“Homeowners Cutting Prices To Make A Sale”: Las Vegas
A housing report from the Las Vegas Sun. “Prompted by falling home prices, the Clark County assessor’s office has reduced the assessed value of some homes by more than 10 percent. The reductions give dramatic evidence that a cycle of rapid appreciation has ended in the Las Vegas Valley.”
“Of the 590,000 residential parcels in Clark County, the assessor’s office said the property values of about 85,000 - 14 percent - have decreased. Of those, about 60,000 were reduced by an average of 5 percent and 25,000 were reduced by an average of 10 percent, county officials said. There were a few reductions as high as 30 percent, based on the recorded sale prices of homes.”
“The lowering of the values by Clark County is the most tangible evidence to date that more homeowners are cutting prices to make a sale. Assessed valuations are used by appraisers in determining values of homes on the market, and the reductions may mean banks won’t be willing to finance homes for what some buyers are seeking, said Richard Lee, VP of First American Title.”
“The reduction in assessments has occurred throughout the Las Vegas Valley, including entire neighborhoods - such as one in Anthem in Henderson, where the assessed values of 176 homes were each slashed by $30,000.”
The Review Journal. “Las Vegas median home prices dropped to $306,100 in December, down 2 percent from the same month a year ago, and the inventory of homes for sale shrank for the second straight month to 17,834, the Greater Las Vegas Association of Realtors reported Monday. It’s still up by a third from last year.”
“Realtors sold 1,644 single-family homes during the month, a 32.5 percent decline from a year ago.”
“Devin Reiss, new president of the Realtors association, said this year is going to be about ‘balance in the market.’ ‘Prices have decreased so slightly that it’s hard to believe that we can expect anything other than the status quo for this market through 2007,’ Reiss said.”
“The median price of a condo or townhouse is off 4.4 percent at $195,000 and the number of units for sale is up 86.2 percent to 4,833. There were 372 condo sales in December, down 36.6 percent.”
“The GLVAR statistics are based on data collected through the Multiple Listing Service and do not necessarily account for newly constructed homes sold by local builders, sales by owner and other transactions not involving a Realtor.”
“Community bankers are being more closely scrutinized for their commercial real estate lending activity, which could hurt the nation’s economy if banks unnecessarily pull back from sound lending practices, an executive for the Independent Community Bankers of America believes.”
“‘In this marketplace, the last couple of years, the FDIC got worried. They saw all these cranes in the air,’ said Nevada Bankers Association President Bill Uffelman. ‘To my knowledge, no bank has been dinged for being overinvested in CRE. That doesn’t mean they don’t come in and look at it.’”
“Ann Grochala, lending and accounting policy director for ICBA, said regulators might ask community banks to increase their capitalization, depending on the institution and what they have on their balance sheets. ‘What we’re waiting to see is how these guidelines will be implemented. That’s where the rubber meets the road,’ she said.”
“The Bureau of Land Management is selling 12 parcels of federal land totaling 56 acres at public auction March 7.”
“The land is being sold under the Southern Nevada Public Land Management Act of 1998, which directs the BLM to provide for the orderly disposal of some 27,000 acres in Clark County based on recommendations made by local governments and the public, BLM sales supervisor Ann Wharton said. The disposal boundary was expanded to about 45,000 acres.”
“Bidding starts at the federal government’s appraised fair market value of each parcel. Most of the parcels are 2.5 acres and appraised at $900,000, BLM spokeswoman Hillerie Patton said. At the most recent auction in August, the BLM sold 27.5 acres for $11 million, or about $400,000 an acre. Since November 1999, the BLM has sold 13,000 acres for nearly $2.8 billion at 13 auctions.”
“‘I think the BLM is looking at the overall market and trying to maximize their profits on the land, and if they don’t see the opportunity, they’re not going to do it. Right now, demand for residential land, especially low density, is not what it was a year ago,’ Nevada Title Co. land specialist Travis Nelson said.”
Note: Commercial real estate lending can include loans to residential developers.
‘I think the BLM is looking at the overall market and trying to maximize their profits on the land.’
