Is Las Vegas Real Estate Showing Signs Of Life?


The real estate agent seems to be the eternal optimist. In the middle of the credit crunch, foreclosure crisis and general market malaise, he or she will be smiling broadly and proclaiming that this is a great time to buy. You could almost picture the agent showing a property that had been devastated by an earthquake, flooded by a hurricane and whisked away by a tornado and saying “It’s a steal, a little paint and new carpet and it’ll be good as new!” Lately I’ve been hearing real estate professionals here in Las Vegas saying that they are busier than they’ve been in a long time, just more puffing?

Houses being snapped up in a matter of days, multiple offers, bidding more than the listing price, – sounds like the real estate market circa 2005. However, that’s what I’m being told is happening today. This is the world of bank-owned homes, or REOs, in Las Vegas at the moment. This isn’t some pundit spouting numbers, or an economist manipulating data to support a pre-formed conclusion (see last weeks article), these are reports from the front lines. New homes still aren’t selling and typical resale listings are languishing on the market for extended periods of time, but the banks have slashed prices on their REO listings enough to spark an interest again.

The Raw Numbers

While I don’t have an axe to grind in this situation, I was sure that what I was being told was an aberration. With all of the negative news we keep hearing, how could the situation possibly be anything but bleak? I decided to look at a few key numbers that are readily available for the Las Vegas market. I would only look at single family homes since that is the bulk of the market here. I was interested in comparing the total number of homes on the market, number of homes under contract, and median price. I would also look at the days of supply, which is simply the number of homes listed divided by the average number of closings per day. I wanted to compare today’s figures to those from 2007.


May 2007 19,411

May 2008 16,556

Down 15%

(Peak supply was 21,772, we are down 24% from that)

Under Contract:

May 2007 2,684

May 2008 5,735

Up 114%

Days of Supply:

  1. 217
  2. 87

Down 60%

Median Price:

  1. $307,000
  2. $271,000

Down 12%

What Does It All Mean?

You could add a lot of different statistics to all of this and spin it any way you want. We are not through this mess by a long shot. We have a lot of foreclosures to work through in this market. There seems to be a consensus building that says there is a crisis looming in the Alt-A credit market that could dwarf the present situation, time will tell. But what I see in these numbers is very simply, activity. I’m sure you’ve heard many times that you can make money in any market. That is mostly true when the market is going up, down or sideways. However it is almost impossible to make any money in a market that is stagnant. Without buyers there is no market. Even a buy-and-hold investor will sell eventually, and that takes a buyer. While many people will see many different things in these numbers, what I see is hope.

Opportunity is missed by most people because it is dressed in overalls and looks like work. –Thomas A. Edison

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  1. Mark McGlothlin on

    Richard, very well written post. You’ve used one of my team’s very favorite quotes from Edison too.

    I’d agree that it’s just fine to have hope, particularly when things are beginning to move again. The median price drop we think is particularly a good sign, as affordability in LV has been dismal in recent history, and obviously inventory can’t begin to constrict if buyers aren’t active.

    If you believe information like the PMI Group’s Market Risk Index, and like you’ve suggested, there’s more correction yet to come, but it is great to see things beginning to move a bit. Yep, it’s OK to have hope.

  2. Interesting post. Cool numbers about the RE market. Readers may want a tid bit of info about the areas that surround Las Vegas. We are just a couple hours from Las Vegas and we tend to see somewhat of what Vegas sees in some ways.

    We have had some turn around here in southern Utah as well! Now I don’t have any numbers for you like you had, but certain parts of the market are coming around. For example, the town home market isn’t doing much, but the single family home market seems to be coming back quite a bit. Without mentioning specific names, I work with lots of Realtors that are busy here in Cedar City and St. George Utah. Thanks for the Vegas update!

  3. You should also consider that this is simply the first leg of the down. In all markets you rarely see a smooth upward or downward curve, there is always a period where people think to themselves “It’s gone down a long way, it can’t go down much more I’d better buy now” It’s often simply a case of people have gotten used to prices on their seemingly never ending upward rise – take a look at the graphs at the end of the last real estate bull market.
    I’d be wary about committing too much to this bounce unless you can ensure a very good rental yield to support you through the likely raising of interest rates and the reduced refinancing options.

  4. I lived in Las Vegas for about 18 months back in the early 1990’s. That whole decade was growth and rising prices (like most of the US). It seemed half the city (on the strip and off) was under construction. It’s a great place to live, I hope that the market balances out soon.

  5. Richard, as a real estate professional in Las Vegas, I couldn’t agree with you more. I have been working with many clients and investors looking to capitalize on the foreclosure market here. I ALWAYS check with the listing agents to see how many offers are on their foreclosed listings. In very desirable areas, I’m seeing as many as 15 offers in on a property. It reminds me of the market in 2004.
    The trickiest segment of the market right now is from $500k-$1million. But even then if the properties are priced well for the area they are still selling.
    Great post.
    Felipe Crook
    Prudential Americana Group Realtors.

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