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!

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.

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.

* Generation Y (also known as the Millennial Generation, Generation Next, Echo Boomers)  follows Gen X. Gen Y’s are called Echo Boomers due to the significant increase in birth rates through the 1980s and into the 1990s, and because many of them are children of Baby Boomers. Generation X’s were born in the latter half of the 1960s through the early ’80′s.

Lots of Entertainment & Dining options attract the young visitors, and there’s lots of buzz about Cirque Du Soleil’s show Michael Jackson, The Immortal World Tour, which will be here December 3rd-14th at Mandalay Bay.

More than 50 Conventions will be here in the next 30 days.

Many of the visitors come here more than once a year, and they love the energy in Las Vegas. As cities go, Las Vegas is one of the youngest cities, and we have so much to offer. Seeing our great city in action fuels the fire in our belief that Las Vegas will come back stronger than ever. We can’t say it enough: our Affordable Housing will bring people to Las Vegas. August sales were second only to June 2009, with over 4,600 properties sold.

Over 17,200 Jobs are available.

The Las Vegas unemployment numbers are confusing. The construction industry is certainly not what it was. But those lost jobs still impact the unemployment stats, and that makes people think Las Vegas does not have jobs.  Look at this snippet (at right) from www.indeed.com, the largest search engine for job listings.

The real estate sales stats show that short sales are on the rise. Bank of America is experimenting with waiving the deficiencies.  This move alone will help stabilize housing prices.  Somewhere between the lines, in the future, the banking industry will have to consider lending to the hundreds of thousands of misplaced homeowners. When the banking industry increases their lending, believe that Las Vegas will be on the top of the heap!

People are coming here from around the world and investing in Las Vegas real estate.  Las Vegas returns Positive Cash Flow.  The displaced, foreclosed-on home owners provide the rental pool.

Download the Investment Calculator from the Invest section.  Cash flow calculations are at the bottom of  every listing in our home search.  You can see the cash flow!

Investors, second home buyers and owner occupants are buying homes in Las Vegas. Baby Boomers are taking advantage of the VERY affordable home prices.

10,000 Baby Boomers are turning 65, the retirement age, everyday.

So, the home sales will continue to grow from that sector. Investors continue to enter the market in a steady stream as displaced homeowners need homes to rent, which creates cash flow quickly. Most of the Investors are cashing in on these cash-flow-rich opportunities.

How long will they have this sweet spot? The answer lies somewhere between underwater mortgages and home equity.

Let’s take a look at the numbers to establish the position of the market:

• 4,541 resale homes were sold in June, a 15% jump — good news!

• 22,872 homes were sold from January through June — a 5% increase over the same period in 2010.

• Did you know that you can purchase a 3 bedroom, 2 bath home for $110,000?

• $110,000 is the median price of the homes sold in June.

June Sales Breakdown:

• 46% were bank owned
• 23% were short sales
• 31% were normal home sellers

The average price per square foot has been bouncing around $70, but in June it was $68.41. Builders can not reproduce that home for that price.

So, where do we see recovery? We already identified sources of home buyers: Baby Boomers, Second Home Buyers and Investors. Some say that when we have the return of home equity, we will be in recovery.

Home equity and appreciation will also suggest more potential housing sales.

Then, Move-up Buyers will begin buying. When the move-up market returns, we should see the prices move up, and home equity and appreciation will return with it. Let’s not forget the luxury homes sales as another indicator of movement. These indicators will signal that the underwater mortgages are diminishing.

Let’s discuss those underwater mortgages. Some thought that this year would be the year that the short sale market accelerated. However, 54% of the available homes on the market are short sale listings and only 23% were sales in June. This indicates that many of those short sales turn into foreclosures. Many buyers walk away from short sales because they take too long to close. Then, the same slow bank comes in and forecloses. Makes no sense to us.

If and it’s a big IF – the banks/lenders start to process the short sales faster and offer the home owner incentives to sell their home as a short sale versus foreclosure, then the underwater mortgages will start to diminish as those homes are sold faster to home buyers.

So, let’s identify the steps to recovery:

1. Baby Boomers buying homes
2. Investors buying inventory
3. Banks processing short sales faster (decreases the underwater mortgage and foreclosures)
4. Home equity returns – appreciation inches up
5. Move-up Buyers return
6. Market normalizes

Opportunity Has A Shelf Life

When the market normalizes, there will not be the same inventory of renters for the investors. The next opportunity for the investors will be when the job market returns and more people move to Las Vegas. According to the Las Vegas Sun, over 5,000 people are moving to Las Vegas every month.

