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Price, Not Location
Value can be had in the real estate market, if you buck conventional wisdom
By Robin Camacho
Real estate is a long-term investment, as any successful investor will tell you. Buy for the short-term profit, but hold for the long-term profit, too. Sixty days is a mere blip on the big-picture screen. So it's hard to believe it's only been 60 days since we launched the LV Real Estate page here at LasVegasAdvisor.com-yet so much has changed in this market since my first article was written in October.
Prices have slipped further since that writing. In August, prices had fallen approximately 4% over the previous 12 months. Reviewing the Case-Shiller Index in late July, it was apparent investors were predicting a 4% drop over the next 12 months as well. But in early August, sales plummeted and the price decline began to pick up speed. To date, prices appear to have dropped somewhere between 12% and 16%. Expect prices to slide a bit further before we hit the bottom.
The good news is that we may be nearing the bottom of the market in terms of sales.
Today the majority of great bargains are to be found in REOs ("real estate owned," otherwise known as bank-owned repos). Of the 19,800-plus single-family residences currently listed for sale on the Multiple Listing Service, only 14%-16 % are bank-owned. By comparison, 30%-33% of single-family residences (SFRs) sold in the past 90 days were REOs! For Las Vegas real estate investors, the Three Ls (Location, Location, Location) are not necessarily the single most important factor today, as many investors gravitate toward REOs and the Three Ps (Price, Price, Price).
While every savvy investor wants to find that elusive bargain in Summerlin, it is difficult to beat the incredible deals popping up in the newer areas of North Las Vegas. When one compares Summerlin "steals" at $135-$145 per square foot to newer North Las Vegas homes selling for $74-$88 per square foot, it can be very tempting to buck universal thinking.
All other things being equal, an REO generally costs the buyer less than a comparable home that did not go to foreclosure. The median sale price for a Las Vegas SFR is hovering around $275,000. By contrast, the median sale price for Las Vegas REOs is $254,000. There are approximately 400 condos and/or townhomes listed as REOs, making it difficult to draw a comparison.
Las Vegas has a resilient and growing economy. While this is an incredible time to buy a home or other property in Las Vegas, banks holding REOs appear to recognize that the housing market will likely rebound in Las Vegas before it does in other hard-hit areas. After all, new jobs are the pillar that supports a healthy housing market—and tens of thousands of jobs will be created in Las Vegas by the end of next year.
While most investors dream of buying homes for 50 cents on the dollar, that rarely happens; don't expect to find banks giving LV homes away anytime soon! Banks don't want to keep homes on the books any longer than necessary and will drop the price on one that doesn't sell quickly enough. When the price gets to the point homebuyers are willing to pay, there is often competition for the best deals. In fact, once a home hits our Top 10 it often quickly receives competing offers and generally sells within days of the price drop, regardless of when it was listed.
Banks and other sellers are getting close to asking price on the homes that do sell. Of the SFRs sold in the past 90 days, sellers received an average of 96.4% of their asking price. Don't let this scare you-this is for houses that did sell, often after one or more price drops. But when you can buy many homes for 30%-45% off the previous sale price, a full-price offer can still be an astonishing buy. If you are working with a knowledgeable, experienced and aggressive Realtor, I recommend that you follow her or his advice. If you can buy a home that's already way below market value, make a reasonable offer before the next guy does.
If you would like more information on Las Vegas real estate, I suggest that you check out our Top 10 and Runners-Up on this site. As our viewers who've worked with me know, I'm always happy to answer a reader's questions on specific properties or on our market in general. Feel free to drop me an e-mail at Robin@Top10RealEstateValues.com.
If you want to make an offer on a Las Vegas property and need to reach me quickly, you can call me on my cell, 702/279-2466.
If you've ever thought of "owning a piece of Las Vegas" this is the time to lay your money on the table. This buyer's market may hold the key to increased wealth ... if you play your cards right.
