Up, Up, And Away...Las Vegas Home Prices Show No Signs Of Slowing Down

The Las Vegas housing market continued its white hot rise as the sales volume of new construction rose in April to the second highest levels since the summer of 2008, which was in the midst of the housing bubble boom.  Meanwhile, the median home price for new construction hit a record high. Both January and April had the fastest sales rate (lowest days on market) since July of 2008. The median home price for houses sold in April was up to $271,600...this is the highest mark since the government began keeping these records in 1993.

This is a whole lot of positive data, and many people are taking these indicators to be signs that the housing market is recovering aggressively in Las Vegas.  This certainly appears to be the case.  But, at the risk of being the only downer in the room, I'd like to remind everyone that the recent highs in Las Vegas real estate isn't based on particularly wonderful economic growth, either locally or nationally.  Unemployment is still way too high.  The Fed is hinting that quantitative easing might be ending soon, but it hasn't ended yet.  Cities like North Las Vegas are still teetering on the brink of bankruptcy.  And, of course, let's not forget the elephant in the room...AB 284. The Nevada Assembly drastically altered the Las Vegas housing market when they passed a bill that virtually ended foreclosures in the Las Vegas valley. The assembly members might be looking like heroes right about now.  But it has been my experience that anything that alters the natural flow of the economy eventually has its consequences and they are rarely pleasant.  I am seriously concerned as to whether or not the growth in the Las Vegas housing market can be sustained.  I would caution potential investors to focus on cash flow, cash flow, cash flow.  If you make sure that you purchase a property with positive cash flow right out of the gate, you will be insulated against the further twists and turns of a potentially fickle Las Vegas housing market.

Helping the Housing Recovery in Three Steps - Part One

My colleague Tamara Lemmon recently brought to my attention a piece she wrote for foreclosure.com outlining what must be done to accelerate the housing recovery.  She has allowed me to share the article with you here on my blog:

"Warren Buffet, in his annual letter to shareholders of Berkshire Hathaway, said, “Last year, I told you that ‘a housing recovery will probably begin within a year or so.’ I was dead wrong.” While Buffet remains bullish on a housing recovery near term, he acknowledges that how long that recovery is in the making will depend on a variety of diverse factors. It is the responsibility of any president or political leader seeking or holding office to help stimulate the recovery of the housing market and to lead the United States out of the current recession. Although this process is complex and dynamic, there are three key steps that can help steer the macro-economy as well as the housing sector in the right direction: a decrease in the amount of red tape currently stifling foreclosure proceedings, incentives to lenders for making home loans, and a decrease in the national debt via a balanced budget.

After the real estate bubble burst at the end of 2007, the United States housing market endured foreclosure rates that quadrupled from their baseline in 2005 to the peak of the housing collapse in mid-2009. Since 2009, foreclosures have steadily declined nationally, and have broken off sharply in certain regions due to the influence of outside forces. Las Vegas is an excellent local market to consider as an example. Las Vegas retained the dubious title of “foreclosure capital of the U.S.” for five straight years from 2007-2011. In late 2011, foreclosures suddenly and dramatically ground nearly to a halt. In August of 2011, there were 4,063 notices of default issued in Clark County, NV. In October 2011, just 2 months later, there were only 43, a decrease of almost 99%! Most experts believe that this drop was due to the passage of Nevada Assembly Bill 284 which placed extensive new regulations into effect for any banks seeking to process foreclosures in the state of Nevada.

It is incumbent upon any leader seeking office, to determine if the decline in foreclosures that has resulted from these and similar measures nation wide, is helping the housing recovery and the economy at large or hurting them. Again, Las Vegas can be used as a test market. The median home price in Las Vegas has risen steadily for the past nine months, for a gain of as much as 30% in some submarkets of the valley. On the surface, this would seem to be nothing but good news for beleaguered Las Vegas homeowners. The problem is, even with all of this upward movement in price, 70% of Las Vegas homeowners are still upside down on their mortgage, with 36% owing more than double what their home is worth. In other words, the upward pressure being exerted on the median home price in Las Vegas is due to the artificial lack of inventory created by the abrupt halt in foreclosures. The majority of homeowners still cannot sell their home for what is owed, so those homes are essentially “frozen” within the market. They cannot be resold or refinanced. This drives the prices of the relatively few homes that are available to unreasonable levels, and sets the stage for a potential second real estate bubble in cities like Las Vegas. Nathan Martin, blogger for Economic Edge, puts it this way, “Each new up cycle produces more debt, recession follows, clears out the debt and allows growth to resume. But when you interrupt the debt clearing process, real growth cannot resume as incomes cannot support more debt.”

