Roberta's Las Vegas Real Estate Blog: Las Vegas Home Prices Falling !!! - Or are they?

Las Vegas Home Prices Falling !!! - Or are they?

You hear it in the news, Las Vegas home prices and those across the nation continue to fall into the abyss. This perception is keeping the value of the dollar down, something that we all pay for at the pump and the grocery store, to name a few. Worse yet for the home buyer, is what it may cost them by using these news blasts trying to find the 'bottom of the market'. Are these reports true, or is a good deal of the mainstream media misleading the pubic, either intentionally for attention and ratings, or simply passing along half truths by failing to check sources and be objective? I'll let you decide.

There are median price reports from typically reputable sources such as Standard & Poor's, and the National Assn. of REALTORS®. Their methodologies and results are different, but they both have listed falling home values nationwide. The problem is what you're NOT hearing about those numbers. Both say their reports are flawed in current market conditions, and overstating price declines. They were interviewed here in the
Wall Street Journal Marketwatch.

If you look closely into the Marketwatch story, what are they telling you? The reason their results are being skewed is from the increase of sales of lower priced homes, primarily foreclosures. These homes are typically in the price range that the average home buyer would be looking for. Yes, and those Las Vegas home bargains are selling. They're also telling you that these median numbers are historical, not representing what is happening today, and that you need to look closely at local markets to have a better idea of what is actually taking place in them.  

What most people don't consider with these median price reports, is that not only are they from the previous month, but even older still. Resales aren't recorded as sales until the transaction actually closes. That time from when a sales price is accepted, and the closing takes place, can be a month or months, making them back dated even further. Today with foreclosures the understaffed banks often dragging the process on even longer, and especially for short sales, the delay can be longer still. Countrywide had sent a bulletin out that they will take as much as 6 months just to respond to an offer, let alone time until closing if accepted. So tracking this historical data becomes even less reliable for tracking what is happening today. 

So what is taking shape in the Las Vegas market? First a little of it's history to put it in perspective. Inventory was at it highest in August 2007. Since then it has been below that point, even with seasonal fluctuations from the larger spring selling market. This also includes new foreclosures coming into the market, so it appears there are fewer and they are also being absorbed. Most often the media reports the
inflated RealtyTrac figures  that imply huge increases, while Foreclosures.com seems to be more realistic and shows declining numbers, even wondering if the end is near for foreclosures nationwide
.

Las Vegas home closings have increased each month over the previous since the beginning of 2008. April had an increase of 22.7% and over 2200 closings, the first time it's reached above 2000 in 7 months. While median has fallen, there's an interesting trend with the more volatile average sales price during those 4 months. Average price can be effected by an unusual amount of high or low sales prices especially in a small sample of a single month. With median prices skewed by the increase in lower priced foreclosures, you'd expect it to be falling, but it's not. It's been relatively consistent for these months of increased activity, remaining well above median and close to the new home median price for April. That Las Vegas new home median price had risen to $292,000 as reported by Home Builders Research. It's also up from the 2007 average median price of $280,085.
 

So what does all that mean to the typical home buyer? Competition is heating up. Well priced homes are selling and more buyers are entering the market, purchasing at both above and below median price. The homes offering the best value are moving quickly, and it's been reported locally for some time that multiple offers above list are coming in on homes at or below $350,000. My personal experience has been the same and even above that amount. One great value listed last Thursday had 10 offers on it by Friday afternoon, and the listing agent I spoke with said that from calls on it, he expected at least another 10 after the holiday weekend.


So let's use an analogy that almost anyone can relate. Produce can be varying in size and quality, but priced the same. You hear your market has a shipment at low prices and you shop before the crowds hit. You have your pick of the nicest, the largest, and offering the best value for your money. Wait longer and you'll have more competition and a somewhat more limited selection. If you wait even longer, you'll find the best has been taken, and while you may still get something at a below normal price or luckily find a hidden gem, most will likely be smaller or with more bumps and bruises, and not near the quality and value you could of had. Some may not suit your needs at all at that bargain price. 

It's very similar to the 3 bank owned homes I showed this past week. All were well below previous sales, and at an amount almost impossible to build. All less than three years old, were similar in area, amenities, and square feet. One was a disaster with damage almost beyond belief, the next needed some cleanup and minor items, and the third in very near move in condition. Which of those do you think will sell first, and what will be left behind? I think it's easy to understand that each provide a different amount of value, even if they are all selling for the same bargain price. When I called about that move in condition home... it has also received multiple offers at or above list, with more expected over the weekend.

I believe this trend of skewed reports will last for some time. For those tracking these figures and hoping to find the bottom of the market, it becomes clear that these reports aren't reliable. You really need to look beyond them and see what is really happening in any given market today. By the time these reports balance out and catch up to the real world, you'll have missed the best selection of Las Vegas home values.



