Las Vegas Real Estate Market Discussion

Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes

I am interested to hear what everyone's thoughts are in regards to the Las Vegas real estate market for 2014. I have my own opinions that I will share later. I just want to hear others' opinions before I state mine. I just don't want to sway anyone's opinion by stating mine first. Thanks in advance for your time and participation.

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Tiger M.

property manager · Las Vegas, NV · Member since 2012 · 502 posts · 171 votes

12y

In one word-CANCELLATION.

Here comes a 2014 reality check. Cancellation or rejection of short sales that have been in escrow for months. Residential values have increased, peaked and are now starting to soften. This creates a tight spot for short sellers.This is an actual scenario with the names changed to protect the guilty. Owner of rental property lists home for sale January 2013. Market price offer of $80,000 accepted by owner January 2013. Short sale process started January 2013. Final approval pending October 2013. Loan sells to new bank November 2013. New bank revalues property at $140,000. New bank does not counter existing buyer and puts the property up for bid on hubzu.com December 2013, opening bid $108,000, reserve $140,000. No offers are received on Hubzu.com after 3 consecutive auctions. Current market value February 2014, $105,000 due to physical condition and required rehab. The original buyer has walked away and buyers using FHA cannot purchase the property because repairs cannot be completed to meet appraisal condition. Seller now being controlled by bank and unable to sell.A second scenario was listed June 2013 at $160,000. Investor put the property in escrow July 2013. Short sale in process when note sold in December 2013. New bank provided short sale approval at $180,000. Buyer cancelled. Foreclosure sale is February 14, 2014, property back on market, cash only at approved short sale price of $180,000. Current value February 2014, $165,000. Chances are it will go to foreclosure sale after the Seller has played by the banks rules. So I’m sure you see the problem from these two examples. Banks aren’t taking physical condition into consideration or adjusting to a softening market and discounting appropriately. They must not be reading the news like this article about US homes sales down 8.7%. Or the comments by the National Association of Realtor’s Economist about how home prices are growing quicker than incomes are causing buyers to hold off on purchases,See Here.

A quick look into MLS activity today has 55 properties "back on" the market(meaning the previous contract failed to close) and an additional 17 revisions to financing. Many of these are short sale approved and/or no longer accept FHA and VA loans. The above scenarios are becoming a trend. Adding additional pressure on owner occupant buyers are the new limits FHA put into effect lowering the maximum loan amount in Las Vegas by 31%. Story here. That is downward pressure on even the new home builders. Speaking of builders, if we watch their moves, it shows what will happen in the resale market like a crystal ball. Currently we are getting offers from builders at 4-5% commissions instead of 3%. In addition, they are offering buyers many incentives like zero cost loans (about a 3% concession), $14,999 down payment assistance, link here and upgrade packages. Feels like 2006 all over again. Effective incentives/discounts are 10-15%. That is the same as a price reduction but papered over to help hold higher appraisals in the subdivisions.Our investors for new homes closed up the last purchases in 2012. Rented for 12 months and then resold. We did several in the same Providence master plan area. 6 months ago the sales were averaging $245,000. The last property, pictured above, is going on the market now and the price has dropped about 10%.

Just like every market, there are deals to be found. The process can be long and drawn out though. As prices continue to soften, there will be better conditions for buyers and more sellers will wish they had been able to dispose of the property in 2013.

There was an auction held recently where the Seller walked away with a loss over $3 Million amerikana dollars on 3 high end properties. He was cutting his loss after buying in 2010 when the market had already collapsed and he got discounted buys. Now there is a guy that is taking serious steps to exit a market.

There was a story from Realtytrac on the state of flipping homes that may interest some of you, Here. Most Tradewind clients that flipped waited approximately one year, putting a tenant in the property for one term and then selling like the new home pictured above. That is not a flip technically and it moved them from high rate dealer income tax status to capital gains.

Go here to learn more about the hardest working property managers in Las Vegas

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Phillip Dwyer
Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
12y
I track the Green Valley Ranch and parts of Green Valley the closest. I just ran some stats on GVR and at the current pace of 17 sales per month, the market still has less than a 3 month supply (MLS stats).

Yesterday I read that they will break ground on a 200-300 unit high end apartment complex in GVR, and Vegas is slotted for 3000 apartment units to be built in 2014. All of that building combined with the ramped up SFR construction seems a little bit ahead of itself. SFR builders are offering both agents and buyers a ton of incentives, plus I'm getting larger standing inventory lists emailed to me weekly.

