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 firstname.lastname@example.org or call me at 702-354-8988. I look forward to hearing from you!