Roberta LaRocca

Julie,

I should have used 'near' in my post as it was written in the article, sorry if it caused you confusion. If you look at the 12 months of May to April, it is near the bottom with the exception of the winter months, and not far off from April a year ago. It's typical for home inventory to trail off for the holiday season, especially in December, and to gradually pick up to normal levels when approaching spring. The levels they reach wouldn't be a good measurement of declining inventory, but the increasing sales from Jan would be a positive sign.

There's actually something more meaningful to see in that graph. Aug 2007 was the peak with an all time inventory record set. Levels have been below that point since, even with foreclosures continuing.

If you look back even further, you'll find the last 6 consecutive months of 2006 first began seeing sales declines. Although prices held through 2006, the increase in inventory began, and that combined with the sub-primes started the price declines in 2007. You can see the rise in this graph from the RJ, and also another winter month dip in inventory.

http://media.lvrj.com/images/2084168.jpg

'06 sales declined as inventory rose and then prices declined. Since the peak in Aug., inventory has stared to decline, the past 4 months sales rose and as the article mentions multiple offers coming in, a current trend in the opposite direction. That information tends to be a little more telling than an estimate of months of inventory based on an unknown formula that can vary from source to source. - Fri May 9 2008, 02:23

Hi again Julie,

There just happened to be a very good article on the Las Vegas housing market in this morning's Review Journal. This data is historical and over a period of time indicating an establishing trend, rather than an estimate of what may or may not be happening down the road.

It shows the 4th straight month of increases in existing Vegas home sales, sales volume exceeding YTD figures, and a 12 month low in inventory, This information is also broken down into the different categories used to compile the data. While not specific, the article also mentions the multiple offers coming in below $350k that indicates additional demand that isn't able to be shown through the collected information.

http://www.lvrj.com/business/18721109.html - Wed May 7 2008, 13:29

Hi Julie,

You ask "Are statistics subjective?"

Anytime someone is predicting the future with them, yes they are. There's even a clue in the article you posted.

"according to SalesTraq formula"

From reading the article, I have no idea what their formula is, do you? Does it somehow include the home permits mentioned? Only single family, or a mix of resales, new construction, condo hotel units, multifamily, and building lots? It uses what basis? In 17 months would all current inventory be gone, or will it reach ____ months level? What estimates are they using for the number of additional resales, or number of buyers, that will be coming onto the market for 17 months? What about future population and employment? Again, I have no idea what they've used to come up with their "projection".

Then, simply because something is published, does that necessarily make it accurate? Seems there's some contradictions within the article from two different research companies. SalesTraq reports 1076 new homes sold in March. Home Builders Research claims 1146. SalesTraq says 423 new permits, while HBR says it was 395. SalesTraq offers figures for home resales in March at 980, but HBR gives a figure 1899, almost double the amount and close to MLS listed properties that are reported as closed that month, that isn't mentioned in this story.

Why the differences in the same article? Shouldn't that itself be a turn off?

Here's another story from the same staff writer from just a few months ago, about yet another research company's data projecting a Las Vegas housing shortage by 2009.

http://www.inbusinesslasvegas.com/2007/12/14/realdev.html

Many months of supply quoted by one, and a housing shortage by another. So which is correct? It seems one recent Trulia poster is already experiencing the Las Vegas demand in workforce housing, getting outbid by multiple offers.

http://www.trulia.com/voices/Home_Buying/Does_anybody_know_o…

I'm sure if you look through the threads Blaze isn't alone in facing increased competition, and that also doesn't register in statistics. Another interesting item in that thread indicates other demand that isn't shown...banks taking so long to respond even to their owned properties, simply because they don't have the staff to handle the volume. Throw in those that are waiting on short sale responses and there would be even more buyers, and demand, in the mix. All these pre-approved buyers that are willing to buy, and would lower the inventory and any guesstimate of months of supply, but statistics don't include them.

For the home buyer like Blaze, it irrelevant if there's 7.6 months, 17, or 36 months of supply, he's facing multiple bids at his price point now. At best, any answer to months of supply is a guess. It's a very general and broad based estimate that has lots of room for error, and subjectivity. For a home buying decision it's not an absolute indicator. - Wed May 7 2008, 03:51

Hi Kevin,

Very general rule of thumb, 5 ½ - 6 months is considered a "balanced market". Inventory and sales volume can vary throughout the year so you would need to have a period of consistency to determine if a market is stable at a point.

I'd have to add that any time you try to generalize you'll leave gaps. As Len points out real estate is regional, and it can even be that way inside an individual market or price point.

Nationally as of March the MLS had an estimated 9.9 month supply of homes. Generally speaking a buyers market, yet even with those high amount of months on average, there are some cities that are seeing price gains. One local example of variations you may find, here in Las Vegas in the middle of the foreclosures and bargains in price per square foot, a sales price record is set.

http://www.lasvegassun.com/blogs/elsewhere/2008/feb/27/mgm-c…

I believe you'll find similar volatility in trying to nail down a buyers or sellers market for a general location even when close to being balanced. Certain areas within it can be more desirable to buyers than another, a certain number of bedrooms, or a price point may dominate a market. When you reach extremes on either side of balanced it generally leans more to overall, but not absolute.