Also in Arizona, the various state organizations sit on land that belongs to the public, while talking about affordable housing! Suppose nobody shows up at the auction? After all, who will loan money to buy depreciating raw land? From the reports:
‘The threshold of their (lending) authority depends on what we’re developing,’ Field said. ‘If you’re building something, it’s easy to get a construction loan, but land acquisition is more difficult unless you put up significant capital investment in the deal itself. It is a bit of an obstacle. You really have to be building something to get financing.’
BBBububuttt…. This land is valuable at any price….
I mean they’re not making any more of it….. ESPECIALLY around Vegas. Remember the endless drumbeat?
Well particularly good piece of real estate if you are a rattle snake.
This desert scrub should go for
This desert scrub should go for less than $5000 per acre. The prices these builders and developers have been paying are hysterical. I cannot understand why land in both southern and northern NV is not plummeting in price right now. Maybe it is just not obvious.
Not when actual farmland goes for less in flyover country. I tell these people in Arizona what I think this scrub is worth and they look shocked.
I’m with you. $100 per acre sounds good to me.
Bah 50$ per acre and even at that price, it’s a lot.
OK, free with a promise to imrove it!
BLM is supposed to sell the land at the fair market value at the time of the sale, not hold out for more profit in the future. The value of land in Las Vegas has been an aberration for years because of the BLM. Las Vegas is in the middle of an empty desert, thousands of square miles of vacant land controlled by the federal government.
Home costs in Las Vegas are way out of line with true value, and affordability.
Not to mention Vegas lacks a basic ingredient for home continued growth/appreciation: water. Doesn’t LV “import” most of their water from AZ and CA?
It comes out of the Colorado River, which isn’t the most reliable water source on the planet. And California, Arizona, and Nevada have been squabbling over how much each state can extract from the Colorado, oh, for decades.
The Colorado River no longer makes to the ocean because they pump so much water out of it. I think it ends in a muddle puddle somewhere in Mexico.
Oupsss! Well. Steal the water from Canada.
Global warming will melt the ice caps and fix all that.
See, there IS a plan!
Melting an ice cube in a bucket of salt water doesn’t make it any more potable.
“The GLVAR statistics are based on data collected through the Multiple Listing Service and do not necessarily account for newly constructed homes sold by local builders, sales by owner and other transactions not involving a Realtor.”
Nor would they want them to because if they did, it would just cause the MLS numbers to look that much more ridiculous
“Prompted by falling home prices, the Clark County assessor’s office has reduced the assessed value of some homes by more than 10 percent. The reductions give dramatic evidence that a cycle of rapid appreciation has ended in the Las Vegas Valley.”
… and a hint that a protracted countercycle of rapid depreciation is already underway …
This should be good news for anyone who has been holding out looking to buy a house. As the tax assessments drop, in some cases below the purchase price of the home, the seller will be forced to drop the price. The bogus bank mortgage assessments aside.
C’mon guys. Real estate never loses value, hence there can be no depreciation. This is merely “negative appreciation” or, as I’m hearing more often, “contraction.”
Massive leverage unwinding can’t escape a period of of even modest “negative appreciation”. Once the gentle portion of the slippery slope gets passed is when we see the evidence of the unprecedented massive-leverage-built house-of-cards come toppling down. Dominos are falling nicely.
“Devin Reiss, new president of the Realtors association, said this year is going to be about ‘balance in the market.’ ‘Prices have decreased so slightly that it’s hard to believe that we can expect anything other than the status quo for this market through 2007,’ Reiss said.”
….yeah I would buy that except for the fact that the # of condo units is up 86.2% vs. YAGO while sales are down 36.6%. What happens when even more units flood the market and even fewer people buy? Tsunami?
Listings in the greater Reno/Tahoe area really ramping up lately. Looks like more than 500 within the last week.
Let’s see, some quick math: 17,834 for sale/590,000 residential parcels=3% of all residential parcels are for sale.
Is that high or low?
With listing turnovers running 60 to 90 days that means something like 10%+ of all res parcels are actively seeking sales. With housing replacement rates at 2% or so a year, that sounds damn high. Like double or triple a sustainable rate.
