The Las Vegas housing market is better off today than it was four years ago — how could it not be? We can identify where we have been; we know how we got here; and we possess some vision, although with caution, of our future. Las Vegas had to go through what it went through given the frenzy of over-buying. At the onset of the housing crisis:
- The banks were not equipped to handle the number of homeowners who were not paying their mortgages.
- The housing industry tanked and thousands of jobs were lost.
- The homeowners were uncertain of their next move and what was going to happen to their credit and their employment future.
- The construction and housing industries were crushed with no sales and, therefore, no work and no idea of where the market was headed.
- The entertainment and high rise developments halted abruptly. More lost jobs.
Today, we still don’t have all of the answers and probably don’t know all of the questions. But what we do know is that:
- Banks are more organized and are processing short sales more efficiently. Hopefully, the deficiency pardon will be reinstated for 2013 home sellers.
- Today, our housing market is growing more solid with all of the thousands of cash buyers that continue to purchase homes and also provide rental housing for those who lost their homes.
- And what built Las Vegas was “affordable housing,” a new city, no state taxes and a climate free from hurricanes, snow and tornados. Our scenario — with the right leadership — encourages growth and more opportunities. (Affordable housing is back at the cost of many unfortunate homeowners).
- The entertainment industry does not go out of style and cautious investors are putting up billions of dollars for new attractions which will create construction jobs and permanent jobs. Thus, more visitors will come to see what’s new and they will spend money.
As a small business owner and resident of Las Vegas for over 25 years, we feel strongly that Gov. Mitt Romney will be better for Las Vegas. Our city is filled with the entrepreneurial spirit. Since 1987, Las Vegas grew from under 400,000 people to over 1.9 million people. Small businesses support the entertainment industry and vice versa. It is yin and yang — and it works and it creates energy.
Many residents who work in the entertainment industry still hear the words of Obama when he hurt the convention industry — totally spoken with a lack of understanding of this country’s spirit and freedoms.
Many small businesses are not expanding due to the uncertainty of this administration’s inability to give guidance versus giving away our taxpayer dollars and creating the largest debt in history.
The current administration lacks experience in small business management and, therefore, does not understand the balancing act between “the money and mission” of the business owner’s daily running of a business. Nor does he understand the mission and responsibility associated with making a profit and keeping people working in a positive productive environment. Obama is not the leader that we need to achieve that which we are capable of achieving in this great city. I voted for Gov. Romney yesterday.
The Good, the Bad and the Ugly — Prices, Inventory and Recovery
The good news: Prices are rising.
- Las Vegas home prices are rising from the bottom that was reached in February 2012. The rate of increase is 3.2 percent per month, which equates to an annualized increase of 15.1 percent.
- Banks are working with delinquent homeowners by offering short sales as a solution over foreclosures. It costs the bank less to short sale then to foreclose.
- Some banks are offering to lease back to the homeowner who deeds the home to the bank. The bank leases back at market rent for three years and then will sell the home back for market value. The bank is also paying the homeowner an incentive on average of $3,000.
- There are still plenty of investors — both U.S.and international — waiting to scoop up homes and rent them for a nice return. Investors are purchasing homes with cash, which makes up over half of Las Vegas sales. That is good for the future market and provides the renter a level of security that the home will not be foreclosed on.
- Investors are purchasing homes as quickly as they are available and renting them. This process continues to help the neighborhoods, property tax revenues and retail sales.
- Land sales are brisk because builders want lots to replace communities that are selling out. Many of the deals are from one builder to another. One builder sells a partially finished lot to an active builder. Builders are experiencing more sales as a result of low resale inventory. With the future uncertain, many corporate builders are holding back on development and just land banking. However, a California group recently purchased 900 gross acres of which 500 acres are able to be developed. The price per acre was $20,000. Now that is a sweet deal.
- For the future we see positives. Las Vegas investors and corporations just put $3.6 billion into new developments in and around the Strip. This means jobs — jobs for construction and permanent jobs. And more attractions to bring more visitors which means more activity which creates the need for more employees. For details on the new attractions, read the blog at: http://lasvegasrealestate.com/blog
The Bad News: Low Inventory
Inventory will remain low even if Assembly Bill 284 is modified.
AB 284, passed in October 2011, was designed to protect homeowner rights that were violated by the robo-signing scandal. It was a surprise to the legislators when inventory dropped so drastically. After all, Las Vegas was No. 1 in foreclosures. If banks could not foreclose, the only alternative was for underwater homeowners to stay in their homes, which they are doing — thus no inventory.
Many underwater homeowners continue to pay their mortgages, but they are stuck. Can you imagine what the level of sales would be if they could sell and move up (or down)? Many of these people are homeowners with good jobs and credit, and are current on payments, BUT CANNOT SELL THEIR HOME because they owe more than it’s worth.
The Ugly: Slow Recovery
Finally, shorts sales have surged as foreclosures have decreased.
- The Clark county housing market will experience a slow progression. We have an unemployment rate that is 4.4 percentage points higher than in 2008. Many of those unemployed are in the housing business from mortgage to construction.
- Yes, the upcoming elections will probably have a large effect on the economic future (growth) of many small businesses. No matter what side takes the helm, there will be changes in the wind. For instance, if the Dodd-Frank bill is modified to direct the banks more specifically on how to loan money to homebuyers, it will unleash many buyers who are waiting in the wings for less stringent mortgage guidelines.
Ruth and John Ahlbrand, broker-owners of RE/MAX CENTRAL in Las Vegas, Nev., are a husband and wife real estate team. Founded in 1990, the agency has 200 bank-owned properties among its listings and 70 agents who deal in foreclosure and distressed real estate. Since 2009, the Ahlbrand’s have been members of the RealtyTrac Agent Network.