Tuesday, April 06, 2010

Las Vegas Home Sales Up, Inventory Down

Inventory has dwindled substantially in the Las Vegas real estate market over the past couple of months, and the volume of sales so far this year has been comparable to the volume of sales in 2005, a “boom” year. First time homebuyers and move up buyers are vying for properties that will allow them to cash in on the government tax incentives being offered through April 30th. But competition with cash investors has frustrated many would-be purchasers, especially for homes listed under $250k. To be eligible for the tax credit, the property must go into escrow by April 30th, and must close no later than June 30th, 2010.

Two years ago there were more than 27,000 single family homes listed on the Las Vegas MLS system. As of the end of March 2010, there were less than 7800 active MLS single family listings. According to CNN Money, Las Vegas is currently the most under-valued market in the country, and homes are selling for less than half of what they were three years ago - far below replacement value. (Here is a link to the Las Vegas appreciation rates by zip code over the past eight years.) This lack of inventory and the low listing prices mean that Las Vegas homes in the most popular neighborhoods may receive anywhere from 10 to 50 offers ABOVE list price within the first week of being placed on the market.

Buyers who need bank financing to purchase a home are regularly losing out to the all cash investors, even though they have received a full bank pre-approval for their loan. After endless days of house hunting, it is not uncommon to see buyers who need financing put in 10 to 20 offers on different homes before securing one for themselves. And quite a few are in a panic because they are trying to meet the April 30th deadline to get a home in escrow before the $8,000 first time homebuyer tax credit expires. The low inventory situation in Las Vegas is made even more difficult by the fact that only about 30% of the 7800 single family homes actively listed are “real” sellers or Las Vegas foreclosures. The rest are “short sales” or pre-foreclosures, and it may easily take three or four months to find out if the bank holding the mortgage will even approve a short sale. Since the buyer also has to be able to close before June 30th to get the tax credit, purchasing a short sale is not even an option.

Move up buyers that want to take advantage of the $6500 tax credit and who are looking at homes over $250k are in a better position, as there is not quite as much competition from the cash investors for higher priced homes. And there are some amazing steals for those who can spend up to $1M (or more), including custom and semi custom homes in some of the Valley’s most prestigious guard gated golf course communities. The Las Vegas high rise condo market also offers some incredible deals. A penthouse near the Las Vegas Strip that originally sold for well over $2M may be listed for sale at less than $1M.

In other words, it is a great time to buy real estate in Las Vegas, and it looks like the market here may recover a lot sooner than financial experts originally predicted.

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