On the other hand, our population is growing. Businesses are moving here. FedEx is finishing a large distribution center near the airport in Henderson now. Nevada is on the short list for the drone projects.

I highly doubt we'll see the rate of appreciate of 2012-2013. I think we could see +/- 10% this year. I know a 20 point range isn't really sticking my neck out there, but our market could easily go in any direction considering all of the government intervention both state (foreclosure rules) and nationally(debt forgiveness). I hope for a relatively flat market in terms of price change for the next couple years, so market participants can relax a bit.

I'm very curious to see what others have to say. @Tiger M. you better chime in.
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Phillip Dwyer
Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
12y
@Joe O What are your thoughts?
0 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
12y
Given the 'Global Warming' we are experiencing up here you should be seeing a sudden influx of Northerners heading your way.

NV & AZ are the two destinations most of our well heeled retired cohorts toss out so it would be interesting to see the demographics of NY's to NV & what they buy ?

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Joe O
Investor · Las Vegas, NV · Member since 2011 · 92 posts · 25 votes
12y
Originally posted by @Phillip Dwyer:
@Joe O What are your thoughts?

"It's tough to make predictions, especially about the future." -Yogi Berra

I'm anticipating a soft, fairly flat market for 2014.

Not a lot of supply, but not much demand either, so no big swings up or down from an imbalance there.

Assuming the Fed keeps rates around where they've been, I think prices in a year, February 2015, will be about 2% higher than they are now. I think rents will edge up a bit over the next year.

Like you said, Phil, our market could go either way depending on the bigger players. If it were guessing one way or the other though, I'd say it's more likely to be down 10% than up 10%.

Right now I'm watching, and waiting.
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Robert Musallam
Investor · San Jose, CA · Member since 2014 · 294 posts · 113 votes
12y
Great timing on this thread. My area is way too expensive, so I was hoping to start exploring the Vegas market for some opportunities (more flipping than anything else at the moment). Would love to hear more on what the Las Vegas experts have to say in general about their market.
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Tiger M.
property manager · Las Vegas, NV · Member since 2012 · 502 posts · 171 votes
12y
In one word-CANCELLATION.

Here comes a 2014 reality check. Cancellation or rejection of short sales that have been in escrow for months. Residential values have increased, peaked and are now starting to soften. This creates a tight spot for short sellers.This is an actual scenario with the names changed to protect the guilty. Owner of rental property lists home for sale January 2013. Market price offer of $80,000 accepted by owner January 2013. Short sale process started January 2013. Final approval pending October 2013. Loan sells to new bank November 2013. New bank revalues property at $140,000. New bank does not counter existing buyer and puts the property up for bid on hubzu.com December 2013, opening bid $108,000, reserve $140,000. No offers are received on Hubzu.com after 3 consecutive auctions. Current market value February 2014, $105,000 due to physical condition and required rehab. The original buyer has walked away and buyers using FHA cannot purchase the property because repairs cannot be completed to meet appraisal condition. Seller now being controlled by bank and unable to sell.A second scenario was listed June 2013 at $160,000. Investor put the property in escrow July 2013. Short sale in process when note sold in December 2013. New bank provided short sale approval at $180,000. Buyer cancelled. Foreclosure sale is February 14, 2014, property back on market, cash only at approved short sale price of $180,000. Current value February 2014, $165,000. Chances are it will go to foreclosure sale after the Seller has played by the banks rules. So I’m sure you see the problem from these two examples. Banks aren’t taking physical condition into consideration or adjusting to a softening market and discounting appropriately. They must not be reading the news like this article about US homes sales down 8.7%. Or the comments by the National Association of Realtor’s Economist about how home prices are growing quicker than incomes are causing buyers to hold off on purchases,See Here.