A housing recovery will happen sooner rather than later.

Robert Shiller – an Economics Professor at Yale – says that we just had one good month which does not make a trend or a turnaround; but it is a good sign.

The housing market trended up from 1997 through 2006.

Then, the housing market started going down and continued going down for the next 5 years.

Shiller says that there have been two major housing crises: the 1930′s and this one.  Housing takes longer to recover because it needs to have momentum, unlike the stock market, which can turn on a dime.

We don’t have a lively economy right now. Consumer confidence is down. The government is battling the debt issue. These issues will get resolved.

Shiller’s tinge of optimism comes from the state of the market.

There is an inventory of 1.8 million homes that we call distressed homes. Where is the optimism in that number?

Here are the glimpses of optimism:

• Home prices inched up in May

• Population is still growing

• People are buying homes

• Investors are buying one or many homes – and many with cash

• New housing is almost at a standstill, which is not adding to the inventory surplus

• Home prices are affordable for 90% of the working population who have jobs

• There is a traffic report of back logged buyers who will eventually buy

When we see several months of increasing home prices, combined with increasing momentum to the positive side, then we can count on the inevitable recovery.

We found this survey about real estate investments and wanted to share these compelling statistics.

This was a report in a new national survey of real estate investors, released this week by Move, Inc. (NASDAQ: MOVE). In the next 24 months, real estate investors will be more active - by 3 to 1  - in their local markets compared to typical homebuyers.

69% of investors say it’ll be easier to find properties in the near future. The Move, Inc. Investor Survey also suggests local markets will be heating up with renewed investor interest and activity.

Compared to a year ago, the Move Investor Survey found that:

• 62% of investors are paying more attention to home values in their local markets
• 43.5% of investors say that it will be harder to find bargains
• 41.5% of investors expect it’ll be easier to sell their properties in the next six months
• 22% of investors are bullish and expect prices to rise in the next six to 12 months
• 53.5% expect prices to remain relatively the same
• 23% expect prices will fall in the next 6 to 12 months

The survey also shows investors are positioned to compete vigorously with traditional first-time homebuyers for hot deals:

• 65.5% expect that first time home buyers will have trouble qualifying for mortgages
• 18.5% are cash buyers which is a strategy that’s out of reach for most first-time buyers
• 80.5% of investors expect cash discounts from sellers

Today’s investors are not stereotypical deal driven experienced flippers — They are planting for the future.

Contrary to the tactics used by investors known as "flippers,"

• 50% of today’s investors plan to hold their properties for 5+ years
• 11% expect to sell within 12 months of purchase
• 67.5% of the investors are investing for the long term
• 59% of the investors are new to real estate investing
• 33.5% are considering their first investment purchase
• 8.5% are in the process of buying/selling their first investment property
• 36.5% of the investors purchase more than one property
• 17% just completed their first transaction and plan to purchase more properties

When it comes to repairs and maintenance, 56.5% of investors say the repair and maintenance of investment property has not been difficult.

Moving forward:

• 42% plan to invest their own time and energy to improve, repair and maintain their properties.
• 29.5% said they’ll hire a contractor for repairs and 28% will purchase move-in-ready properties.
• 65.7% don’t expect repair costs to exceed 20% of the property’s purchase price.

“This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers that buy and sell properties quickly,” said Move, Inc. Chief Executive Officer, Steve Berkowitz.

“They’re mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities.”

Investors Combine Cash and Credit to Snap Up Properties

While cash is king in many circles, 75.5% plan to combine cash and credit to purchase properties as they build their real estate portfolio.

• 59.5% plan to pay cash for less than half of the purchase price
• 16% plan to use more than 50% cash and finance the remainder
• 57% of the investors told Move that the 2nd most difficult challenge is finding financing.

“The fact that most real estate investors plan on combining cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales. We were surprised to learn that 75% of investors are financing portions of their purchases.

This suggests investors are seeing tremendous or once in a lifetime opportunities and may be tapping into credit or taking out second trusts on existing properties. The data also shows investors are expecting high returns to match the level of investment they’re making in an arena that is new to many investors,” Berkowitz said.