I also only know of supply in months that is tracked locally or nationally by National Assn. of REALTORS® and their metropolitan associations. Their figures also wouldn't include FSBO, private or builder sales, only properties listed through them. You may want to contact agents for the specific markets you're interested in following. - Sat May 3 2008, 02:01

Blaze,

I know exactly what you mean about the banks dragging their feet, but some will, some won't, and may react differently even with their own properties. Moving quickly isn't a sure thing, but if a bank, owner, or builder wants to get a home off their books, hesitating can often automatically take you out of the running.

Really, it's not much different than what you can run into anywhere in the market, not just REOs. Builders can stand firm, then for whatever their reason decide to offer greater incentives or go lower price. Resale owners rejecting offers can have a sudden change of heart and trim their asking for a quick sale. Once there's a great deal it's bound to attract attention. Some will wait to see what comes in, others are ready to go. It's why you have to stay on top of what's happening, and why I tell my buyers not to limit themselves, especially to "only foreclosures". That label doesn't necessarily mean more choices or a better value. I think it's good idea for you to consider the builders, just in case.

That home I mentioned in my last post is a perfect example. The buyer had an offer in on a short sale and no response from the lender for weeks. Then a builder's model home came on the market one night. Professionally decorated, upgraded, furnished, and on a landscaped over-sized lot in the area they wanted to be. Best of all it was 40k under their previous bid and didn't need the additional investment of the other property. No, it won't happen every time, but a good reason not to restrict the possibilities.

Sure it's a bit of luck, but mixed in with some perseverance, a little creative thinking, and staying tuned in to everything out there. I was making my own move to Vegas when the market was crazy. 6 months of searching and so many offers above asking accepted before mine could be presented, missing some by just an hour. Builders were struggling to keep pace with demand and new homes meant waiting months. Some places had you wait for lotteries just for building lots. Having sold everything on the other side of the country, the pressure was on and yes it was frustrating. Then I found a home that also turned out to be an REO. It was larger than I what I had been bidding on and yet below the increased price range I began using to increase my own chances. A really tough find, especially in a sellers market.

In this business just like any other, if you give up, guaranteed nothing happens. Work harder for a solution to overcome the hurdles and you're still in the game. Lowering the size of the home opens up more selections in your price range, and still doesn't eliminate what your looking for should it turn up. - Tue May 6 2008, 15:08

Hi Blaze,

You're right, builders have been offering more upgrades as incentives lately. The reason is the builders have cleared so much of their excess inventory and scaled back on construction, leaving limited standing inventory. They've trimmed their costs and prices already dropped, from lows of roughly $185 a sf during the peak, to around $120 - $125 a sf, and few that drop below that.

Those prices combined with the large inventory of resales is why Las Vegas is called a buyers market and also why there's an increase in activity. One reason I believe you'll find it difficult to find what you're looking for, is with the 6% seller contributions you're asking it works out to around $85 a sf. That's normally less than builders cost today.

What you're running into with the multiple offers on the REO's in your range is another issue with a buyers market...desirability in a price point. I just touched on this in another Trulia thread.

http://www.trulia.com/voices/Home_Buying/Can_anyone_tell_me_…


There are a lot of buyers looking for the same as you. Unfortunately there are some that can go a little higher with their offer. So while it is generally a buyers market, the great deals are attracting a lot of interest and you have to act quickly. I recently found a great home at a super price for one of my out of town clients. The morning after it was listed I was there taking pictures and video and they made an offer based on that. If they hadn't, they would have lost it to the other offers that came in. You have to be prepared to move on the exceptional homes, similar to when it was a sellers market.

As Damon mentions, it takes a lot of time staying on top of builder's "quick sales" and even listings. You never know when that one property may come up that could work. Communication is key and I also spend a lot of time previewing and photographing homes and neighborhoods for buyers that have committed to me. I've found it the best way to find the home that's right for them. There's a small sample of some of my recent visits found in my blog just as an idea of what it takes.

http://activerain.com/blogs/search4lasvegashomes


I'd also suggest talking to your agent and have them look at a little less square feet to expand the available properties you'll both have to work with. If something turns up that suits your needs, be ready to make your move. Good Luck! - Tue May 6 2008, 01:42

Hi Tom,

It's impossible to predict the future, and I wouldn't begin to say there's anything that is guaranteed in real estate and most other investments. I've seen almost identical Las Vegas housing market commentary as yours appearing in Forbes, but it appears there are some other factors they tend to leave out. More often than not Forbes is about as objective as the NFL when it comes to Las Vegas.

