Rental homes can be the IDEAL investment in today’s real estate market because they offer a much higher rate of return than alternatives without the volatility of ups and downs that you see in the stock market.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

• Loan amounts – conventional loans for more than the conforming limits set by Fannie Mae are considered jumbo loans and generally have a higher interest rate.
• FICO score – the lowest interest rate is reserved for the highest credit scores; the lower the score, the higher the rate borrower will pay.
• Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
• Loan purpose – purchase transactions generally have the lowest interest rate while refinancing a home is generally higher.
• Debt-to-Income ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
• Loan-to-Value ratio – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

While the country has experienced the worst recession in our recent history, the real estate market shows signs of rebounding in certain areas of the country. Las Vegas is definitely one of those areas. Driving the steady rebound are the low interest rates and historic low home prices. Investors and first time home buyers are fueling the sales numbers.

At a glance, here are the top 11 reasons for buyers, sellers and real estate agents to be optimistic about Las Vegas real estate in 2012:

1. Interest rates continue to be low
2. Home prices are stabilizing and/or starting to rise.
3. Home sales are increasing.
4. Distressed properties continue to be the majority of sales.
5. The short sale processes have improved and will help reduce foreclosures.
6. Investors will continue to purchase Las Vegas homes and provide housing for the displaced homeowners.
7. New home builders continue to provide huge incentives for buyers of new homes.
8. Many cities around the country are experiencing a steady rebound, which is good for Las Vegas.
9. Las Vegas continues to be a desirable place to live with a lifestyle unlike any other city.
10. People from other climates and lifestyles move here when their homes sell in other parts of the country.
11. The U.S. Housing economists are predicting recovery, too.

Las Vegas is poised to grow. Has the past 3 years set the stage for future dynamic growth? It appears so!

Finding a list of companies from a phone book doesn’t mean they’ll be reasonable and reliable, it just means they have a phone and are willing to pay for an ad.  Searching on the Internet may direct you to a website that appears to be a local company but really is a marketing company who will sell the lead to a repairman or company who will pay a referral fee.

There are consumer organizations like Angie’s list who rate repairmen and contractors but they usually require an annual membership fee to be able to access the information.  There are also services like Renovation Experts or Service Magic that are registries for contractors but they may not be the most competitively priced.

Your best recommendations are going to come from friends, family and neighbors you trust who have actually used the repairmen before and would use them again.  The problem here is that you might have to make multiple calls before you can find a friend who can recommend the type contractor you need.

Repairs are a normal part of selling homes and we certainly come in contact with lots of contractors.  This experience leads us to understand who is reputable and reasonable as well as who to avoid.  As part of our commitment to helping you be a better homeowner from the time you buy your home until you sell it, we’re more than happy to make a recommendation of good repairmen or other professionals you might need.  Give us a call…we want to help.

I’m sending you a short basic scoring key system that evaluates investment properties based on the neighborhood and area. You can download the score card here:

Investment Property Scorecard

If you have any questions about real estate investing, just hit reply to this email, or feel free to call me at (702) 324-5390.

Best regards,
Mary Kennedy

REMAX Central

www.MaryKennedyLasVegas.com

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.

“Mary is a highly qualified and conscientious realtor, she will do any buyer or seller a very good job. Eric and Sharon Teague – January 23, 2012

Mary Kennedy provided us with superb real estate services. She escorted us to a variety of quality condominiums, all in the general price range we had suggested. She answered all of our many questions and pointed a number of key issues that contributed immeasurably in our final choice. Should we ever need real estate services in the future Mary Kennedy will be first on our list. She is a true professional! Bill & Jane Smuck- Papillion, NE. – January 23, 2012

“If you tell Mary what you need and want, She’ll devote her excellent work until she finds it for you, she won’t give up on you even after you have given up yourself on finding the affordable price. She is expert on foreclosure and short sales. Nat Nakpil- Walnut Creek, CA.- November 22, 2011

“Mary is a genuine treasure with whom I have had the great pleasure to work with. By far she is the most knowledgeable, competent, and personable real estate agent in my experience, and has the real capacity to listen to you with a genuine knack of understanding your real estate needs whether it be an interest in short sales, foreclosure or anything in the market. She will diligently guide you through the maze of unfathomable regulations of the various markets with grace, patience, and a smile on her face. James King MD- Las Vegas, NV.- November 12, 2007

“Mary was easy to work with. Her follow up was timely and professional. I would recommend her to my friends.” Dan Harris- Pahrump, NV.- November 21, 2011

“Mary was retained as our realtor for a home purchase here in Las Vegas. It was nice to see how she modified her search criteria as we better defined the needs we had in a house. When a property was finally selected, Mary was punctual and on top of the process throughout the purchase. I felt that Mary was our advocate watching out for our interests as we navigated the inspection and purchase process. I would and have recommended Mary to others Kennedy to anyone needing a Realtor in the Las Vegas market.” Kirk Ketterer- Las Vegas, NV.- November 21, 2011

