Forrest’s Blog

 The race to the final December 2007 closings certainly lacked the enthusiasm generated by Kinky Friedman’s run for Governor of Texas in 2006.  Both ended up about the same way . . . failing to excite anyone with results.  But Kinky at least, had the distinction of being the first independent in 154 years to even make it on the ballot! 

Yet, there is some really good news in those numbers . . . so let’s first download and take a look at:  December 2007 Resale Market Snapshot. 

Listing prices dropped 2 percent during December and 5.4 percent since September.  On the otherhand, closed sales prices dropped 4.5% in December and 8.7 percent since September.  Meanwhile available inventory dropped nicely while the absorbtion rate nudged upward.  Some areas even saw a reduction in the amount of over-pricing compared to previous months. 

Areas 103 and 504 seem to have benefitted nicely from the November and December auctions.  Homes in area 103 sold much better than in previous months while the average listing price and average sales price are becoming more balanced.  Area 404 did not see much of a drop in average list price, but experienced a nice increase in average sales price that boosted the absorbtion rate and modestly closed the over-pricing gap from October and November.

I would be remiss if I did not mention that we are once again seeing a large number of multiple offers being submitted on properties around and below $250,000!  This is especially true for well priced REO listings right now . . . and something that every buyer should know before making an offer in and around this price point.

Have a Great and Prosperous 2008!

Let’s begin with some good news!  However, that will have to wait until we congratulate Lee Barrett on becoming a certified CRS instructor on his first attempt during the NAR Convention last month.  Congrats Lee!! 

Now for the good news! First, the single family residential (SFR) resale closing numbers for November are pretty much on par with October . . . and that’s good why?  Well, we did not have the “normal” November dip from October numbers . . . and that might just be the first sign of life and hope in resale sales since it bucked the traditional end of year trend.  So let’s see what we can learn from the November SFR stats about the current underlying condition of the Las Vegas market.

First, download and take a look at: November 2007 Resale Market Snapshot

This table is a snapshot of the SFR listings that were available in the Greater Las Vegas market as of December 1, 2007.  The listings are broken down by MLS areas; you may also want to download a map to the Greater Las Vegas MLS Area Codes.

More good news!  The overall available inventory has dropped slightly since the last snapshot a month ago.  More importantly, the average price of available SFR listings has also dropped approximately 1.6% for each of the last two months or a total of 3.2% for the two months combined.  Also, the average sale price inched its way up as did the absorbtion rate.  On the whole, the Greater Las Vegas resale market remains 14% over priced, but some areas are adjusting well.  For example, take a look at area codes 201, 202, 403, and 502.  These areas are coming closer to striking a balance between average list price and average sale price.

There is one anomaly in the chart . . . and that is area 601! The small number of closings skewed that data slightly as there were three high end properties that closed out of the fourteen total closings.  One of these was a closing with a sale price of exactly $1,000,000 that had an original list price of $1,399,000; that property sold with a 29% reduction to the original list price.  Area 601 seemed to have good activity for the number of listings and a higher than average absorbtion rate, but the -12% does represent a small amount of skewing.

The one number in the report that could still use improvement is the average Cumulative Days on Market (CDOM).  It has slowly increased to an overall market average of 169 days.  One (actually several) events may change this next month!  The December auctions!!  Early indications are that the Hudson and Marshall auction held on Sunday, December 2, 2007 yielded great deals and excellent results for the properties that were included in the auction.  There are several more auctions to be conducted this month, so I am really looking forward to see what impact they will have on next month’s snapshot!

 Until then . . . Keep Getting Price Reductions . . . and close more sales!!!

Anyone who has been following the Las Vegas real estate market knows that September 2007 closings were the lowest in a decade.  Meanwhile, the resale inventory remains close to 30,000 homes.  So, what can we learn from the September stats about the underlying condition of the Las Vegas market. 

 First, download and take a look at:  September 2007 Closings vs Available Listings

 This table is a snapshot of the single family residential listings that were available in the Las Vegas market on October 5th.  The listings are broken down by MLS areas; you may also want to download a map to the Greater Las Vegas MLS Area Codes.

The table details the number of homes available is each MLS area as well as the average current list price for homes in that area.  The columns to the right of these compare what actually sold in those same areas, including the number that sold, what percent of the available inventory that sold in September, as well as the average closed sales price for homes in each MLS area.  The column on the far right of the chart is titled “% Gap/LP-SP”.  This calculation is the percent difference between average list price and average closing prices by area.  In short, it really depicts just how overpriced that the current inventory of available homes remains.

For example, Area 102 has an average listing price of $416,865 but an average sales price of $327,229.  Listing in MLS area 102 remain approximately 22 percent overpriced compared to the 4.4% of available inventory that actually closed in September.  That 4.4% is also considered the absortion rate for Area 102.  Overall Las Vegas has an absorbtion rate of 4.8% and is 13% overpriced on the average.

