Las Vegas Land Prices Fuel Surging Housing Market

 

 

But is it a second bubble?

The price for residential land in Las Vegas has risen 90% in only a year as
new construction continues to feverishly attempt to capitalize on the
demand for housing created by the slow down in foreclosures.  According
to an article in the Las Vegas Review Journal, Sunbelt Development and
Realty Partners reported an average price of $202,983 an acre for
medium-density (six to 14 units an acre) residential land in the fourth
quarter of 2012, compared with $170,450 in the third quarter and
$104,000 at the beginning of the year.  This rise in land prices comes
as the last of the “dinosaurs” haunting the Las Vegas valley are sold
off.  These dinosaurs are projects that were abandoned in various stages
of incompletion after the real estate bubble burst in 2008.  For
several years, home builders who wanted to, could purchase these
partially finished lots for fabulously low prices...but not many wanted
to.  New home construction ground almost completely to a halt in 2009.
 Over the last year, however, demand for new homes has skyrocketed and
developers who could have purchased land cheaply three years ago are now
entering bidding wars for residential lots.

Land is becoming a precious commodity in Las Vegas.  This is partially due
to the geography of the valley itself.  There is only a limited amount
of land remaining in the Las Vegas valley and much of it is owned by the
United States government as BLM land.  This is an issue that Las Vegas
developers have always known they will have to face sometime in the
future.  In the near term, there are still plenty of residential lots to
be had, but prices are escalating rapidly.  Home Builders Research
President Dennis Smith has described the increase land prices over the
last year as “downright scary.”  Robb Beville, president of Las
Vegas-based Harmony Homes, elaborated, “Low inventory is what is driving
up the demand, not job growth or employment growth.”  

This “artificial” increase in real estate prices is something we’ve been
talking about for the last year.  It is creating a lot of uncertainty in
the Las Vegas real estate market and makes it difficult to know if the
recovery we are currently experiencing in home prices will continue, or
lead to another bubble bursting.  As always, in this time of
uncertainty, we strive to bring you the best real estate investment
bargains available, as well as the best information and advice on the
market.  We recently offered one of these “dinosaur” unfinished
condominium developments to our investors for pennies on the dollar.  If
you are interested in finding deals, like this one, that still exist in
Las Vegas, call and speak to Glenn personally.

Real Estate Backed Investments on the Rise Again

 

 

For several decades, owning real estate was considered one of the safest income plays available to investors.  Investors appreciated the tangibility of owning an actual home on an actual piece of property.  They appreciated that the variables associated with a real estate investment were much easier to understand than the myriad of factors that affect investments in the stock market.  For many investors, this all changed when the real estate bubble burst in 2008.  For several years after the bubble burst, even as real estate prices hovered at historic lows and potential returns soared, Americans returned to the stock market in droves and it became difficult to convince investors to give real estate another chance.  But recent statistics seem to indicate that this period of concern has come and gone, and investors are now competing in a sellers’ market to buy the same properties that they could have snatched up for pennies on the dollar only two years ago.

But some investors still shy away from the stability, long-term appreciation, and cash flow that real estate investments bring for the simple reason that they don’t feel equipped to manage such an investment.  We address this potential problem in two ways.  First, we offer full service property management for all of our investors’ properties.  We have been doing this for several years and we currently have over 100 Las Vegas properties in our management portfolio. Because we cater to investors, we know what investors need from a property management team and we strive to make investing in Las Vegas real estate easy and hands off as much as possible.

We also offer investment positions in the flips that we complete.  We have completed over 200 flips in the last three years, with an excellent track record for profitability.  (Records available upon request.)  For our clients that want to enjoy high rates of return with no involvement in transaction details or property management this works perfectly.  With a minimum investment of $100,000 we provide a guaranteed 10% return.  One year terms are standard, but we will consider different lengths for special circumstances.

If you’ve been considering investing in Las Vegas real estate, but aren’t quite sure where to begin, give us a call.  I will help you consider all your options and find an investment plan that works best for you individual needs.

Possible Revision to AB284 Could Re-Open Floodgates of Foreclosures in Las Vegas

 

Assembly Bill 300, introduced by Assemblyman Jason Frierson, D-Las Vegas, was introduced in March and seeks to change a pivotal definition that is part of Nevada Assembly Bill 284.  AB284, which passed the legislature last year, was supposed to help protect homeowners from illegal foreclosures.  What it has done, however, is to slow foreclosures to a trickle, artificially raise prices throughout Las Vegas, and allow some homeowners to remain in their home for years without paying on their mortgages.  

