As 2014 is upon us, the Las Vegas real estate market heads into yet another uncertain year. I know I said the same thing last year, but unfortunately it’s the truth. With inventory yet again on the rise, the appreciation spurts we saw last year are a thing of the past. Foreclosure numbers fluctuate and Short Sale numbers are moving upward. The impact of investors and state law leave us wondering on just how much longer it will take to get out of this volatile market.
2013 was an interesting year. Some areas saw appreciation over 20%. Somewhat scary considering the last time we saw appreciation rates that large we fell off a cliff. Let’s be clear, anyone who knows anything about appreciation knows those types of growth chunks are not normal. When stuff like that happens typically there are bigger issues at play. In 2013 that didn’t change. Availability of homes for sale sunk to a paltry number under 5,000. Given we sell can sell around 3,500 to 4,500 homes on any given month. Demand has never swayed in Las Vegas. Even in the worst months of depreciation people were always buying here. The problem was the severity in the number of homes on the market.
Over the last quarter or so the inventory has almost doubled. Given the typical wave of homeowners waiting to list property until after the new year, it’s conceivable the number of homes for sale will be moving towards 15,000 come spring or early summer. The standard supply vs. demand laws will mean those people looking to sell will have more challenges negotiating numbers in their favor. Those looking to buy will have more leverage to get better deals. The bottom line is, if you’re a seller needing or really wanting to sell, you better get it done quickly. If you’re just considering “testing” the market, you’re better off waiting for the inventory numbers to begin to trend downwards again before listing. If you’re a buyer, good days are ahead, be patient and get the knowledge and strategy you’ll need to get the best possible deal you can. Whether you’re buying or selling though, consult with and interview different real estate agents to ensure you have the right professional working in your favor.
Other unknown variables which play a wild card into just how this next year will play out are the hedge fund investors and state law. No one really knows for sure just how either will work. Hedge fund investors were purchasing properties at a furious rate. Many had the intent to purchase and hold as rentals. Their ability to hold these properties without flooding the market is completely unknown. Their financial strategy could very well leave us with hundreds if not thousands of these properties coming back on to the market. At what rate and when is the question.
The second wild card is state legislation. The recently passed Nevada Home Owner Bill of Rights allegedly give more efficiency to the foreclosure and short sale processes thus theoretically getting of us out of the distressed property mess faster. Notice the use of the term theoretically. While politicians puff they are helping, insiders in the industry argue if the dynamics of this legislation only prolong our pain. In reality getting the banks to comply with state law without the ability to enforce it leaves us right where we started, slowly moving through the muck. Expect 2014 to be a year of highs and lows. Sellers will begin to see the reality of what is already happening in regards to the dynamics of being able to sell for more. Buyer’s opportunity to leverage the market will open up yet again, and value will fluctuate based on supply vs. demand. The number of homes that are foreclosures and short sales and properties being dumped by hedge funds will give us the true outcome of just how good…or bad 2014 will end up being.