Las Vegas Market Update – September 2013
Let’s Talk Overpricing!
The average closed price of an REO in August was $177,481 while the current average available REO property is $204,577. That means that the average listed REO is about 15% overpriced. Similarly, currently available short sales are approximately 22% overpriced while traditional equity listings are generally 80% overpriced, as is the overall overpricing average. It was actually worse in January when listings were roughly 130% overpriced. However, the primary reason for that we are % overpriced is because the gap between average listing price and average closing price has narrowed. Thus – overpricing is still a significant issue.
Also, keep in mind that there were only around 5,000 total available residential listings in January. However, at this moment we are knocking of the door of 8,000 available listings.
Finally, this condition is not exclusive to Las Vegas! Really? Overpricing is alive and well in the Greater Phoenix / Scottsdale market. Click here to download a snapshot of the Phoenix market.
The Current Las Vegas Market
Single family residential (SFR) closings for 2012 continue to lag last year by 9.6%. The SFR median closed sales price is now $182,000 for a YTD increase of 22%.
The first page of the January 2013 Market Update Report is included on page 8 of the downloadable report above to make it easier to visualize the remarkable changes we have witnessed in just the past 8 months.
Las Vegas Market Closings by Sold Terms
Let’s compare current financing opportunities now with those at the beginning of 2013.
Only 48% of August closings were cash compared to 55% in January. It’s my opinion that the shift away from cash is a combination of things at present. First, Las Vegas is shifting away from a distressed sales market thereby allowing for better underwriting of loans in this area. Secondly, investors are slowing down purchases due to decreased yield opportunities, especially for shorter term (up to 3 years) buy and hold. Finally, there has been modest improvement in the jobs situation.
Las Vegas Closings by Property Type
Comparing closings by type at the beginning of the 2013 with the current month clearly illustrates the shift towards a non-distressed market in a big way.
Distressed sales continue to give way to traditional, equity sales as the Las Vegas Market recovers. Rising market values are definitely making it more difficult for yield investors to acquire additional properties for their portfolios. At what point will they begin selling?
Upcoming Property Management Permit Course
First, I am going to shamelessly plug Berkshire Hathaway HomeServices Nevada Properties Pre-Licensing Property Management Permit course that is approved by the Nevada Real Estate Division. This course is excellent for those who want to obtain their Property Management Permit or even for those who just want to learn more about Landlord Tenant laws and managing properties in Nevada. Registration is now open.
However, walk-ins are welcome on Monday afternoon beginning at 8:00 am, September 19th in our Summerlin office at 10777 W. Twain Ave., Suite 333!