Be careful not to confuse the averages with what is happening with any specific property. In fact, let’s talk about the new competition in the Las Vegas real estate market!  Many homes purchased in the second half of 2003 and later probably got caught in the extraordinary market price run that saw home increase nearly 50% in 2004 alone.  It may be difficult for many of those homes to be priced competitively, especially if they were financed with little or no equity  . . .  or refinanced with most or all equity removed from the home.  However, consider the owners that purchased their home in 2002 or earlier!  They may be sitting on a great deal of equity . . . assuming that they resisted the temptation to pull the majority of equity out of their home.  This seller . . . with good equity . . . and perhaps a small mortgage (or no mortgage at all) can list their home today at an extremely competitive price that will allow them to net a very healthy return on their investment for the years that they have owned the property.  That is why you might see a $700,000 home sell for $475,000 in this market.

In 2004 homes were selling for more than they were valued at due to the heavy demand for homes in Las Vegas.  Today, homes are worth what they are worth, but they very well may sell for less than they are worth.  Simply, supply and demand is alive and well in up and down markets.  It’s just imperative to establish list prices carefully in the current Las Vegas market if one is serious about selling in the short term.

The word is out. “There are no more stated income loans being written in Nevada”!  This is just not true!!  However, Assembly Bill 440 from the 2007 Legislative Session has had an impact on a wide variety of low documentation loans.  Even news articles that have some of the facts correct can be scary to read.  For example, take a moment to read today’s Las Vegas Review Journal article on this subject:

MORTGAGE MELTDOWN: New law tightens lending

I whole heartedly agree with Bill Ochs’ (owner of Nevada Mortgage) viewpoint that the marketplace, rather than legislation, could better solve this problem.  What’s currently taking place in the mortgage lending business certainly is evidence that the marketplace has already taken great strides in resolving the agressive, liberal lending practices of the previous two years. 

 But . . . enough of my viewpoint!  Rocky Finseth (Principal at Carrara Nevada) and Jenny Welsh (Government Affairs Director) have followed this legislative item since it’s inception.  They have written an article which clarifies the implementation and impact of AB440.   Rocky and Jenny briefly explain how this legislation came about and share the guidelines that are currently in use by lenders.  This article is certainly worth reading and offers insights that should dispel the misinformation that many of us are receiving.   Please check out: 

Clarification on AB 440

Now that you have the most up-to-date information on this issue, there is an even better resource for the best information on available loan programs.  Just contact one of our MJM Home Loans Representatives!  Their contact information can be found at:

I already know that many of you are taking exception with the very title of this blog.  

Be patient, control yourself, and let me express my grave concern with the label “Buyer’s Market”.  In fact we need to discuss the dangers associated with putting any labels on any market condition.  Why?  Well, the primary reason is that any label represents a singular viewpoint . . . not that of everyone looking to potentially take advantage of the current market conditions.

Let’s start with the seller who has had held their property for five year or more and wants to trade up in this market.  For this seller it may be an excellent seller’s market because of their ability to sell at a price well above what originally paid while being able to purchase a bargain after selling their property.  Again, labels look at life from one person’s viewpoint and ignores the many possibilities that may be right in front of us.  Yes, labels may blind us and our clients to opportunities that may be staring us in the face.

Next, if it is such a “Buyer’s Market”, then why are so many potential buyers sitting on the sidelines waiting for the “bottom of the market” to be reported by the media?  Certainly these folks that have cancelled otherwise good escrows at the last minute to wait for a better deal do not believe it to be a buyer’s market.  This makes about as much sense as the buyers who were willing to pay tens of thousands of dollars over market value to buy a house in what was labeled a “Seller’s Market”.  Why was there such an urgency to buy at that time and now now?  Certainly the prices are generally better now and interest rates remain very low.

 Here’s my larger problem with labels!  Labels have a tendency to take our mindset away from “The Now” to the past or the future.  It’s as if the past was a better time to do this or that . . . or the future will be a better time to act on our needs.  But what control do we have over the future?  How can be go back in time to recapture a lost opportunity?  Without some serious help from H. G. Wells . . . we can’t!  We can only deal effectively with the present.  That’s perfectly okay because there are always opportunities in every market for those who are present to them. 

The key is to focus all of our energy on “The Now” because “Now” is all we can control.  But if we do this, we will find extraordinary market opportunities that are available right now . . . today!  More importantly, this is true in any and every market.  So remove the labels that distract us to days gone by or a future that we can’t guarantee.  Focus on “Now”!  Focus on today!  This is the only way to build a business that succeeds in all markets and market cycles.  It keeps us focused on the reality of “What Is” rather that distracting us with “What Isn’t” or “What Will Be”.

 So let’s remove all the labels and just address it as the “current market”.  It’s not any particular label . . . it simply is what it is!