October 2013 Las Vegas Market Update: Episode #362
Todd gives an update to the real estate market for October 2013
Hello. Welcome to Todd Miller TV. This is going be a market update for October of 2013 and so if you watched probably a year ago, maybe 18 months ago, I officially declared the REO boom over and of course we never know but it turns out I was right because the flood of our REOs never hit the market.
Now we kept hearing from people out there, on YouTube, making videos and there was this huge wave of REOs that were going to flood the market and drive down prices and blah, blah, blah and it never happened.
We heard it two years ago. We heard it a year ago and it has not happened. When I talk to our REO clients, they tell us, “Hey it’s not going to happen.” We’ve got a steady stream of small number of REOs.
It’s still a lot. I mean we have maybe 10 percent of our markets REOs and if you think about it, 10 percent of the market doesn’t sound like a lot but in a market where you have 50,000 sales a year, that’s 5000 houses. Will it increase in the next year or two? Yeah, and this is why.
We’ve had legislation passed and I think the state is about all legislated out. I think they’re done with legislation. I think the banks are done with the legislation. Everybody has kind of figured out what the new rules are and they’re just going to go back to what they were doing before. They’re going to go through the process. They’re going to foreclose. We are going to see a slight increase. I predict we could get up to 15 percent of the market being REOs but it’s not going to be a flood. It’s not going to destroy the market and the markets pretty much close to an equilibrium.
So have a lot of short sales. Short sales are probably 15, 20 percent of the market but really 60, 70 percent of the market are equity sales, traditional sales or people with equity and the thing we’re seeing are people who are taking the house they bought a few years ago as a starter home, put it on the market, sell it and moving up.
So we’re seeing the move-up buyer. The move-up buyer came back, the move-up seller to a buyer. We didn’t have that person for the last six or seven years because everyone was underwater so it was moving up. They were actually foreclosing or short selling and moving into something smaller.
So that’s healthy for the market. It creates more stuff. It creates more movement which is always good. It gives people more choices and anytime people have equity, it’s good. So what I predict moving forward is that what you’re seeing is what you’re going to get. We’ve been this way for almost a year. It has been tight. Prices have appreciated quite a bit, about almost 30 percent. It’s not going to happen again. We’re not going to have another 30 percent appreciation.
Are we likely to have slight appreciation? Yes. Are we likely to still see some short sales? Yes. Are we likely to still have foreclosures? Yes. It’s probably going to happen in about the same type of numbers that is happening right now. I do predict a little more REO. I just think the banks are – because we’re seeing NODs start to increase a little.
So I think that’s going to – there’s going to be back on the backend but this flood of properties never happened and the other thing is this. If values rise, people underwater, that the number of those people go away because values arising and less people are either underwater or they’re getting closed and they’re looking at going, “Hey, I’m closed. If I just hang on to this house for a couple more years, I will have my equity back.”
So anyway, that’s my take on the real estate market and what to look forward to here for the next few months. Anyway, that’s my update and hope to see you on another video. Thanks.