“Mary and John are on top of it! Not only are they service oriented and conscientious but they are loyal and dependable. If you are their client you will never be an orphan! It is a pleasure and a privilege to know two people who are down to earth and enjoyable. Ruth & John Ahlbrand, Broker/Owners for Mary at RE/MAX Central, Las Vegas- May 26, 2011

“Mary is a great real estate agent! She knows the market very well and provides good results!” Gary Bodnar- Las Vegas, NV.-May 25, 2011

Supply and demand may soon change the home buying landscape in our great dynamic city of Las Vegas. There are several factors that may affect not only the inventory but also the price of homes and the price of rents. See the article from today’s Las Vegas Review Journal for the details on the decreasing inventory.

The Las Vegas Review Journal article references the recent bill that was passed in the Nevada legislature.  Bill 284 changes the procedure on the foreclosure process on home owners in default.  The new bill requires judicial process to foreclose, which could slow down the time it takes to foreclose and resell the home.  Florida is an example of a judicial foreclosure state.  Foreclosures in Florida take as long as 300 days.

Sales of Single-Family Homes Rise in November

BY HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL
Posted: Dec. 8, 2011 | 2:04 a.m.

Reflecting bargain prices and strong demand, single-family home sales in Las Vegas rose to 3,159 in November, a 1.3 percent increase from the previous month and 13.8 percent increase from a year ago, the Greater Las Vegas Association of Realtors reported Wednesday.

The median price was $125,000, up 3.3 percent from October, but a 7.3 percent decrease from a year ago.

Just as important, the inventory of available units on the Multiple Listing Service fell to 20,818, down 8 percent from November 2010. The number of homes without contingent or pending offers fell 22.3 percent to 9,780 in November.

The modest increase in median price is attributed to strong demand, coupled with decreasing supply, said Paul Bell, president of the Realtors association.

Real estate agents have been expecting a decline in inventory after a Nevada law that took effect Oct. 1 requiring lenders to provide an affidavit of authority to foreclose and other documents, backlash from the robo-signing scandal that emerged last year.

“It’s more of a function of our third year with 40,000 or more closings,” Bell said. “There’s just less inventory, especially in areas where homes are really selling .”

The number of desirable properties listed for sale continues to decrease, especially in good neighborhoods in master-planned communities and near large employment centers, he said.

Bell said that ongoing sales surge continues to be driven by investors buying homes at bargain prices.

“Investors are definitely making a difference right now by restoring homes and helping to drive up prices,” he said.

The market saw a slight uptick in short-sale closings, or homes sold for less than the principal mortgage balance, which could be in response to the new law, Bell said. Also, asset managers have been approving more short sales and taking incentives offered under programs such as the Home Affordable Foreclosure Alternative, or HAFA.

There were 150 to 250 homes a day receiving default notices before the law went into effect. Now it’s maybe three to five a day, said Tony Martin of LV Default, a company that buys homes at trustee auctions.

Bell said the full impact of the law won’t be realized until the first or second quarter of next year.

A lot of Las Vegas neighborhoods have gone through 40 percent to 60 percent turnover of inventory, and that’s another reason why the market has seen a decline in inventory, he said.

This article was written by Hubble Smith at the Las Vegas Reveiw Journal.

Why should we be optimistic about the housing market?

The global economy affects everyone.  Though we didn’t create the global economic crisis, we do have to deal with it in our everyday lives.  Wherever you are in the world, your economy will obviously affect your spending choices.

In the U.S. we do have indicators of a turnaround. Here are a few indicators that don’t get much publicity in the overall Market and the Las Vegas market: 

• The worst is over for the mortgage resets.

• People are buying homes in the U.S.  At the top of the heap are the Gen-Y and immigrant buyers.  The two groups continue to increase their real estate purchases.

• The family formation numbers were dropping until recently.  Now they are back  up to 1.25 million families being formed every year.

• If you go back to the recession in 1973, you will find that homes sales increased after the recession.  Homes sales are now increasing.

Here are more good indicators from the Investor Front.  Individual Investors who do not buy in bulk are playing a major role in the recovery of the housing market:

• Investors buy homes, spend money to make the home “market ready,” and then they rent them.

• On average, investors are spending over  $220,000,000 buying over 2000 homes per month in Las Vegas.  In June 2011 the amount hit a high of $250,000,000.  Over 49% of the purchases are all cash which creates a solid Las Vegas real estate market.  Cash sales are foreclosure proof.

• Investors use their 401(k)s and IRAs to buy homes that they rent for a positive cash flow, which goes back into their 401k or IRA.

• They ride the prices back up, and in the future, all the profit goes back into their retirement funds.  This process makes the future brighter for the future retirees as their accounts start to show profits again.