For the very thing you, and they, mention as a driving force.....employment, Vegas does have more recovery potential than most. Jobs are projected to be on the increase beginning the latter half of this year and growing through 2010 and beyond. That's pretty obvious with the largest commercial construction underway in the history of Las Vegas. There are numerous articles on it and even this report from the Nevada Dept of Employment.

http://detr.state.nv.us/PDFS/2008_Employment_projections.pdf

That report also shows that recovery, just like real estate appreciation or depreciation, is regional. It shows that within the state, as the western portions of NV don't have the same growth opportunities on the horizon.

There is also another aspect to the Las Vegas economy that's been obvious in this economic slowdown. As domestic travel has declined, gas prices rising and airlines shutting down or reducing flights that effect tourism, it's been buffered here by an increase in international travel. While the dollar has recently appeared to show signs of stabilizing, it still offers great value to many foreign travelers, and for investment opportunities.

So there is a rather large number of jobs estimated to be created and will be across the board in wages. Currently Las Vegas has earners of $45,760 and above that fall into the 75th percentile, 25% of the employed, so around 250,000 people. If that trend continues through this employment growth there would be a substantial number that can afford median housing or above, especially in 2 income households.

On the issue of present affordability, recently the consulting firm Applied Analysis has reported that 36% of homes on the market in Las Vegas are now affordable to median wage earners. Taking a quick look at the MLS shows that around 40% of listings fall at or below, and some well below, that $246k median price you quote. That appears to make their estimates be in the ball park.

For yet another point of view, Business week also lists Las Vegas as a "buying opportunity" due to current pricing levels.

http://images.businessweek.com/ss/08/04/0418_housing/index_01.htm

As you'll notice just among their top 14 picks, Vegas isn't the most expensive market by any means. That is also another issue with affordability...those that are bringing any equity when they move here. Not everyone is a first time buyer. I have spoken with several that have accumulated equity, sometimes more than the median price of homes, and find Vegas an incredible bargain. Throw in the relatively low property tax and no state income, it carries even more appeal.

So no crystal ball, but there's a lot more potential for Las Vegas than some limited observations may show. - Sat May 3 2008, 02:14

Hi Rita,

With current plans underway the water supply has been estimated for at least 50 years of sustainability and that was assuming projected growth. Of course that doesn't include any future technology and conservation efforts, or if the building stops now. I really don't imagine growth being stopped until the limited land runs out here, and besides, it would only be shifting the problem elsewhere.

While the drought has eased for the moment in the southeast where you're from, it was a wake up call for better management of water resources there as well. It looks like it's also being called water wars there.

http://www.usatoday.com/news/nation/environment/2008-03-17-w…

Vegas isn't alone on this end of the country, water shortages are facing all of the western states...

http://www.kcby.com/news/local/16187372.html

The shortages even occur in the northeast, and this one example from a few years ago.

http://contractormag.com/plumbing/cm_newsarticle_454/

Fortunately Las Vegas was studying water supply long before the drought and climate change that is effecting so many areas today, even in much wetter regions. Las Vegas technically ran out of water back in the 90's, but has managed to more than double in population and expanded quite a bit commercially since then. I did a blog on Las Vegas water 'running out' and some of the myths and misconceptions.

http://activerain.com/blogsview/384399/LAKE-MEAD-RUNS-DRY

For the good news this year, the April - July Colorado river flow forecast is projecting 9.7 million acre-feet, or 122 % of average. Lake Powell is expected to raise by 50' and the added available release of 15% should add 6' or more to Lake Mead level forecasts. It's not a sure sign that the drought is over, but a definite improvement over recent years.

http://www.sltrib.com/outdoors/ci_9110951

http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=21403

One other water issue that is currently being addressed, Tamarisk or 'salt cedar', is an invasive tree along the Colorado River that is siphoning off more water than Las Vegas' tiny water allocation.

http://www.lasvegassun.com/news/2008/mar/23/beetle-can-save-…

Under a new agreement, Las Vegas would be the first to gain additional water from any additional resources developed such as from the Tamarisk eradication project.

http://www.rgj.com/apps/pbcs.dll/article?AID=/20080413/NEWS/…

Water supply is something that needs to be taken seriously, not only in Las Vegas, but across the country. Many areas are having their supplies dwindling due to aging infrastructure and lack of storage capacity to simply the US population growth, and investment was overdue. The fact that Las Vegas has had to look at it's supplies long before it was recognized as a problem elsewhere, has caused it to be much more proactive and allowed for it's growth. - Sat May 3 2008, 01:49

Hi Mrs. T,

Typically the earnest money is deposited with the title company for opening the escrow account. It sounds as though that's why they are willing to provide the refund, but I have no idea if there were different arrangements made in your particular case.

Contracts can also differ with addendums, contingencies, and waivers, I would suggest discussing this with your agent and his/her broker. If they are unable to resolve your situation you can also contact the NV State Real Estate Dept. and file a complaint.

http://www.red.state.nv.us/compliance/compliance.htm

Beyond that, you would need to contact a real estate attorney for actual legal advise for your situation. - Mon Apr 21 2008, 00:09