existing home sales are down 9.8 percent for the year. There were 4,163 resales in May, a 17 percent drop from a year ago.
Murphy said the big story is the number of incentives being offered by builders, including paying higher broker commissions, putting in free upgrades and paying for closing costs. “The list is getting longer every day, and for the last two months incentives are getting bigger,” he said.
The first clue that there is no housing bubble in Las Vegas is price stability over the entire year, Bottfeld said. Price appreciation has dropped in markets such as Phoenix, Denver and San Diego, according to the Office of Federal Housing Enterprise Oversight. Over the fourth quarter of 2005 and the first quarter this year, appreciation in the Las Vegas market has risen.
Secondly, the new-home market in Las Vegas is beginning to compress in response to market conditions, he said. With fewer new home communities, the resale inventory will be absorbed quickly.
Murphy is less optimistic.
“This inventory will be with us for the rest of the year and will moderate the prices,” he said.”
Hubble Smith, Las Vegas Review-Journal. June 29, 2006
The Review Journal is the biggest schill for real estate developers I have ever seen. They are absolutely shameless and will doubtless print positive articles all the way to the bottom of the real estate crash.
Here is the link:
http://tinyurl.com/jynge
“Murphy said the big story is the number of incentives being offered by builders…”The list is getting longer every day, and for the last two months incentives are getting bigger,” he said…”
“The first clue that there is no housing bubble in Las Vegas is price stability over the entire year”
Maybe prices are stable BECAUSE of more and more incentives? Taken to absurd levels, the builders could offer 100% cash back at signing as an incentive to keep prices ’stable’…but what would that do to the prices of *existing* houses?
Here is a post with inventory detail on Tahoe:
‘Two months ago, the market showed 407 in current inventory. Last year at this time there were 268 homes on the market. A few years ago, 88 homes were listed. ‘The pie is so much greater now. The buyers right now are smart,’ said association President Theresa Souers. ‘We’re seeing a correction that’s happening across California.’
Some related links:
‘Hundreds of new teachers attended the ‘Coming Home’ workshops, which started last fall as a recruiting program. Housing prices are slowly dropping in the Las Vegas Valley, but they can initially seem prohibitive for new teachers or those who have been in the district for only a short while.’
‘North Las Vegas originally planned Desert Mesa to be a 123-home low-income residential development on the southern edge of the city. But the project was stymied by construction delays, soil problems and lawsuits from contractors, and it led the U.S. Department of Housing and Urban Development to classify the housing authority as a ‘troubled’ agency. Desert Mesa is now a fenced-off collection of 15 half-finished and graffiti-covered homes, vandalized beyond repair.’
The buyers right now are smart,’
only if they wait… but then they’re not buyers anymore…
That Desert Mesa development is a prime example of why government agencies should not be in the housing business. In this case, they managed to turn it into an abandoned slum before anyone even moved in - in fact, before the construction was complete. Another triumph for low income housing programs…
You don’t understand. Not enough money was thrown at it. If only we had taken more money from others by threat of force we could have had a nicer society for everyone.
I keep hearing “buyer’s market,” but I don’t yet see a market favoring buyers. Prices are still sky-high, and now loan rates have made buying even less favorable to all but the congenitally naive. Like some Nigerian 419 scam, the media (and realtors) keep parroting “buyers market,” hoping to net the last few unaware buyers.
It won’t be a “buyers market” for a few seasons.
Good point- I had never given thought to the idea that the “buyers market” mantra is nothing more than marketing by NAR, homebuilders, etc. The uninformed may assume it is now safe to buy since the market has returned to “normal conditions.” As many have mentioned, it feels like the beginning the the tech bubble burst when investors (including me) attempted to catch a “falling knife”.
It will be a buyers market once newspapers spew at great length about how bad real estate is and how it will never come back.
Then it will be a buyers’ market.
Remember whose ad revenue pays the bills for your local newspaper’s operation (real estate), and then it will become clear why “buyers market” is the new mantra.
It would be interesting to see how many of us on the blog got “bitten” during the Dot-Com bust. I lost $25,000 at first, mitigated down to about $11,000 by dollar-cost-averaging on the way down and firing my financial planner. Bad me.
Got bitten and burned, probably one reason I was drawn to this blog. C’mon, fess up! Is it 10%, 25%, 50%, higher? What do you think?
Were you a GF who never wants to be one again?
Didn’t personally get bitten, but my pension fund had negative earnings 3 years running. In terms of total benefit I would have been maybe $100K better off if they had gone to cash in mid-2001.
On the other hand I put some of my own money into counter-cyclical managed funds in 2000/01, specifically to try and counteract what I thought might happen with the pension money. Those funds did quite nicely, so net-net I probably broke even.
In fact my biggest blunder (I live in Australia) was during the 90’s, when I listened to the logic of a very conservative adviser who kept saying stocks were overpriced by historical ratios. I therefore stayed out of equities during a decade when (even without your tech boom) they outperformed everything else.
It really depends on your definition of a “buyer’s market”. To me, it is a market where prices are relatively low, inventory is high, competition from other buyers is minimal, rates are reasonable, and the employment picture is stable.
