Todd explains the Las Vegas real estate market for July 2013 and the year looking forward.
Hello. Welcome to Todd Miller TV. July is today, 2013, so we’re going to do a market update for July and what the big news is, is that last month this new legislation passed, Senate Bill 321, which basically stops foreclosures, more so than AB-284 or any other thing has done it.
Basically legislatively stops it, forces the banks to go through a lot of hurdles. So we’re looking at a three to six-month minimum wait, so we’re going to have this window of three to six months where there aren’t any foreclosures. So probably in three to six months, the inventory is going to basically – won’t completely choke off but the REO flow will disappear.
REOs are not that big of a market right now. Last month, they were less than 10 percent of all sales but why this is important is because what this is going to inadvertently do is it’s going to take some of those people who are going to do a short sale, are going to potentially change their mind, meaning they’re going to say, “Hey, wait, if they can’t foreclose on me, maybe I get a loan mod,” and the banks are going to be even more incentivized to give people loan mods, principal reductions and things like this.
So it’s going to keep people in their home and then what’s going to happen is there are going to be people out there who say, “Well, I’m moving but darn, this loan mod I got, I can now rent the place out and have positive cash flow.” So upside down but it cash flows now and now there’s no reason to ever get rid of it. Keep it forever, just positive cash flow. Forget that it’s upside down. Just wait until the distant future and then deal with it then.
So the problem today is if you’re an investor or first time home buyer looking to buy, there’s just less inventory. So basically what this does is it takes that inventory that should get pushed out and it locks it up.
So expect to see for the next year continuing a very small amount of inventory in rising prices. It’s going to happen. I have not called any of my investors and said, “Sell your properties,” not one of them. I’ve had some individual clients, just people who called me and said, “Todd, we need to sell for whatever reason. Come list the house,” and we’ve done that.
But I’m not telling anybody to sell. I don’t think it’s – you never know what’s going to happen three, six months, a year down the road. But it’s my gut feeling that price is just going to go up, went up 24 percent last year. Twenty-four percent this next year now, but 12, 15, could that happen? It might. Add on to that six, seven, eight percent return rate on cap rate maybe on an investment. Now you’re up at 20 percent which isn’t a terrible investment.
So Monday, I got four calls from different people. That was yesterday. All want to buy, so a lot of people coming in to buy in the marketplace. Anyway, that’s my update for July 2013 here in Las Vegas and hope to see you on another video. Thanks.