A Look at the Las Vegas Real Estate Market (Infographic)
There is an overall consensus that the Las Vegas real estate market is slowly recovering, although its current status is way below what it used to enjoy before the recent recession. Although it will take a considerable time before the housing market can get back up to full recovery, favorable signs of life manifested themselves as investors started snapping up as much properties as they can and developers pushing through with major industrial, commercial and residential projects.
Whether you’re an investor, a buyer or a seller, Todd Miller and Nevada Realty Solutions aim to provide you with comprehensive information about the Las Vegas real estate market that will help you make intelligent decisions when buying or selling properties. The following is a product of this commitment, loaded with up-to-date and highly valuable insights about the state of the Las Vegas real estate industry, in an attempt to provide you with everything there is to know about the market before you buy – and not after.
The infographic (click to zoom):
Real estate asset valuation solutions provider Clear Capital reported that there was a steady double-digit increase in home prices for January of 2014 at all the cities the agency has been tracking across the whole United States. Las Vegas registered the highest gain in home prices at 32 percent among these cities, although these levels are still 31.5 percent short of the price ranges the market enjoyed back in 2006.
This increase in home prices was confirmed by the Greater Las Vegas Association of Realtors (GLVAR), which reported that the $185K median home price for houses sold in January 2014 registered a 23.3 percent increase as compared to the same period as last year. These prices were actually the same as what was registered last December 2013. This was expected according to GLVAR, with January being a relatively very slow month for the market. However the stable prices is a clear indication that the Las Vegas housing market is slowly moving towards a healthy recovery – a trend that is expected to persist this 2014 and beyond.
Real estate analytics company RealtyTrac recently highlighted that Nevada posted the highest residential sales percentage in the United States. 18.9 percent of overall residential sales in the state involved bank-owned homes, including properties repossessed by financial institutions. Short sales and sales of foreclosed properties accounted for another 15.3 percent of statewide residential sales.
RealtyTrac also highlighted that Las Vegas registered the sixth highest residential sales tally among other large cities and metropolitan areas but figures highlighted registered a 9 percent decrease in total sales volume compared to the same period last year. Institutional investors, private or commercial entities who made a minimum of 10 property purchases during the previous year, accounted for at least 18.2 percent of the total residential sales in Las Vegas during the previous month.
While there was a significantly sharp decline in the filing for foreclosures last year, Nevada’s 2.16 percent foreclosure rate (or one in every 46 homes) still registered the second highest in the country next to Florida according to a report from RealtyTrac. Among cities and metropolitan areas, Las Vegas came in ninth highest, registering a 2.45 percent home foreclosure rate as of January 2014. These figures still indicate a 35 percent decline in foreclosures though as compared to the same period last year, which is higher than the US average decline of 25.9 percent.
Supply of Homes
Rumors that a ton of properties will flood the Las Vegas real estate market persisted for some time, but during the last three years nothing of this sort actually happened. Quite the contrary is actually what’s happening according to toddmillertv.com as presented in the following which are based on the latest figures as of February 2014.
All in all, there are 8,971 properties that were listed as available, and this includes single-family homes, condos, telhomes and manufactured homes. Based on figures from the last twelve months in the market, there were approximately 40,000 sales made for all property types. Assuming that there will be no new properties coming out, available properties will be gone in 2.7 months. This indicates an average time of 1.35 months from listing to sale, which is approximately just 40 days in the relatively hot market. Rates are still going up although they are still way below where they should be.
There are many reasons behind this low supply. One is that homes that should be transacting are not readily transacting because these homes are being tied up by financial institutions. Another major reason is the Nevada Law (AB284) that virtually prevented banks and lenders from foreclosing homes unless they take possession of the original loan papers and other pertinent documents. This means that there is little possibility for these properties to flood the market anytime soon and is being reflected simply as shadow inventory.
The same scenario can be seen for single-family homes that exclude condos and townhomes. There are 6,925 properties currently available and if using the 32,000 units sales figure generated during the last 12 months, supplies will last for only 2.6 months. This is way below the historical figures of 5 to 6 months of supply with an average time in the market of 3 months or 90 days. In summary, the total number of properties available is a bit lower than what it normally registers in previous markets.
Apartments and Rentals
An apartment boom seems to be in the outing for the Las Vegas real estate market with the rash of at least apartments and rental units set for completion by 2014 based on reports from Review Journal. This is totally a turn-around from what occurred last year in 2013, where only a dismal 370 units – the lowest in 20 years – completed delivery within the Southern Nevada area.
The purported 3,000-unit delivery of rental units is raising quite a few eyebrows because of a wide variety of reasons that will make industry experts uncomfortable with the projected figures. For one thing, vacancy rates are still high at 9.18 percent compared to 7.8 percent market average based on figures from the last 14 years. Rental rates is still another point to ponder, which at $781 average is still way below the $932 average rates registered back in 2007.
However, other experts insist that the projected rental unit deliveries is just rightfully so because of some compelling reasons, starting with the fact that the Las Vegas real estate market registered very little new apartment homes since the recession. Current numbers may not be enough to accommodate the projected population growth bought about by a projected growth in jobs this year and the next. Household adjustments will also be a factor with single people 35 years and below moving out of their parents’ homes. These young adults, many of whom have endured the foreclosure problem during the recent recession, will opt for apartments or rental units which they will hold on to for years before getting a real property of their own.
There are still many challenges facing the Las Vegas real estate market. For one thing, the 8.6 percent unemployment rate is still relatively high as compared to the national average of 6.6. Another challenge in the outing is the expiration of the Mortgage Forgiveness Debt Relief Act, which could trigger a significant drop in short sales and another increase in foreclosures. Still, investors are starting to flock towards this market, opening new businesses and purchasing empty real estate that they could utilize for future projects. This and other factors in store for 2014 may still give life back to a battered but still surviving real estate market.