High Risk Leads to High ROI Expectations

Based on the investments they’re making in today’s environment, real estate investors clearly expect high yield returns. 48% expect a profit of 20% or more from their property investments.

• 40% expect a profit of 10%.
• 6.5% expect a 5% or less return on investment.
• 50% of today’s investors plan to hold their properties for five plus years.

Property Investments May Become Gateway to Homeownership For Many

This survey shows that investors will outnumber traditional homebuyers 3 to 1 in the next 2 years.

• 27% said they’ll buy a primary residence as a first-time buyer.
• 49% plan to live in their investment property until it’s sold and/or turned into a rental property.
• 56.5% will put their investments to work as rental properties.
• 28% plan to purchase vacation property that they’ll eventually sell.

The Move Investor survey also found that 30% of real estate investors are interested in buying retirement property as an investment.

“The survey suggests some first-time buyers may be looking at investing as a strategy to becoming homeowners,” Berkowitz said. “While today’s market is tough for some, it’s also motivating millions to take an unconventional approach and creatively search for new ways of entering the housing market. This data also suggests the dream of homeownership is alive for millions that are keeping their eye on the future. They will use their initial home as the first in a series of many investments. Investment opportunities -- perhaps next door or down the street -- will continue to knock at the door for many local investors with the vision, faith and interest in their local markets.”

About the Survey

The survey was conducted by OmniTel, the weekly national RDD Probability Sample telephone omnibus service of GfK Custom Research North America. It is based on interviews conducted April 11 through 15. Each Omnitel study consist of 1,000 completed interviews, made up of male and female adults (in approximately equal number), all 18 years of age and over. Supplemental interviews were added to the national study in order to end up with a stable base size of 200 real estate investors. The supplemental interviews utilized the same sampling frame as the national frame.

The margin of error on weighted data is +/- 3% and higher for subgroups. The raw data are weighted by a custom designed computer program, which automatically develops a weighting factor for each respondent. This procedure employs five variables: age, sex, education, race and geographic region. Each interview is assigned a single weight derived from the relationship between the actual proportion of the population with its specific combination of age, sex, education, race and geographic characteristics and the proportion in our sample that week. Tabular results show both weighted and unweighted bases for these demographic variables.

The retail sales reporters are estimating an increase this year over last year. The hotels in Las Vegas are 98% full for this New Year’s weekend. Over 300,000 visitors will celebrate New Year’s Eve in Las Vegas!

Unemployment applications are lower according to the national numbers. Las Vegas really took a hit in the construction market and our unemployment is still 14%. Not sure what the 2010 fourth quarter Las Vegas unemployment numbers will tell us.

There are still an average of 100,000 new visitors in Las Vegas every day. The Hospitality industry still needs people to handle that volume. The Las Vegas Convention Authority says that the convention business for the first quarter of 2011 has increased over 2010. More convention visitors means more business for retailers, hotels, restaurants, and casinos.

We love Las Vegas and defend it with our heart and soul -  but please know – our crystal ball is filled with factual data! But off the record, when we put our ear to the ground we hear a strong pulse for our economy that is reminiscent of the Nineties, when home prices brought investors, second-home buyers, retirees, and first-home buyers to Las Vegas.

If you visit www.indeed.com there are 20,315 job postings for Las Vegas. 2,555 job postings are for the casino industry. Those casino jobs include food and beverage, computer department, casino worker jobs, etc. The 14% unemployment encompasses over 60,000 construction jobs that were lost in the past three years. The construction industry may continue to suffer for a couple more years until the New Home industry starts to pick up.

When we say Happy New Years, we’re putting 2 thumbs up!  The 2 thumbs up are “11″ and up is a big “Yes, we will have a better year ahead.”

Las Vegas Home Price Comparison

Home Builders Research:

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.

Las Vegas Home Owners Tax Savings for 2011

If you own a home in Las Vegas, the deadline to file for a Tax Appeal is January 17, 2011.

Contact Michele Shafe, assistant director of the Clark County Assessor’s Office.

The average savings in taxes could be over $830.00 per year, depending upon when the home was purchased.

The Las Vegas tax rate is around 1% of the the value. If the home is worth $100,000 the annual property tax would be approximately $1000. If the home dropped $26,000 is value, the savings would be $260 per year.

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