That’s only MLS, not most new homes or FSBO.
Yeah, I was leaving out the squishy numbers. Also not included are homes that were pulled for relisting in the spring as well as homes that are still under construction.
I can’t believe they actually lowered taxes? I bet it takes a year for that to happen here…
Maybe they are trying to encourage the buyers to come back into the hosing market?
a year… do you live in the same florida I do. I am thinking they wont do a reasses unless you ask.
The article says they aren’t lowering taxes, just assessments for new buyers.
AH, I missed that, thank you, so the FB’s still get the higher taxes with the depreciation, they must be so happy to have those lovely mcmansions…
Obviously if the house was worth the price they paid, then they should be happy to pay the tax on that price.
GO FIGURE? if i lower the price i might sell. what a great idea
From the article, Devin Reiss also states:
“While we do not discount the national studies that have come out, we recognize that the studies do not take into account local economic conditions, such as lack of private land for development and the continued job and population growth that make Southern Nevada different from other parts of the country.”
Of course…. It’s DIFFERENT in Vegas…
What lack of land is he talking about? The BLM is trying to sell land all around him, while existing homes are being assessed downward? Wow, this guy is quite the optimist!
Idiot would be a better choice.
imploder: no sh!t that guy is an optimist! The fact that a large portion of the surrounding land is public is irrelevant, as you pointed out with the BLM sales. Let me count some of the ways S. Nevada is different: hotter than hell, an economy based almost 100% on tourism, lots of lower paying service jobs, lack of water, lack of culture, etc, etc…
I often wonder what will happen in Lost Wages as the bubble really starts to hit home? Will people in neighboring states stop visiting and blowing money when they find their housing ATM has gone dry?
I keep checking the mailbox for my check for my share of the proceeds from all these BLM sales.
Should’nt I as a member of the public get a share of the proceeds? What is this USSR 1990?
Your share is being sent directly to Halliburton.
Is there anyone here familiar with the new southwest development area in LV? particularly a place called Mountain’s Edge. Brother-in-law owns a place in the something Villagio…actual address is 8xxx Luna Sera. The whole gated community is 50% pitched dark at night. Most places have no blinds. 3 for sale signs on the same street. Almost like living in the ghost town.
My wife and I almost bought out at mtns edge 2 years ago. We backed out and KB has since lowered the price on the house we had signed on by over $50,000.
I believed he paid $800K for his 4500sf plus all the upgrades and the swimming pool.
800k in LV? 800k? Is he out of his f* mind? and 4500sf? The electric company must LOVE him in August. Either that, or he stays at the mall until 10pm, then soaks in his pool till dawn.
UnF’n believable. If that isn’t a sign of heavy drug usage by the masses, I don’t know what is.
They’ve been pushing Mountain’s Edge with a lot of ads for many months now, much moreso than most other new home communities. In fact, I noticed how numerous the ME ads weve before I moved here.
Can anyone tell me where I can find data the shows the price listed versus the price sold for properties in socal? I think it would be a telling statistic. What other criteria should I use as negotiation leverage at this time?
“Negotiation leverage?” How about this: Make the most aggressive, reasonable off you can given your local market. Stipulate in the contract that seller has 24 hours to respond - yeah or nay - no counteroffers will be entertained. Keep moving down the block until somebody bites.
I have been both a buyer and seller of RE at market extremes. You will not believe how nice it is to be on the right side of the table. You can require a backrub - and get it - if that is your thing. Patience is the best leverage, trust me.
The last property I bought, I made an offer that expired in 4 hours. I’ve never given a seller more than 24 to think about it and/or play me off of another potential bidder.
“Can anyone tell me where I can find data the shows the price listed versus the price sold”
Realtors have this info, corner one and ask for a CMA report for the area you are looking at. Then release the Realtor back into the wild so that it can breed and make more Realtors.
Hey everyone.
This is my new name for 2008.
Used to be ‘Auction Heaven in ‘07′.