A quick look into MLS activity today has 55 properties "back on" the market(meaning the previous contract failed to close) and an additional 17 revisions to financing. Many of these are short sale approved and/or no longer accept FHA and VA loans. The above scenarios are becoming a trend. Adding additional pressure on owner occupant buyers are the new limits FHA put into effect lowering the maximum loan amount in Las Vegas by 31%. Story here. That is downward pressure on even the new home builders. Speaking of builders, if we watch their moves, it shows what will happen in the resale market like a crystal ball. Currently we are getting offers from builders at 4-5% commissions instead of 3%. In addition, they are offering buyers many incentives like zero cost loans (about a 3% concession), $14,999 down payment assistance, link here and upgrade packages. Feels like 2006 all over again. Effective incentives/discounts are 10-15%. That is the same as a price reduction but papered over to help hold higher appraisals in the subdivisions.Our investors for new homes closed up the last purchases in 2012. Rented for 12 months and then resold. We did several in the same Providence master plan area. 6 months ago the sales were averaging $245,000. The last property, pictured above, is going on the market now and the price has dropped about 10%.

Just like every market, there are deals to be found. The process can be long and drawn out though. As prices continue to soften, there will be better conditions for buyers and more sellers will wish they had been able to dispose of the property in 2013.

There was an auction held recently where the Seller walked away with a loss over $3 Million amerikana dollars on 3 high end properties. He was cutting his loss after buying in 2010 when the market had already collapsed and he got discounted buys. Now there is a guy that is taking serious steps to exit a market.

There was a story from Realtytrac on the state of flipping homes that may interest some of you, Here. Most Tradewind clients that flipped waited approximately one year, putting a tenant in the property for one term and then selling like the new home pictured above. That is not a flip technically and it moved them from high rate dealer income tax status to capital gains.

Go here to learn more about the hardest working property managers in Las Vegas
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Robert AdamsBusiness Member
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Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
@Phillip Dwyer I couldn't agree with this statement more : "Yesterday I read that they will break ground on a 200-300 unit high end apartment complex in GVR, and Vegas is slotted for 3000 apartment units to be built in 2014. All of that building combined with the ramped up SFR construction seems a little bit ahead of itself."

The existing construction is alarming enough. The approval of these new sites is dumbfounding. I don't understand how they approve everything that comes across their desk. Have they not been watching the market over the last year?

The expanding growth of the businesses you mentioned is promising but I would still like to see the valley absorb more of the existing inventory and keep demand strong vs dilute demand with an over abundance of new properties. I have not heard much about the drone projects. I would be interested to hear more about that.

I also agree that there is no way we will see the appreciation rates of 2012 and 2013 in 2014. As far as the +/- 10% appreciation rate this year, I am a little more optimistic. I think if we see +10% appreciation that would be great. Unless Q3 and Q4 are TERRIBLE then I can see us hitting the -10% but I hope the market stays stable long enough to keep us positive this year. I don't expect us to see any depreciation Q1 and Q2 now that demand and supply are temporarily stable. The last half of the year is still questionable in my opinion. The fact that inventory stopped skyrocketing like it was in Q3 of 2013 is a good sign. Up until Decembers dip in inventory I thought we would be in a buyer's market by now. Seeing the inventory hang around the same levels for the past 2.5 months is a good sign. Also, seeing high levels of activity in "C" and "P" status listings is encouraging. If those number start dipping off I will be more concerned as it means people are really pumping the breaks on demand.

Phil thanks for being the first to chime in.
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Robert AdamsBusiness Member
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Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Pat L.:
Given the 'Global Warming' we are experiencing up here you should be seeing a sudden influx of Northerners heading your way.

NV & AZ are the two destinations most of our well heeled retired cohorts toss out so it would be interesting to see the demographics of NY's to NV & what they buy ?

LOL Pat we have plenty of warm weather and properties for all you New Yorkers!
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Robert AdamsBusiness Member
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Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Joe O:

Originally posted by @Phillip Dwyer:
@Joe O What are your thoughts?

"It's tough to make predictions, especially about the future." -Yogi Berra

I'm anticipating a soft, fairly flat market for 2014.

Not a lot of supply, but not much demand either, so no big swings up or down from an imbalance there.

Assuming the Fed keeps rates around where they've been, I think prices in a year, February 2015, will be about 2% higher than they are now. I think rents will edge up a bit over the next year.

Like you said, Phil, our market could go either way depending on the bigger players. If it were guessing one way or the other though, I'd say it's more likely to be down 10% than up 10%.

Right now I'm watching, and waiting.

Nice Yogi quote! Just curious why you say not a lot of supply? We have almost triple the supply we had in the beginning of 2013. At the present time it does appear to be balanced but if it increases another 20-30% I could see us in a buyer's market. I think it is best for everyone involved in the Vegas market if we see a flatter year in 2014 than we did over the past few years. All the high volatility makes the market hard to predict and hard to sustain healthy growth.

