Mary Kennedy, Realtor

In our report last year we believed that consumer confidence was improving in Las Vegas and therefore the retail and real estate would improve in 2011.  Our beliefs were correct.  Las Vegas is moving up in many areas like employment, McCarren Airport traffic, visitor count, hotel occupancy, hotel revenues, new businesses, and real estate sales.  Let’s take a look at the real estate market for 2011.

SALES

48,822 single family homes and condos were sold in 2011 according to the Greater Las Vegas Association of Realtors.  These are fantastic numbers.  December 2011 sales for single family homes were up 10.9 % from December 2010.  Single family homes out performed the condo market.  The condo sales decreased 5.6% from a year ago.

Previous years of record sales:

• 64,168 sales in 2004
• 58,522 sales in 2005
• 49,792 sales in 2003
• 46,879 sales in 2009

The investors found lower prices in 2011 as appraisers were extremely cautious and used foreclosures to calculate value.  This practice kept home prices down.  The median price of the recorded sales in December was $110,000 which is 7.6% less than December 2010.

The regular sellers were hit hard as their home values were lowered by the uncared for foreclosure property values that were used for comparable properties.  The foreclosure properties were the lowest comparables.  The process did not compare apples to apples.

BUYERS

Many buyers were willing to pay more for properties but the banks would not loan more than appraised value which is the standard banking practice.  When the market returns to a “normal” market, the impact of the appraisal process could cause values to increase faster than in a historical normal market – due to the values being held down by the foreclosures.

There really is a shadow inventory but we do not know when that inventory will be released as the banks get their act together.  The demand for homes is from investors and owner occupants.

INVENTORY – Who turned off the “Inventory Spigot”?

The inventory of single family homes was 19,230 in December 2011 of which 8,831 do not have a contingent or pending offer.  Much of the 8,831 units of inventory is what buyers continue to pass over as they search for better deals or properties in better condition.  Most of the foreclosures in December 2011 were a result of Home Owner Association liens not the lenders.   923 notices of default were filed in December.  The month to month decline is 12%.  Who turned off the spigot?  The answer is a new Nevada law AB284.

AB284 requires the lenders to prove that the signatures were not “robo-signed” before they can foreclosure.  In addition, the law will not allow the beneficiary of the foreclosure proceeding to be a trustee.  This law is targeting Banks like Bank of America who used their subsidiary, Recon Trust, in many of their foreclosures.   Bank of America will have to use a different trustee.  It will take a few months before the notices of default begin to flow out of the spigot.   The Review Journal reported that there are 21,340 pre-foreclosure home owners.  These homes have not been foreclosed and many sit empty.   In the meantime, prices should increase slowly as inventories continue to decline creating a back log of home buyers and investors.  It will be interesting to watch how the market reacts to all of this movement and mess.  Government officials are getting into the mix and looking at bulk sales to investors as a strategy to maintain home values.  We continue to monitor and report the activity in the housing market.

Our prediction for 2012 is that the median home price will hover around $120,000.  The buyers will continue to get real estate bargains of a lifetime.

Las Vegas Home Price Comparison

Home Builders Research reported:

• 2010: Median Existing Home Price $120,000
• 2009: Median Existing Home Price $126,000
• 2006: Median Existing Home Price $200,000
• Existing Home Prices have dropped 60% since 2006.