If you are interested in relocating to Las Vegas or would like information on Las Vegas real estate, please email me roberta@search4lasvegashomes.com  or call me at 702-354-8988.  I look forward to hearing from you!

 

Roberta's Las Vegas Real Estate Blog

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Comment balloon 7 commentsRoberta LaRocca • June 02 2008 04:37AM

Comments

Home prices are falling everywhere, Roberta, because of tighter lending requirements and other factors. The reporting methodology is factored from the most relative and current frame of market reference available. These items aren't instantly added to the queue because of the scope of this problem in national dimension. It's essentially up to the regionally demographic stages of reporting to work in concomitance and in combination to bring about a satisfying and realistic overview of the perception and dimension of value. Since these events or market situations don't happens at the same time as, or in connection with, one another, the median is grey. It's just the nature of the beast and if the median is bad in a heavily populated region the bad news trickles down to the less affected communities and contaminates the market perspective.

Posted by David Saks over 10 years ago

You know I love to see stats but the worst thing in the world when looking at them is when they are wrong. It can compound a problem/situation.

Your friend in Charlottesville!

Posted by Charles McDonald, REALTOR®, Blogger, Principal Broker®, Owner (Charlottesville Real Estate Solutions) over 10 years ago

David: Unfortunately saying that "Home prices are falling everywhere" also isn't true. Even with median prices being skewed downward by the unusual numbers of foreclosures, 48 of 149 metropolitan areas showed gains in median during the first quarter of 2008. How many more also would, if the numbers weren't being pushed down, is anyone's guess. It's agreed that you need to look closely at an individual market's performance and not paint with a broad brush. It's very regional, and even within a given market you will have pockets of ups & downs.  

 http://www.realtor.org/ro/press_room/mixed_home_price_performance_continues.htm  

Mortgage restrictions are also a somewhat misleading perception. While they have had an effect, I've had many clients 'assume' that they couldn't qualify because of all the gloom & doom news stories, when in fact they could. Here in Las Vegas, you can see from the increases in closings and multiple offers that there are many buyers in the market that aren't being effected by them. Those buyers among the pool of multiple offers aren't being tracked in statistics, but obtaining financing isn't the issue for them. Offers here must be accompanied by a pre-approval, and in the case of foreclosures and short sale, some of the lenders involved are requiring their own in-house prequal before submitting an offer. So in those cases a 'buyer shortage' isn't caused by restrictions, but from being among a larger crowd going after the best values, and who can blame them.  

Also not getting much air time is that mortgage restrictions have been lifted June 1, and that should give a boost to the jumbo loan products that have had the most difficulty under them. Locally they had created a soft spot in the market in the $400k - $900k range and effecting median, but that may be changing with this new policy.  

 NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the good news is that mortgage restrictions have just been eased. "In the past week, Freddie Mac and Fannie Mae announced that they were eliminating their ‘declining market' policies, effective June 1," he said. "This means consumers across the country will have access to safe, affordable financing with downpayments of only 5 percent on most mortgages, with 100 percent financing available on some loan products, and we could see an upturn in home sales this summer."  

 http://www.realtor.org/press_room/news_releases/2008/ehs_april08_ease  

No, the entire market hasn't recovered, but bad information is implying something much worse than it actually is. The hesitation it creates can cause potential home buyers to get less value for their investment by waiting until they see improvement in numbers that are off the mark. It also becomes difficult to correctly inform when it gets lost in a flood of misconceptions, Why I'm doing my part to show there is more to the story with this post.  

Charles: Yes I also hate bad numbers, especially when only half the story gets told. It makes one wonder how much this has slowed economic recovery, and the cost to everyone. You also have to wonder how much of this is from election year politics. The 'mortgage crisis' has been ongoing for some time and looks like Congressional help may only arrive when it's nearly corrected itself, but leaving many victims from the inaction.

Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, Property Management (Simply Vegas Real Estate) over 10 years ago

You perfectly summed this up and get a gold star in the LV Area Real Estate professionals group!

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 10 years ago

Renee:  Thanks! I will proudly wear my gold star!  :)   I hate to see people miss out on a good values because of all the misleading information!  Locally, this article was in the RJ today and tells more of the real story.

http://www.lvrj.com/news/19521509.html

 

Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, Property Management (Simply Vegas Real Estate) over 10 years ago

Just thought I should add that the May figures are out, and Las Vegas median home prices gained, the first since 2007. Also the fifth straight month of sales increases.

Story here from Reuters, 'Las Vegas May median home sales breaks price slump'.

http://www.reuters.com/article/marketsNews/idUSN0530257120080605?rpc=401&

 

Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, Property Management (Simply Vegas Real Estate) over 10 years ago

Great job Roberta.

Posted by Aaron Auxier - "Hollywood's Connection to Vegas"® (Realty ONE Group) over 10 years ago

Participate