Red Hot Las Vegas Homes

While the country has experienced the worst recession in our recent history, the real estate market shows signs of rebounding in certain areas of the country. Las Vegas is definitely one of those areas. Driving the steady rebound are the low interest rates and historic low home prices. Investors and first time home buyers are fueling the sales numbers.

At a glance, here are the top 11 reasons for buyers, sellers and real estate agents to be optimistic about Las Vegas real estate in 2012:

1. Interest rates continue to be low
2. Home prices are stabilizing and/or starting to rise.
3. Home sales are increasing.
4. Distressed properties continue to be the majority of sales.
5. The short sale processes have improved and will help reduce foreclosures.
6. Investors will continue to purchase Las Vegas homes and provide housing for the displaced homeowners.
7. New home builders continue to provide huge incentives for buyers of new homes.
8. Many cities around the country are experiencing a steady rebound, which is good for Las Vegas.
9. Las Vegas continues to be a desirable place to live with a lifestyle unlike any other city.
10. People from other climates and lifestyles move here when their homes sell in other parts of the country.
11. The U.S. Housing economists are predicting recovery, too.

Las Vegas is poised to grow. Has the past 3 years set the stage for future dynamic growth? It appears so!

The Las Vegas Home Market Has A Sweet Spot – But Opportunity Has A Shelf Life

Investors, second home buyers and owner occupants are buying homes in Las Vegas. Baby Boomers are taking advantage of the VERY affordable home prices.

10,000 Baby Boomers are turning 65, the retirement age, everyday.

So, the home sales will continue to grow from that sector. Investors continue to enter the market in a steady stream as displaced homeowners need homes to rent, which creates cash flow quickly. Most of the Investors are cashing in on these cash-flow-rich opportunities.

How long will they have this sweet spot? The answer lies somewhere between underwater mortgages and home equity.

Let’s take a look at the numbers to establish the position of the market:

• 4,541 resale homes were sold in June, a 15% jump — good news!

• 22,872 homes were sold from January through June — a 5% increase over the same period in 2010.

• Did you know that you can purchase a 3 bedroom, 2 bath home for $110,000?

• $110,000 is the median price of the homes sold in June.

June Sales Breakdown:

• 46% were bank owned
• 23% were short sales
• 31% were normal home sellers

The average price per square foot has been bouncing around $70, but in June it was $68.41. Builders can not reproduce that home for that price.

So, where do we see recovery? We already identified sources of home buyers: Baby Boomers, Second Home Buyers and Investors. Some say that when we have the return of home equity, we will be in recovery.

Home equity and appreciation will also suggest more potential housing sales.

Then, Move-up Buyers will begin buying. When the move-up market returns, we should see the prices move up, and home equity and appreciation will return with it. Let’s not forget the luxury homes sales as another indicator of movement. These indicators will signal that the underwater mortgages are diminishing.

Let’s discuss those underwater mortgages. Some thought that this year would be the year that the short sale market accelerated. However, 54% of the available homes on the market are short sale listings and only 23% were sales in June. This indicates that many of those short sales turn into foreclosures. Many buyers walk away from short sales because they take too long to close. Then, the same slow bank comes in and forecloses. Makes no sense to us.

If and it’s a big IF – the banks/lenders start to process the short sales faster and offer the home owner incentives to sell their home as a short sale versus foreclosure, then the underwater mortgages will start to diminish as those homes are sold faster to home buyers.

So, let’s identify the steps to recovery:

1. Baby Boomers buying homes
2. Investors buying inventory
3. Banks processing short sales faster (decreases the underwater mortgage and foreclosures)
4. Home equity returns – appreciation inches up
5. Move-up Buyers return
6. Market normalizes

Opportunity Has A Shelf Life

When the market normalizes, there will not be the same inventory of renters for the investors. The next opportunity for the investors will be when the job market returns and more people move to Las Vegas. According to the Las Vegas Sun, over 5,000 people are moving to Las Vegas every month.

A housing recovery will happen sooner rather than later.

Robert Shiller – an Economics Professor at Yale – says that we just had one good month which does not make a trend or a turnaround; but it is a good sign.

The housing market trended up from 1997 through 2006.

Then, the housing market started going down and continued going down for the next 5 years.

Shiller says that there have been two major housing crises: the 1930′s and this one.  Housing takes longer to recover because it needs to have momentum, unlike the stock market, which can turn on a dime.

We don’t have a lively economy right now. Consumer confidence is down. The government is battling the debt issue. These issues will get resolved.

Shiller’s tinge of optimism comes from the state of the market.

There is an inventory of 1.8 million homes that we call distressed homes. Where is the optimism in that number?

Here are the glimpses of optimism:

• Home prices inched up in May

• Population is still growing

• People are buying homes

• Investors are buying one or many homes – and many with cash

• New housing is almost at a standstill, which is not adding to the inventory surplus

• Home prices are affordable for 90% of the working population who have jobs

• There is a traffic report of back logged buyers who will eventually buy

When we see several months of increasing home prices, combined with increasing momentum to the positive side, then we can count on the inevitable recovery.

We found this survey about real estate investments and wanted to share these compelling statistics.

This was a report in a new national survey of real estate investors, released this week by Move, Inc. (NASDAQ: MOVE). In the next 24 months, real estate investors will be more active - by 3 to 1  - in their local markets compared to typical homebuyers.

69% of investors say it’ll be easier to find properties in the near future. The Move, Inc. Investor Survey also suggests local markets will be heating up with renewed investor interest and activity.

Compared to a year ago, the Move Investor Survey found that:

• 62% of investors are paying more attention to home values in their local markets
• 43.5% of investors say that it will be harder to find bargains
• 41.5% of investors expect it’ll be easier to sell their properties in the next six months
• 22% of investors are bullish and expect prices to rise in the next six to 12 months
• 53.5% expect prices to remain relatively the same
• 23% expect prices will fall in the next 6 to 12 months

The survey also shows investors are positioned to compete vigorously with traditional first-time homebuyers for hot deals:

• 65.5% expect that first time home buyers will have trouble qualifying for mortgages
• 18.5% are cash buyers which is a strategy that’s out of reach for most first-time buyers
• 80.5% of investors expect cash discounts from sellers

Today’s investors are not stereotypical deal driven experienced flippers — They are planting for the future.

Contrary to the tactics used by investors known as "flippers,"

• 50% of today’s investors plan to hold their properties for 5+ years
• 11% expect to sell within 12 months of purchase
• 67.5% of the investors are investing for the long term
• 59% of the investors are new to real estate investing
• 33.5% are considering their first investment purchase
• 8.5% are in the process of buying/selling their first investment property
• 36.5% of the investors purchase more than one property
• 17% just completed their first transaction and plan to purchase more properties

When it comes to repairs and maintenance, 56.5% of investors say the repair and maintenance of investment property has not been difficult.

Moving forward:

• 42% plan to invest their own time and energy to improve, repair and maintain their properties.
• 29.5% said they’ll hire a contractor for repairs and 28% will purchase move-in-ready properties.
• 65.7% don’t expect repair costs to exceed 20% of the property’s purchase price.

“This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers that buy and sell properties quickly,” said Move, Inc. Chief Executive Officer, Steve Berkowitz.

“They’re mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities.”

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