Prices low? Not even close.
Inventory high? Getting higher every day.
Competition from other buyers? Getting better every day.
Rates? Pretty reasonable.
Employment Picture? Getting worse every day.
More than likely, the perfect time will be when all variables except the employment picture are favorable. I suspect it will be very scary buying a home after the bottom falls out, with all the news of layoffs, the recession, people losing everything, etc. It won’t be easy using the bulk of my safety net for a down payment in that environment, especially with the MSM beating every sad story to death.
” It won’t be easy using the bulk of my safety net for a down payment in that environment, especially with the MSM beating every sad story to death. ”
True. You know the MSM will be putting sadsack FB stories on the 10PM news at that point…they have to.
Yes, it will be a target-rich environment for crusading consumer reporters looking for sobbing “victims” to feature.
Wouldn’t it be if this collapse could be used as a “tecching moment”?
Imagine your local nightly news running an “FB of the Day” segment, explaining how a featured debtor committed financial suicide. As the debtor is kicked to the curb, the segment tagline would be:
“Lost another one to Ditech.com!!!”
The best time to buy is when *everyone* tells you you’re an idiot for buying.
The thing I found most interesting from the USA today article:
About 60% of home buyers from January to March took out high-risk loans that give them the option of paying only the interest or even less each month, according to LoanPerformance. (Would their odds have been better at the blackjack table?)
Even though sales are down, the homes which are selling right now are selling to the most marginal of borrowers. I am sure we can look forward to a healthy portion of the 60% defaulting in a couple of years.
“I am sure we can look forward to a healthy portion of the 60% defaulting in a couple of years.”
Maybe a lot sooner than that. From Charles Hugh Smith’s blog today, quoting an unsolicited loan teaser he received:
“The payment examples are based on a fixed pay option ARM with a 30 year loan term and has a fixed initial payment based on a 1.00% minimum payment rate for the first year. The fully indexed rate is based on a fixed initial interest rate of 5.25%, 5.54% APR for the first 12 months and may increase or decrease after the fixed period.”
I have no idea what portion of currently-written Option-ARMs have a 12-month re-set, but I’d guess the number is rising rapidly.
I am scraping my jaw off the ground.
Sorry about that; it’s just that (as an Australian) I’ve been reading about option-ARMs and teaser rates on this blog for months without seeing (or maybe thinking about) the actual numbers.
Are you telling me that, for example, on a $600K loan you only pay 500/month for the first year? Holy moly, what a come-on. And then you reset to maybe $3000/month?
A loan like that seems designed to generate defaults down the line.
prices have come down plenty on apple to apples sales-if you want to list and price to sit, have at it
off 5% in 22151 N VA
‘A buyer’s market’ in Central Valley
COMMUTE COSTS, INTEREST RATES ON THE RISE, SPURRING SLOWDOWN
http://www.mercurynews.com/mld/mercurynews/business/14976554.htm
As Bay Area home sales boomed during the past decade, the spending spree extended to Central Valley towns where workers willing to brave hours-long commutes could buy sprawling homes for the price of some one-bedroom Silicon Valley condos.
Now, it’s a far different market.
Lots of stupid buyers who are clueless regarding value… lol… $600K 1br/ba Give me a break… watch as you been digging your own financial grave…
Tracy resident Elaine Tabasa, who commuted to Fremont for her job in high-tech marketing before she went on maternity leave a few months ago, bought a three-bedroom house for about $400,000 in 2004. She and her husband, Chris, moved there from Milpitas. She thinks the house is worth close to $600,000 now. They have no plans to sell soon, though someday she’d like to move closer to the Bay Area again.
“If we decided to move back to the Bay Area, we could take that equity from the home in Tracy, and use it to buy another house in the Bay Area,” while keeping the current house as a rental, she said. “I think our house is still a good investment.”
Hmmm…equity in the Tracy home? Here we go…another one living in a cloud. Someone please tell me…doesn’t local/national media, internet access run out to Tracy? It’s more like they will be lucky if they can get a price of $400k (the price they paid for it) when they are ready to move. How could they not know of the market turn that’s happening? The prices in Tracy should NOT be what they are right now….there are even $1 and $2 million dollar properties there. Unbelievable. There was a time when Tracy was one of *the* destinations* for reasonably priced housing for those who could not afford the Bay Area proper.
Boy, oh boy, are these folks in for a very, very rude awakening.
BayQT~
It is unbelievable how much homes cost in Tracy and surronding areas. They got the last parts of the boom when people got priced out in the Bay Area. Now houses are $500K and over in the central valley. These areas will get hit hard when the downturn comes.
I’m counting on such an effect when I buy. Why? I wish to buy in the “core market” of Los Angeles. Only by getting my compitition “under water” can I outbid them (at reasonable prices).
The outlying areas of the major cities are in for a world of hurt… this has always been true of Los Angeles housing downturns; I doubt it will be different anywhere else (with oil near $75/bbl).
Neil
Her math and lack of understanding of finance also shows her stupidity. I really don’t understand these people.
“we could take that equity from the home in Tracy, and use it to buy another house in the Bay Area,’’ while keeping the current house as a rental, she said. “I think our house is still a good investment.’’