I am hoping for more than 2% appreciation but as long as we stay positive and don't dip into the red I will consider it a win for Vegas. With higher home values I would hope rents increase as well to keep the investors in place rather than cashing out their profits and adding tot he supply side of the sales market. The other side of that is that so many investors have rentals on the market it has added to the rental supply side which will tend to decrease rents. However, I think most of that has already happened.
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Robert AdamsBusiness Member
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Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Robert Musallam:
Great timing on this thread. My area is way too expensive, so I was hoping to start exploring the Vegas market for some opportunities (more flipping than anything else at the moment). Would love to hear more on what the Las Vegas experts have to say in general about their market.

The is still good deals to be had in Vegas but I think the smart investors in Vegas are adjusting their investment strategy to provide a cushion should the market soften further. Have a plan "A" but if the market softens further you should make sure you have a plan "B" exit strategy. Vegas' prices are still a lot cheaper than CA, and our taxes are a lot less as well. If I can ever be of any assistance or if you would like to just discuss the market please feel free to contact me directly.
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Joe O
Investor · Las Vegas, NV · Member since 2011 · 92 posts · 25 votes
12y
Originally posted by @Robert Adams:

Sure, but that supply level was ridiculously low (three weeks or so?).

Right now we're at 2.5-3 months supply, maybe? That, to me (and historically), is still low.

I think we'll remain around there (maybe go to 4 months), but that (low) supply will be matched by low demand. Naturally we'll fluctuate somewhat, but I wouldn't be surprised if it hovers around there. Just my guess.

Completely agree with everything else you said, some stability in our market, and a positive year would both be great! :)
1 Reply
Serge S.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
12y
@Tiger M. Great post! Although I work Arizona and not Vegas, our trends are about the same. 100% agreed that banks are not adjusting accordingly to condition or the soft market. I see this all the time, they list on Hubzu or the MLS based on Q3 2013 prices. They seem very willing to let inventory sit. Nationstar in particular (using auction.com) is letting homes recycle 3-4 months instead of taking reasonable offers. I guess the newsflash has yet to hit them.

Honestly, it feels like late 2007 into 2008 when sellers were grasping onto 2006 comps with no foresight. Only when reality hit in 2009 did they begin to see reality. Not saying we are headed for 2009-2010 all over again but month after month I'm seeing inventory rise, sales stagnate and price appreciation has leveled off. Certainly sub segments (particularly the low $100k) will still be strong but other segments seem to be in for some pain.

I think its generally a very dangerous market for both the buy and hold investor and flipper. I am in and out as fast as possible on a flip and pretty much put the breaks on buy and hold. The 2% rule investment simply no longer exists in Vegas or Arizona.
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Robert AdamsBusiness Member
OP
Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Tiger M.:
In one word-CANCELLATION.
Here comes a 2014 reality check. Cancellation or rejection of short sales that have been in escrow for months. Residential values have increased, peaked and are now starting to soften. This creates a tight spot for short sellers.This is an actual scenario with the names changed to protect the guilty. Owner of rental property lists home for sale January 2013. Market price offer of $80,000 accepted by owner January 2013. Short sale process started January 2013. Final approval pending October 2013. Loan sells to new bank November 2013. New bank revalues property at $140,000. New bank does not counter existing buyer and puts the property up for bid on hubzu.com December 2013, opening bid $108,000, reserve $140,000. No offers are received on Hubzu.com after 3 consecutive auctions. Current market value February 2014, $105,000 due to physical condition and required rehab. The original buyer has walked away and buyers using FHA cannot purchase the property because repairs cannot be completed to meet appraisal condition. Seller now being controlled by bank and unable to sell.A second scenario was listed June 2013 at $160,000. Investor put the property in escrow July 2013. Short sale in process when note sold in December 2013. New bank provided short sale approval at $180,000. Buyer cancelled. Foreclosure sale is February 14, 2014, property back on market, cash only at approved short sale price of $180,000. Current value February 2014, $165,000. Chances are it will go to foreclosure sale after the Seller has played by the banks rules. So I’m sure you see the problem from these two examples. Banks aren’t taking physical condition into consideration or adjusting to a softening market and discounting appropriately. They must not be reading the news like this article about US homes sales down 8.7%. Or the comments by the National Association of Realtor’s Economist about how home prices are growing quicker than incomes are causing buyers to hold off on purchases,See Here.