The new bill seeks to replace the language of AB284, which requires anyone signing documents on behalf of a lender to have “personal knowledge” of who owns the promissory note on the loan with a phrase requiring those signing foreclosure documents to have knowledge that could be “obtained from reviewing business records of the beneficiary of the deed of trust and information from the county recorder or title insurance issued by an agent authorized to do business in the state,” according to the Las Vegas Review Journal’s coverage of the issue.  Assemblyman Frierson describes the proposed revisions to AB284 as a compromise that “realtors, title companies, bankers and legal aid all came together and said this would satisfy their concerns about personal knowledge.”

It will be interesting to see what the effects of the passage of AB300 could be for the housing market in Las Vegas.  It is possible that a loosening of the restrictions imposed on banks by AB284 could result in a new wave of foreclosures that drive prices back down in the valley.  Many people, including myself, have cautioned that the rapid rise in home prices we’ve seen in Las Vegas in the last year and a half could be the beginning of another real estate bubble.  Only time will tell, but if I had a house to sell in Las Vegas, I would definitely be selling it now.

Real Recovery for Las Vegas Real Estate?

 

 

The sales numbers for Las Vegas real estate have been extremely promising over the last year and a half.  But does this mean that a real recovery is underway?  It might be too soon to tell.  One thing we can be sure of, however, is that Las Vegas, previously known as the foreclosure capital of the nation, has now become one of the hottest housing markets in the U.S.

As I discussed with my co-host Brad Henderson on the Las Vegas Real Estate Realty Hour show of February 9th, Las Vegas real estate appreciated between 15% and 24% last year alone.  This leads all other major metropolitan markets other than Phoenix.  

My personal experience in the Las Vegas marketplace bears out this trend.  Two years ago, it was relatively easy for me to find investment properties for my clients at $50/sq. ft. or even less.  Now it is difficult to find properties listed under $100/sq. ft.  This recovery seems to be extending to new construction as well.  New construction ground almost to a halt in the Las Vegas valley for over four years after the real estate bubble burst, but now new builds are back in full swing and selling at a brisk pace.

If you are looking for timely updates on the Las Vegas real estate market along with different viewpoints from fascinating guest speakers, tune into my weekly radio show or visit teamplantone.com to listen to all the back episodes.

Second Bubble Far From Bursting

 

 

Las Vegas home prices continue to rise, outpacing all other metro areas nationwide.  In fact, residential home prices gained an unbelievable 2% in February alone, the largest single month gain since May of 2006.  Economists attribute the gains to continued low inventory in the valley, historically low mortgage interest rates, and improving employment numbers.

In an odd twist of fate, improving home prices might actually help add to housing inventory as homeowners who have wanted to sell, but have been underwater on their homes, find price points at which it makes sense to finally put their homes on the market. It remains to be seen if this potential increase in inventory will slake demand and push prices down again in the ultra-hot Las Vegas housing market. Many homeowners are also expressing confusion as to whether current market conditions are right for listing their home. Many are just beginning to reach the absolute minimum price levels at which they could list their home and not take a significant loss on the transaction.  Many have been waiting years for this moment.  But then they pause to wonder if prices are going to continue to escalate at their current rate.  If so, why not wait a few months before listing their property?  Perhaps they could actually make money on the transaction?

It is very difficult to spot absolute market peaks, perhaps even more difficult than spotting bottoms. While I have said for months that I don’t believe that the oft-mentioned “shadow inventory” will ever make an appearance here in Las Vegas, I do believe that current market conditions are unstable, unpredictable, and being driven by more than just hard economic data. That being said, I can’t tell you if this is the perfect time to sell your Las Vegas home or not.  What I can tell you is that this may be the perfect time to refinance.  Home prices are attractive, and refinance rates are at all-time lows.  There really seems to be no better time to initiate either a rate and term refinance or a cash out refi...especially if you are going to use that cash to re-invest in Las Vegas properties.  It might seem hard to believe in this extremely hot market, but we are still finding great investment deals for our clients.  If you are interested either in Las Vegas real estate investing, or in a great referral for your refinance deals (I have a wonderful broker I’ve used for years), give me a call.  I’d be happy to chat.