Doesn’t she understand that “taking the equity” is a LOAN. Borrowing money to get into an even higher priced, higher mortgage home (+higher taxes, insurance, etc.). Also, adding to the debt will be the neg cash flow that would certainly be the case if they kept and rented out the current home in Tracy. This strategy worked for some of the idiots that lucked out on their timing when appreciation was 20% a year, but will bankrupt anyone trying it now. The ONLY way to enjoy the “equity” is to sell and relocate to a LESS expensive home.
Why would anyone in their right mind buy a house for $600K in a town called “the Toilet”. It is far from any major city, and smells like permanent ‘bovine fecal matter’.
just wait till that area gets digesters.
It was a “buyers market” in 1929 too.
One more contrarian reason for the homebuilders to rally: Yet another analyst downgrade.
————————————————————————-
THE RATINGS GAME
Still waiting for the housing nadir
BB&T cuts home builders after longer-than-expected slowdown
By John Spence, MarketWatch
Last Update: 4:04 PM ET Jul 6, 2006
BOSTON (MarketWatch) — BB&T Capital Markets reduced price targets and some ratings for home-builder stocks, saying it expects order trends to remain soft through next year as the housing market continues weak.
“The U.S. housing market continues to slow and hasn’t yet shown definitive signs of stabilizing — which, if you’d asked us a few months ago, we’d have said we expected by now,” analysts L. Todd Vencil, John F. Kasprzak Jr. and Paul Betz wrote in a research note Thursday.
The nation “is now solidly in the teeth of a significant housing-market slowdown,” the analysts added, noting that annual rates for sales of new and existing homes in May were down 9.7% and 8.3%, respectively, from last summer’s highs. Meanwhile, the supply of homes sitting unsold on the market is running at a historically high six months.
“The story is similar for every measure we look at: starts, permits, mortgage applications, traffic, builder confidence — all down,” BB&T said.
http://tinyurl.com/h86td
TOL hit its high of the day, up 2% five minutes before the closing bell. That’s a fat one for a short tomorrow if you can manage it in the first half hour or so IMO.
There was so much disbelief about the newly-popular “ADP employment report” yd and today that they even started rumors on the NYSE floor that ADP would “revise” it. Oh brother that is so obviously so stupid in three different ways that tomorrow’s pre-open employment report (gonna be double what they thought it was, right in line with the ADP numbers, IMO) is gonna be like a bomb.
Where is LV Landlord?
Has Ben banned her?
I gotta get my Bagdad Bob moment for the day!
“Where is LV Landlord?”
Nicaragua. Using an assumed name.
In court to get back her deposits on the 12 pre-con units at the Hard Rock?
The first clue that there is no housing bubble in Las Vegas is price stability over the entire year, Bottfeld said. Price appreciation has dropped in markets such as Phoenix, Denver and San Diego, according to the Office of Federal Housing Enterprise Oversight. Over the fourth quarter of 2005 and the first quarter this year, appreciation in the Las Vegas market has risen.
what an absolutely inane statement. this is like folks in Sri Lanka saying 5 minutes before the tsunami hit that there will be no tsunami because Thailand and Indonesia already have been hit and since they haven’t seen it yet on their shores they should be ok.
Well, Las Vegas is a family-friendly city. They don’t tolerate wild speculation and gambling. Why should there be a bubble there?
why would anyone buy a high end condo in vegas when they could buy a $2m house in lodi on a full quarter acre?
Been to Lodi?
$450k houses in Gustine! Hahahahahahahaahhahahahahaha! You know the end is near when houses in bad areas like that cost far far more than the median household can legitimately afford without “cheater” mortgages that will blow up in their faces.
I am in CT and am seeing many commercials for condos on the LV strip. They are pathetically trying to drum up sales because nobody W of the Mississippi is interested….
Let’s get Baghdad Bob to start doing guest appearances. He could have quite a career here doing stand up comedy on late night TV. He would be hilarious.
check out Bob right here…
http://www.davidstuff.com/bagdad-bob.htm
Very OT but great!
(We are going back to our typical market. We have more inventory and a longer period of time to sell your home.’”)
that’s just short rest stop on the road to disaster.
‘I don’t think we need to be concerned until we see the median and average prices starting to drop drastically,’….says Suzy the realtor.
I thought that a “buyer’s market” was when you see the median and average prices HAVE DROPPED drastically…
If a RE agent needs a sale likes a junkie needs a “fix” or a vampire needs a “drink”, isn’t there a conflict of interest between the seller/buyers best interest and the hungry stomach of the realtor?
Is that why they lie?
Why would anyone buy a condo in Vegas?
Well heck who wouldn’t want a 1350 sq ft pad that will negative cash flow more than $25,000 annually? When if YOU have that kind of throwing around spare change to gamble on in Vegas….why not get hooked up in a Vegas suite at one of the strip hotels, post your $25K at the cage, get your room stay comped, pool useage, a few free meals & your room cleaned and beds turned…
But then of course, that is gambling not investing, and you are sure someone who has money like you do will come and rent your 1350 sq ft pad, RATHER than post the cash at the cage!
The world gone mad I say, MAD!