Sure, the majority of real estate media reports have been bad, with Las Vegas and Nevada always getting some of the top honors. The terms bubble bursts, overbuilt, sub-prime nightmares, sales declines, steep cuts in permits, foreclosures with people tossed into the streets and losing their homes. It sounds horrible, with no end in sight, no light at the end of the tunnel.
The problem seems to be that the media has used a cookie cutter approach that all markets are created equal, and many, including people in the industry, have fallen for it hook line and sinker. Worse yet, so have our potential customers.
Why are many Vegas industry people convinced and accepting these numbers? Of course sales are down and customers, especially 'flippers', are no longer beating down the doors and escalating prices beyond asking. Foreclosure rates and inventory are at an all time high. Prices are falling behind those of just a year or so ago. On face value these reports are 'believable'.
My previous experience as a business owner tells me I need to drill down through this all this negative information and see the total picture. Find out what is hype and assumption, and what is fact. Is it really as bad as the soap opera reports suggest? From what I've found, for the average home buyer or investor, no it's not.
Yes, Nevada has the highest foreclosure 'rates', Las Vegas in bottom of the 'top 10' metros, and large percentage increases in them from month to month. Some of that can be explained as Nevada being a Trust Deed, non-judicial state without right to redemption. Foreclosures can happen more quickly here than in other areas. Still, in spite of the rates, it looks as though there are many other areas that have foreclosure 'totals' much higher. According to Realty Trac, Nevada had a total of 6,197 foreclosures for Aug. '07. Not wonderful, but with Las Vegas alone maintaining 6 - 7,000 a month moving into the valley, it's absorption of these homes will obviously be faster than those with limited growth, or the population declines of the rust belt region.
So, is Vegas really a 'buyers market', with sellers taking a big hit, as many declare here in Vegas? Yes......and no. For 50 years prior to this 'boom', a general school of thought was if selling a home within 3 - 5 years of purchase, you would expect to incur a loss to minimal gain at best. In the Las Vegas market, with all this negative information bandied about, where does the past 5 year appreciation/ depreciation actually stand? According to the second Qtr. 2007 OFHEO figures, the Las Vegas MSA averaged to maintain 93.73% gain, which is substantially ahead of the national average of 50.76%, and neither of those appear horrendous.
No, homes here won't get the top dollar of the peak pricing that occurred in '03 and '04, no more than you can sell stock for a premium price after a pull back. But....just as in the stock market, those that are in for the longer haul that can outlast fluctuations, normally see a gain over time. It would appear that agents need to educate sellers to what is now a normal market that is still doing well, instead of focusing on the negatives of a normal market not performing the way a booming market had once done.
Yes, the flippers are taking a beating, and contrary to the often heard media cries of the 'greedy bankers and real estate agents that caused people to be tossed into the streets', well it seems that isn't really the case here. Yes those foreclosures have gone up dramatically......but who is actually being foreclosed? Families, or the flippers who are walking away? In Las Vegas, it's those 'short term investors'. They are the most responsible for the price fluctuations, with 75% of all foreclosure starts in this boom of the last 6 months, and 85% of all auctions and actual repossessions during that time.
You'll also notice in that research that 38% of homes are still owned by investors. So is Vegas a good investment market? Obviously there may be more foreclosures coming among those that remain, but for the educated ones that didn't over leverage themselves, it appears the answer is yes. They all aren't ready to cut and run, and see the longer term potential. Even now, some are entering the market or adding to their portfolio as prices have backed down and some bargains to be had.