"Vegas' Current Market 2008" by Henry B. Springs

Despite prices falling 1.6 percent earlier this year and the increase in foreclosures in the third quarter the good times of Vegas’ housing market are rolling right along. Las Vegas is called the “fastest growing city in history” and the fastest growing upscale market” in the U.S. Fortune magazine predicted declining sale prices by as much as 6.6 percent but Vegas’ housing market has continued to rally. Average housing prices in many major metro areas remained stagnant or declined in the third quarter while average prices of homes Vegas posted an 18.5 percent increase. Amidst a slew of developments under construction, 76,000 new jobs, and gaming and tourism revenues that continue to break new records Vegas is still a great place for first time buyers, investors, retirees, and second home seekers, despite the uncertainty of the overall housing market. Houses aren’t selling like they did. The rise in inventory has prompted sellers, mostly investors to create more incentives for buyers to take the much needed plunge. Property has been standing empty. Cars, closing costs, TVs, bonus commissions, furniture and entertainment centers are a few extras sellers are offering to sweeten deals, says Nate Barnhill. Devin Reiss, president of the Greater Las Vegas Association of Realtors has also seen a free Mercedes offered with deals. Vegas is still a “buyers market like nobody’s business,” says Nate Barnhill of Hildreth and Barnhill. According to Devin Reiss low interest rates, abundant housing choices, and a strong local economy still makes Las Vegas one of the best places to buy a home. Vegas boasts a growing, healthy economy. Small businesses and corporations are relocating to Vegas because of cheaper operating costs and no state income tax according to Barnhill. Increased development of rental property is only a fraction of what’s been built. 6,000 acres is developed every year and there are only 36,000 acres left to develop, says Barnhill. He feels this is an “ideal time for homeowners to get into the market” while there is excess inventory, undervalued property will only gain in value as the city braces itself for its next wave of growth, says Barnhill. “We see the market changing as multi-billion dollar projects like Project City Center, Echelon Place and others create thousands of new jobs,” says Reiss. New jobs will mean more people, families, and more homes to accommodate them. Barnhill says over 160,000 residents will descend on Las Vegas by 2009 and drive prices for a limited housing supply even higher. There are bargains to be had because it is a buyers market and sellers are creating larger incentives for buyers. Prices won’t rise abruptly until demand outweighs supply. Reiss says a “by product of the well publicized real estate boom” is that too many people saw buying a property as a short term investment. Nearly half of the homes sold from 2005 to 2006 were to people who intended to resell quickly for a profit but growth and demand did not keep pace with expectations. They have been holding on as the market corrected. Houses are sitting empty. 14,948 foreclosures emerged in the third quarter, a 200 percent increase from the same period in 2006. Barnhill doesn’t ignore the problem but feels the real problem is would be buyers who “ are having problems getting financed.” He says lending restrictions and qualifications have changed and are preventing buyers from purchasing. He feels they are a “scare factor” that is “aiding the downturn.” . He says he had a client who had to find a new lender because of minor structural damage that prevented the original lender from honoring the deal. Foreclosures in metro Vegas have “more than tripled in the past year,” are they the result of investors who didn’t want to hold on to the property this long? Konnell Peterson of The Peterson Group, Las Vegas feels overzealous investors are responsible for “a large part” it. $50 billion worth of ARMs reset this year , another wave will reset in 2008. Owners couldn’t make payments before the first cycle. Peterson says market conditions are “consistent” with the rest of the nation but recommends investing in “high rises” and planned communities geared towards baby boomers and retirees because of their increasing presence and larger financial resources. In 2006 Vegas’ economy consisted of $2.1 billion worth of gaming income, nearly 27 % of its total economy, says Barnhill, up17 percent from 2005. 7,000 people a month migrated to Las Vegas in 2006 and with job growth rising 5 percent in 2007 more housing will be needed to accommodate them in 2008. 27.2 fewer housing permits were issued for new homes last year. A steady rise in population has been Vegas’ saving grace. The steady flow of new buyers has kept inventory low but will outweigh available supply in 2009. Economists forecast “tumbling” prices in 2008, no full recovery until 2010. Justin Walters of Bespoke Investment Group, New York, a money management research firm predicts a 5.6 percent fall in Vegas’ housing prices by May 2008. Doom and gloom was forecast for this year and the next. Inventory of single family homes in Las Vegas increased by 19 percent in August to 24,341. Supply of condominiums rose 23 percent to 6, 221 for the same period, reported by the Greater Las Vegas Realtors Association. The median price for homes was $ 299,000, down 3.9 percent from $337,000 in 2006. Condos were down 8 percent to $190,000 from $195,000 last year. Third quarter’s prices ended up gaining back valuable ground, nearly twenty percent compared to last year. Vegas is far from perfect. Foreclosures have affected property values where they are rampant. Buyers acquired plenty of equity and borrowed from it for cars, investments, loans and in some cases gambling when the market peaked. Others gambled with the housing market and either way are mortgaged to the hilt. Investment properties sit empty awaiting eventual foreclosure but home prices have rebounded again by year’s end. Construction in Vegas is the second largest industry, nearly $9 billion in projects starting in 2007-8. MGM’s $7.4 billion City Center is the most expensive construction project in the U.S, a 76-acre mixed residential high rise on the Vegas strip. 23, 219 permits for new homes were issued last year. Vegas’ future can only be seen as bright, with industry, employment, and population working together to continue positive returns . It is the perfect time to find great deals on property that are undervalued and will only appreciate in a market that has no intention of bottoming out.