Las Vegas Home Sales – Are We There Yet?
Not sure if we have hit the “bottom” of the Las Vegas real estate market that everyone keeps asking about. I know that several of my sellers participating in our Las Vegas For Sale by Owner program are certainly anxious for better news.
Here is what I’m paying attention to from a mortgage originator’s point of view:
With the Las Vegas median home price finally getting back to a range of $235,875 in March 08, according to GLVAR statistics, the price is down 22.7 percent from a year ago. This impacts many of the residents living and working in the Las Vegas community because they can now afford to purchase a home.
FHA lending limits were recently increased to $400,000 in Clark County. As one of the few available mortgage programs that still allows for 100% financing, FHA mortgages are opening the doors to home ownership for many new buyers. Otherwise, a borrower applying for a conventional mortgage loan needs to budget a minimum 10% down payment. Obviously, there are several other qualifying factors that banks consider for approval, such as income, credit, employment history, and residence status.
In regards to Las Vegas market trends, the housing inventory levels and new contracts have made dramatic changes in a very positive direction. In October of 2007, the average days on market (DOM) for a single family residence below $400,000 hit a high of 381. This means that if no additional inventory was added, it would take 381 days to sell that home. In March of 2008, as reported by The National Association of Real Estate Investment Advisors, the new (DOM) average has been lowered to 135. In addition, the number of new contracts has increased from 1994 units in January 2008 to 3921 in March 2008.
We still have another year or so of adjustable rate mortgages coming due that were originated in 2005 and early 2006. However, most of those home owners have already started making arrangements with their banks or have put their homes on the market as a short sale.
2007 was a difficult year for all of us because the correction hit us so fast. Now, most sellers are willing to acknowledge that fact that their properties may not be worth what they paid for them during the boom. With this new level of general market awareness, sellers are making better educated decisions about the true value of their properties.
Once those foreclosures resulting from ARMs are cleared, I believe that there will be a great sense of stability in the Las Vegas real estate market. As a loan officer, I can tell you that 100% of my 2007 and 2008 closings were 30 year fixed rate mortgages with very low interest rates. I’ve seen the speculators leave the business, and my current clients are planning on staying a while.
If you have to sell, price and exposure are the two things moving properties right now. Another option would be to look at a possible refinance to get you out of that ARM or higher interest rate.