Friday, April 08, 2011

Las Vegas Real Estate IS a Depressed Market, But...

Yes, Las Vegas real estate IS a depressed market, but is it truly a buyer’s market? That’s the $64 Million Dollar Question.

The answer is yes and no. Las Vegas is not necessarily a buyer's market, even though it is a very depressed market. At certain price points the market definitely favors the buyers, but in the lower ranges, under $250k, you are in the seller’s ballpark. In other words, lower end properties are already so undervalued that there is stiff competition to purchase. You can’t reasonably expect to low ball something that is already so low that there are multiple offers on it. And yet many buyers make below list price offers (against the advice of their agents) and are angry when they don't get a bid.

Inventory levels have remained steady for the past six months and all cash sales account for over 50% of purchases. Investors are buying Las Vegas because the prices are so low they receive a great return on rental income. So under $250k the competition is fierce. Most Las Vegas foreclosures and short sales are actually selling for MORE than list price as there are multiple offers from these cash investors. Yet even above list price these are great deals FAR below replacement cost and with great rent yields.

But if you are truly looking for more bang for the buck, think about the Las Vegas homes for sale in the higher price ranges. The higher the price point, the more open sellers are to negotiation. There are fewer offers to choose from (unless the property is grossly underpriced which happens often on the short sale listings). Bank foreclosures are much more willing to deal and “real sellers” tend to have more equity. If they have been sitting on their homes for a few years and finally get to the point where they have to move, a real seller can be just as good of a deal as a foreclosure. Plus they come with warranties and are in generally better shape, which makes them less costly in the long run.