In Real Estate Good Things Come to Those Who Don't Wait

They say that good things come to those who wait, but lately good things come to those who pounce quickly.  Real estate has become a hot commodity once again, and houses that once languished months, or even years, on the Las Vegas MLS are now being snatched up in days or even hours.  We have certainly observed this phenomena first hand, especially in the last six months, as we watch foreclosures and REOs being bid up and short sales being submitted with multiple back-up offers.  

The following graphic is constructed off of data from the latest Realtor’s Confidence Index.  As you can see, nearly ⅓ of all homes on the market are selling within one month.  This is a huge departure from sales data one and two years ago.

Why are homes selling so quickly here in Las Vegas?  Affordable housing and attractive interest rates.  Interest rates remain the lowest they’ve been in years, and housing is extremely affordable even after the 20% gain in median home price we’ve witnessed in the last year.  What is interesting to note in all of this, is just how strong the rental market in Las Vegas continues to be, even with low home prices and even lower interest rates.  

Traditionally, as home prices drop, if interest rates are low, it becomes cheaper to buy than to rent.  This is definitely true here in Las Vegas.  The average home-owner can save between 50-100% monthly on their mortgage versus rent on the same property.  When this occurs, typically rents will fall as landlords are forced to make their product more competitive.  For the most part, this has not happened in Las Vegas.  Rents have dropped very slightly, but nothing compared to the plummet in home prices, and even as interest rates remain low, rents have remained strong.  This is due, no doubt, to the large percentage of the Las Vegas population who are currently ineligible to purchase a home because of recent foreclosure, bankruptcy, or other negative credit activity.  

As a result, it continues to be an excellent time for investors to enter the Las Vegas real estate market, although it is much more difficult to find affordable properties than it was one or two years ago.  Gone are the days when investors had multiple Las Vegas foreclosures to cherry pick.  For those who are interested in Las Vegas investment real estate, I recommend “alternative acquisition strategies.”  We have had to get very creative in order to find properties for our clients in this market.  Give me a call if you’d like to hear more.