Thought more attention needed to be paid to the Fraud aspect of this ridiculous bubble so I put it right there in the new name.
As for Vegas, and the Assessor’s office lowering prices…
I think that just about plunges a stake into the heart of whatever crap the REIC has been spewing out there. Kinda hard to argue that away in a soundbite, but I’m sure they’ll keep trying.
You will always be ‘Auction Heaven’ to us.
Oh LVLandlord, where are you when we need you?
Why have you forsaken us?
LOL. I always think of LV Landlord when I see the dire headlines from Las Vegas. She scuttled out of her with her tail between her legs when her “it’s different here” mantra became completely untenable. It was fun in those early days (2005), back when this blog had some genuine kool-aid drinkers that have since gone down with the ship.
OT - Another one going down:
Popular Finance
——————————————————————————–
Originally posted by michellet
I just heard at work this morning that Popular Finance is closing in March I believe.
——————————————————————————–
Yup our AE said the magic date is March 14th, supposedly not closing but reorganizin
http://forum.brokeroutpost.com/loans/forum/2/84103.htm
“‘Prices have decreased so slightly that it’s hard to believe that we can expect anything other than the status quo for this market through 2007,’ Reiss said.”
Well, he got the first part right - prices have only decreased slightly so far. But, as for the second part (status quo for 2007), I can think of at least one other possibility - much bigger price drops.
“‘Prices have decreased so slightly that it’s hard to believe that we can expect anything other than the status quo for this market through 2007,’ Reiss said.”
—————————————————————————-
Translation: The numbers we fabricated were expected to give the impression of a minimal price reduction so that we could pull in more GF’s.
“Yup our AE said the magic date is March 14th, supposedly not closing but reorganizin
http://forum.brokeroutpost.com/loans/forum/2/84103.htm
”
Right… and when hole-in-the-wall restaurants close for “remodeling” they open up again soon…
There is a land shortage in LV. Actually there is a shortage of clean land in LV.
The US DOE Nevada Test site is only 60 miles from the LV airport. Look for the town of Mercury Nevada on your map, during the 50s and 60s they conducted hundreds of above ground nuclear bomb tests at the site. At the atomic cafe, a restaurant in Mercury are photos of the famous ” Welcome to Fabulous Las Vegas” sign with mushroom clouds behind it. The 70s brought more underground testing. The contamination lasts many thousands of years. Check on your map for Yucca Mountain, about 90 miles from LV airport. This is the future waste storage site for all of the nuclear waste from all the power plants in the country. Look at the road map and you will see all this waste will be trucked right through LV, there are no other ways to the site. Having worked at the test site, I remember the signs on the road “Do Not pick up metal on the ground” (could be a radioactive fragment from a bomb). Wait till the contamination leaks into the Colorado River as government modelers predict. now that the bubble is over in LV, the developers can move to Chernoble.
My step-sister and her husband own two houses in Henderson, one in Green Valley and one in Anthem. They bought the one in Green Valley new in 2000 for $145,000. It’s a standard 3-2 cookie cutter with literally no land. When you go out the back door there is a mesa/mountain thing within arm’s length. Imagine having your house up against the bottom of a cliff…like that.
They bought the one in Anthem last summer for something like $480,000. This time a 4-2 cookie cutter in a gated community with no land at all.
They did not sell their Green Valley home first, but did take most of the equity out (they say for a down payment on their Anthem house, but I eye their new monster SUV and wonder.)
They had renters for a while in the Green Valley house, but now they want to sell. (I’ve been told that they didn’t sell before they bought their new house because they thought the price of their old house would keep going up and that keeping it and renting was an investment. I find it hard to believe that by the summer 2005 they didn’t realize what was going on.)
They have three months mortgage for the Green Valley house in savings, and have listed it for $50,000 above what Zillow says it’s worth. Zillow also says that their new house has lost $10,000 in the last thirty days.
Their Anthem street has FIVE houses listed on Zip Realty (Juniper Springs is the name of the street.)
Waiting to see what will happen is like a soap opera. Her husband is in construction…a carpenter. So who knows how much work he’ll have in the coming months and years.