A quick look into MLS activity today has 55 properties "back on" the market(meaning the previous contract failed to close) and an additional 17 revisions to financing. Many of these are short sale approved and/or no longer accept FHA and VA loans. The above scenarios are becoming a trend. Adding additional pressure on owner occupant buyers are the new limits FHA put into effect lowering the maximum loan amount in Las Vegas by 31%. Story here. That is downward pressure on even the new home builders. Speaking of builders, if we watch their moves, it shows what will happen in the resale market like a crystal ball. Currently we are getting offers from builders at 4-5% commissions instead of 3%. In addition, they are offering buyers many incentives like zero cost loans (about a 3% concession), $14,999 down payment assistance, link here and upgrade packages. Feels like 2006 all over again. Effective incentives/discounts are 10-15%. That is the same as a price reduction but papered over to help hold higher appraisals in the subdivisions.Our investors for new homes closed up the last purchases in 2012. Rented for 12 months and then resold. We did several in the same Providence master plan area. 6 months ago the sales were averaging $245,000. The last property, pictured above, is going on the market now and the price has dropped about 10%.

Just like every market, there are deals to be found. The process can be long and drawn out though. As prices continue to soften, there will be better conditions for buyers and more sellers will wish they had been able to dispose of the property in 2013.

There was an auction held recently where the Seller walked away with a loss over $3 Million amerikana dollars on 3 high end properties. He was cutting his loss after buying in 2010 when the market had already collapsed and he got discounted buys. Now there is a guy that is taking serious steps to exit a market.

There was a story from Realtytrac on the state of flipping homes that may interest some of you, Here. Most Tradewind clients that flipped waited approximately one year, putting a tenant in the property for one term and then selling like the new home pictured above. That is not a flip technically and it moved them from high rate dealer income tax status to capital gains.

Go here to learn more about the hardest working property managers in Las Vegas

Tiger,

Was the first and second short sale examples a Fannie Mae property? I was running into this a lot back in 2013. Here is an article I wrote about Fannie Mae doing this back in January 2013. Fannie Mae Article about demanding more than appraisal value

In regards to the article talking about the December 2013 YOY dip of 8.7% this is a national figure so it is hard to use when talking about a local market. With that being said, I am expecting the YOY to be down for Vegas for not only December, but for the whole year of 2014. The reason I say this is because we were in a hot seller's market that had become a feeding frenzy for investors and hedge funds. With 30% appreciation rates we we not growing at a healthy rate. So for example if we appreciate 10% in 2014 would we that not be considered healthy growth/appreciation? In my opinion it is healthy growth. But the YOY would show a -20% compared to 2013. So in my opinion we needed to become a less volatile market to become healthier, although the YOY looks negative.

I feel about the same with the NAR's national affordability index. It is using national prices and national incomes. It is also using a national median home price of $198k from Dec 2013 which is higher than Las Vegas' median home price in December. I do agree that as the prices continue to increase this will begin to play more of a factor here in Vegas. I think the NAR's report is a little more accurate to other areas of the country.

I agree with you that the banks are lagging in regards to responding to the softening of the market. The fact that they are not accepting FHA and VA is not a wise move. Why eliminate such a huge pool of buyers (other than to steer people into over paying for properties)? I think if the market softens further you will see them back peddle on this .

The lowering of the FHA loan amount from $400k to $287,500 was terrible for our market but a smart play by FHA to limit their own risk in the market. The decision to lower it came in after 2 quarters of skyrocketing inventory. They were probably more scared about the market softening in Vegas than we were. (NOTE TO CASH / VA / CONVENTIONAL BUYERS: If you can afford to buy properties between $287,500 and $400,000 your buying competition just decreased by about 25% Jan 1 , 2014.)

The NEW Home Builder discussion has come up a lot over the past year. At first our minds were blown that we were building new homes when we had 80,000+ homeowners in default. Then they built the homes aways. Then inventory began to increase and some agents began warning people about buying new homes because if the market softens, which all signs were pointing to, the new home communities would get hit harder than the resale communities. Now with builders beginning to panic and offer not only buyer incentives but agent incentives as well, it is only a matter of time until we see "price reductions" on new homes. At that time the people who didn't listen and bought new homes anyways will take it the hardest as their neighbor buys their exact same home for thousands less. I remember Sun City Anthem did this back in 2006. They lowered their houses $100k. The previous buyers were outraged. I would expect to hear similar stories towards the end of 2014 for new home owners.

