Many
of my articles in the past months have been devoted to discussing the
abnormal and unpredictable market conditions prevailing in Las Vegas
real estate today. From the collapse of the real estate bubble in 2007,
to the passage of AB284 in 2012, real estate in Las Vegas has been
anything but a smooth ride. Recently, experts have wondered whether the
sharp gains in median home price over the past year will hold, will
continue, or will be lost. There are several uncertain factors
overshadowing these possibilities and these factors have made predicting
the near term moves of the Las Vegas real estate market an even more
difficult task than normal.
One
indicator that might be fairly solid, however, is the data surrounding
new construction. New construction ground to a virtual halt after the
real estate bubble burst in Las Vegas in 2007-2008.
Shortly
thereafter, a huge glut of foreclosures flooded the market driving home
prices down well below builders’ replacement costs. This made it
impossible for builders to turn a profit on new construction. In 2012,
foreclosures ground to a halt of their own with the passage of AB284,
and home builders scrambled to pull permits to help fill the demand for
homes to buy. Currently, banks have resumed foreclosing in Las Vegas,
but are still only filing less than half the NODs they were before AB284
passed. Several possible amendments to AB284 is in the works and it is
uncertain how those amendments might affect inventory and pricing.
One
potential key indicator in all of this confusion can be found in the
sales data from new construction. The number of new construction units
sold is on pace to be up for the third straight year and demand
continues to be very strong. What is interesting to note, however, is
that builders are largely not replacing the inventory that they are
selling. According to the Las Vegas Review Journal, “Fifteen percent of
the market’s 131 subdivisions have fewer than 100 lots left, and
another 44 percent have fewer than 50. Sure, builders are buying raw
land, but those parcels are a year or more away from construction.”
This means that if changes are not forthcoming to AB284 allowing more
foreclosures to fill the gap in demand, prices could escalate even more
dramatically in the next couple of years. As I’ve outlined before, this
isn’t necessarily good news.
If
you are considering buying or selling in this volatile Las Vegas
housing market, contact me for unbiased advice or visit my website to
learn more: www.teamplantone.com
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