(Before anyone says it…I’m not whining. I don’t even feel sorry for them. A carpenter and a stay-at-home mom need a half-million dollar house? Seriously?)
The worst thing about Las Vegas/Henderson in my opinion is that should there be some sort of global energy crisis…such as Peak Oil or Global Warming…Vegas would be utterly uninhabitable. It is nearly impossible to grow even a small amount of food here. Everything is shipped to us over 100s of miles. We are completely isolated. If you drive out of town in any direction you have to go hours before you reach the next town of any size. Not only that, but in the event of a crisis we’re in a bowl as well and could be trapped just by closing down the highways. It’s chilling.
By the way, Vegas is poised take water out of Northern Nevada. Sad, sad, sad.
Not only that, but I’ve heard that 2007 is supposed to be even hotter than 2006 which was the hottest year I can remember in 20 years of living here. People will be leaving.
Shaunta, I’m in Vegas, too. Thanks for your detailed and informative post. Your point regarding how inhospitable Vegas would be without A/C, gas, etc. is spot on. Everyone thinks of the Strip as a fantasy-land, but in some ways the entire city is a fantasy-land.
Wasn’t Las Vegas where all the evil people were gathered in Stephen King’s THE STAND, after a pandemic wiped out all but a remnant of the populace. The good survivors were concentrated someplace in the east, I think. Seems fitting, somehow.
The good survivors assembled in Boulder, CO. The most heroic among them then walked to Vegas just to witness a salvaged nuke blow the whole thing away.
Also, when you go out to Anthem or Mountain’s Edge or other sprawl-y areas of Vegas you literally have to drive 10 miles or more just to find a gas station or a grocery store. If oil hit $100 a barrel, those people who are already severely over-burdened and who are now paying $6 or more a gallon to fill up their gas tank will really be up a creak. The outlying areas of Vegas are the direct opposite of walkable-community.
Shaunta,
What is going to matter the most in the next decade is debt and distance. We all understand the debt part, but you made a compelling case for the distance. I am here in Houston and we are totally dependent on cars and air conditioning.
I didn’t even think to mention air conditioning. Vegas (and Houston, too, I’m sure) is totally unliveable without air. And it’s getting worse every year. Not only is the temp going up, but all the pools and grass and non-native plantings are making it more humid as well. So the old “at least it’s a dry heat” isn’t as true as it used to be. (It’s still dry…as my husband from New Jersey tells me all the time. Just not as dry as it was.)
I have to agree with the other residents here that Vegas would become uninhabitable if peak oil prices or an extreme water shortage hit. I’m wondering if I should even bother to buy to buy a house out here again just due to these factors alone.
Today I met a family that owns a moving company in Las Vegas! I asked them what their opinion of what the current population growth and housing situation in Vegas.
Population growth: 3000 people a month
People moving out of Vegas every month: 2000
That is their unofficial figures.
They also said most of the homes they deliver furniture to now in Vegas, the other houses in the neighborhood are often empty with for sale signs everywhere. They anticipate have to cut the prices they charge on moving into Vegas in case of population slowdown due to the housing market bottoming out. Moving out though, their rates have double since 2000. And the current amount of houses being built, or already built, versus the actual current population moving into the city is not even close. A good portion of houses now are empty. Overbuilding maybe???
And IMHO, Mountain’s Edge sucks. All cookie cutter homes at expensive prices, with a crappy small highway that shares commuter traffic with Pahrump. If that development ever gets built out and occupied like its supposed to, some serious work is going to have to be made to the main roads leading up to it, or traffic will be a complete gridlock.
“Community bankers are being more closely scrutinized for their commercial real estate lending activity, which could hurt the nation’s economy if banks unnecessarily pull back from sound lending practices, an executive for the Independent Community Bankers of America believes.”
WTF?? If banks unnecessarily pull back from sound lending practices?
Why would they do that . . . I know regulations are changing regarding CRE, but they are changing to include more sound lending practices, not a pull back from them. BTW, isn’t a big part of the problem the fact that banks ALREADY pulled back from sound lending practices?
What a dolt.