The 3 properties you talk about that were sold at auction recently were actually purchased by some of my closest friends. I believe the seller's losses were closer to $4M. It was a Palms Place Penthouse which they later canceled on and did not buy, The Tom Ford Ranch on Russell, and my personal favorite the Palms Estate on Pecos across from Wayne newton's old estate. So at the same time someone is taking serious steps to get out there is another taking serious steps to jump in.

Thanks for chiming in Tiger! I value your input!
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Robert AdamsBusiness Member
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Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Joe O:

Originally posted by @Robert Adams:

Sure, but that supply level was ridiculously low (three weeks or so?).

Right now we're at 2.5-3 months supply, maybe? That, to me (and historically), is still low.

I think we'll remain around there (maybe go to 4 months), but that (low) supply will be matched by low demand. Naturally we'll fluctuate somewhat, but I wouldn't be surprised if it hovers around there. Just my guess.

Completely agree with everything else you said, some stability in our market, and a positive year would both be great! :)

I completely agree Joe O!
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Robert Musallam
Investor · San Jose, CA · Member since 2014 · 294 posts · 113 votes
12y
Thanks @Robert Adams I really appreciate that.
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Phillip Dwyer
Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
12y
So I just looked up stats for the northwest part of town. I looked at everything northwest of the 215/95 intersection. There are 212 on the market with 59 sales in the past 30 days. That equates to less than a 4-month supply. Keep in mind this doesn't include new construction or very little. So there's a little more supply than in GVR, but no over supply on MLS.

I did receive a builder hot list this morning or last night from a big national builder. They basically have 10 units of complete to near complete inventory in one small sub. That sure seems like a lot, and this is near GVR.
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Phillip Dwyer
Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
12y
@Tiger M. and @Robert Adams I'm not sure I have the same view on the failed short sales. I think a lot of this has to do with the banks stringing along people until they met the terms the banks agreed to in the big robosigning deal from a couple years ago. Values went up, so why should the banks take less after getting people to hang on that long. I'm guessing that many of the banks make more/loose less in a foreclosure than a short sale once mortgage insurance is figured into the equation.

In terms of inventory, short sales are usually the least competitive and even in big numbers are not necessarily a good gauge of the market. If you look at the price per square foot of REO (not short sale) versus traditional there's very little discount when homes are in relatively similar condition. To be honest, I don't understand why banks do short sales at all, at least the way the system works now. I imagine less short sales will take place moving forward for several reasons:

1. I think most of the big lenders have met their quotas for the settlements mentioned previously.

2. Prices have increased giving banks less incentive

3. Prices have increased so more owners are closer to not being underwater.

4. Banks want to continue to control inventory

5. The debt forgiveness act is still in limbo

6. Many of the banks sold off servicing rights to non bank institutions
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Robert AdamsBusiness Member
OP
Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Phillip Dwyer:
@Tiger M. and @Robert Adams I'm not sure I have the same view on the failed short sales. I think a lot of this has to do with the banks stringing along people until they met the terms the banks agreed to in the big robosigning deal from a couple years ago. Values went up, so why should the banks take less after getting people to hang on that long. I'm guessing that many of the banks make more/loose less in a foreclosure than a short sale once mortgage insurance is figured into the equation.
In terms of inventory, short sales are usually the least competitive and even in big numbers are not necessarily a good gauge of the market. If you look at the price per square foot of REO (not short sale) versus traditional there's very little discount when homes are in relatively similar condition. To be honest, I don't understand why banks do short sales at all, at least the way the system works now. I imagine less short sales will take place moving forward for several reasons:

1. I think most of the big lenders have met their quotas for the settlements mentioned previously.

2. Prices have increased giving banks less incentive

3. Prices have increased so more owners are closer to not being underwater.

4. Banks want to continue to control inventory

5. The debt forgiveness act is still in limbo

6. Many of the banks sold off servicing rights to non bank institutions

I was referring to Fannie Mae short sales at the end of 2012 and early 2013 specifically. They were not asking for top appraisal dollar they were asking well above appraisal value. We had one in escrow for $85k and they countered at $140k and the place was trashed. It wouldn't have appraised for more than 100k.

Here is a quick run down of what I believe was happening back then (I have not run into it happening lately, in fact we got one in escrow today $4k under expected appraisal value).

(you can read the long versions in the link below)

-Fannie Mae approves short payoffs at ridiculously high prices like the example I gave below.

-No one buys them.

-Fannie Mae forecloses or gets the property back in deed in lieu

-FANNIE MAE GETS PAID FROM THE MORTGAGE INSURANCE AS THE FANNIE MAE GOVERNMENT
LOANS ARE INSURED.

-Fannie Mae relists the property as a Homepath REO

-Fannie Mae then offers financing on these overpriced properties

-Fannie Mae then funds the new loan on their over priced property and DOES NOT REQUIRE an appraisal.

-Now the new owner has a new Fannie Mae loan on an over priced home that they are already upside down in.

MORE INFO I POSTED ABOUT THIS IN JAN 2013
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Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
What about that newly zoned 24, 000 units going up in northwest Vegas I heard about?

Thanks,

Matt
0 Reply
Tiger M.
property manager · Las Vegas, NV · Member since 2012 · 502 posts · 171 votes
12y
@Matt R. stated previously that builder prices coming down could damage the previous buyers in the subdivisions. I've seen 10-15% builder price reductions in the past 2 weeks.

@Phillip Dwyer I think we are all correct about short sales, even though we are telling different stories. I guess the point is the same, S.Sales will become less of a factor and more folks will be forced under water unable to sell providing more REO in the end. Are we carnivores or cannibals? I forgot.

I am going fishing in Belize, be back in a week, you gents have this sorted out and settled so we all know which way to go by then would ya...
1 Reply
Andy Chu
Involved In Real Estate · Las Vegas, NV · Member since 2010 · 341 posts · 86 votes
12y
I just had another SS cancel in Huntington because the new BPO came in and now they want $110 a sq ft for a property that needs 5-7K in repairs. Let's see if FREO wants this property, (I seriously doubt it).

The supply of inventory is actually down from December and we are about stagnant with supply moving slight down for the week currently at 5,871 units (ER, SFR, NO SS) . Las Vegas Metro sold 1,643 properties in the last 30 days which puts us at an absorption rate of ~107 days.

We've had a significant number of buyers walk through our office in the last couple of weeks and some of my listings that were sitting are now getting multiple offers. I'm with @Phillip Dwyer on this one. It looks like summer could easily bring 15-20% increases from current median value.
1 Reply
Robert AdamsBusiness Member
OP
Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Andy Chu:
I just had another SS cancel in Huntington because the new BPO came in and now they want $110 a sq ft for a property that needs 5-7K in repairs. Let's see if FREO wants this property, (I seriously doubt it).

The supply of inventory is actually down from December and we are about stagnant with supply moving slight down for the week currently at 5,871 units (ER, SFR, NO SS) . Las Vegas Metro sold 1,643 properties in the last 30 days which puts us at an absorption rate of ~107 days.

We've had a significant number of buyers walk through our office in the last couple of weeks and some of my listings that were sitting are now getting multiple offers. I'm with @Phillip Dwyer on this one. It looks like summer could easily bring 15-20% increases from current median value.

I have been watching the inventory levels weekly as well. One week we are up and the next we are down. The past few weeks in a row have dropped slightly and I agree we are still below November's / December's inventory levels.
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Phillip Dwyer
Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
12y
@Tiger M. Have fun down there! Be safe.

I'm thinking the new construction situation will have less impact this time around, because the volume is significantly less than at the the peak. However, the little things can cause avalanches.
1 Reply
Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
12y
The over construction capacity is certainly a problem. An exception is that the very high end condo market there, as the current price is still far below the construction cost and therefore new projects must wait until the price is a lot higher to start.
0 Reply
Robert AdamsBusiness Member
OP
Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
12y
Originally posted by @Xing Zhu:
The over construction capacity is certainly a problem. An exception is that the very high end condo market there, as the current price is still far below the construction cost and therefore new projects must wait until the price is a lot higher to start.

I agree. Another factor with high-rise condos is that investors tend to not buy them as much as traditional condos, town homes, and SFR because the high HOA dues and other expenses kill the cash flow. If rents were to increase and cash flow were to improve I think you would see a huge increase in demand for those high end high rise condos.
[email protected]702-349-9175
The Adams Team at Rothwell Gornt Companies4.971 Reviews
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