In order to prevent this, we must loosen regulations prohibiting foreclosures and allow banks around the country to re-initiate the normal foreclosure process for delinquent borrowers. This is not cruelty; it is practicality. Foreclosure stops the bleeding. Foreclosure provides a reset button for home values in hard hit communities. Once a home has been foreclosed upon, it can re-enter the market at the correct value. Eventually, if the needed foreclosures are allowed to proceed, home prices will finish correcting, inventory will “thaw”, banks can clear their books of non-performing assets freeing up capital to lend, and the real estate market can finally return to normal. Halting foreclosures not only delays this recovery, it creates a paradigm that is ripe for a second housing bubble and a second housing collapse. While it is likely that banks will find their own way around bills like AB284, and resolve issues such as those surrounding MERS, the continued submission of legislation aimed at slowing or blocking foreclosures should be viewed as counter-productive to the economy. The first step to any viable economic and housing market recovery plan must be to legislate the resumption of the normal foreclosure process in all states, free of unnecessary red tape."

If you are interested in learning more about the opportunities that are available for investors in the current Las Vegas real estate market, contact Glenn at VIP Realty.

2009 In Review

2009 was a year of expectations and a year of hopes.  Some of these were met, some were exceeded, and others will wait and continue to seek fulfillment in 2010.  We all knew that the foreclosure wave would continue to sweep over the nation’s beleaguered real estate markets.  And it did.  Las Vegas once again led the United States in foreclosures as more bank owned properties than ever flooded the market.  We hoped that this influx of affordable properties would lure some investors back into the stagnant Las Vegas real estate market.  But no one expected just how tantalizing that lure would be.  As investors from California, Canada, and all over the world sought to purchase cheap Las Vegas real estate that was suddenly cash flowing positively for the first time in years, home sales in the valley boomed.  Throughout the summer of 2009, Las Vegas posted sales numbers that exceeded those of the boom years in 2003 and 2004.  As quickly as foreclosures re-entered the market, they were gobbled up in their REO form by eager investors cashing in on what had become the greatest real estate buying opportunity of our lifetime. 

And we all hoped that this re-energizing of the real estate market would spread to the economy at large.  It didn’t.  To spite the high hopes of many generated by the seemingly endless stream of economic stimulus packages introduced by the new Presidential administration, an economic recovery failed to materialize and December saw some of the worst unemployment statistics since the recession began.

And yet, this bad news for the economy at large, may translate into good news for investors looking to purchase real estate in 2010. Normally, the excess of demand that we have been seeing in the Las Vegas market would push real estate prices higher.  But the general economic downturn may curb those price hikes and keep properties in Las Vegas at their historically affordable levels through the next year.  Especially for those willing to acquire properties through the trustee sale, properties that need a little work, or unconventional properties like high rise condos. 

As the supply of turn key, single family REOs has dwindled over the latter half of the year, my investors have found that the best way to acquire profitable real estate in Las Vegas is to think outside the “herd.”  We have been investing with great success in properties purchased through the trustee sale auction, high rise properties like the MGM Signature Condos, and properties that are not “turn key” such as “stripped” foreclosure homes.  Since the vast majority of investors are not purchasing these types of properties, we are able to continue to get great deals on investments that will generate strong positive cash flow.

I look forward to 2010 as a year that will continue to allow my clients to purchase Las Vegas real estate at deeply discounted properties.  Hopefully, the nation’s job, credit, and financial markets will begin a steady recovery and everyone can begin to benefit again from a robust economy.  Until then, we are wise to once again remember the words of the great financial giant Baron Rothschild who made his fortune largely during the years of the Great Depression, he said, “Buy when there is blood in the streets...even if the blood is your own.”  Now is truly the time to take advantage of every opportunity to create wealth for our future. 

If you are interested in taking advantage of this historic opportunity to purchase great Las Vegas real estate, contact Glenn Plantone at 702-769-9872.

Surviving and Thriving as a Real Estate Agent: Part 3

In my last two articles, I have discussed how real estate agents can not only survive, but thrive in this challenging real estate market.  I have covered the first three points in my four point plan:

1. Develop Your Niche
2. Become An Expert in Your Field
3. Be Mobile/Adapt
4. Develop a Marketing Campaign

Today I will cover the final point: Develop a Marketing Campaign.

Once I have developed my niche and determined specifically where I am going to invest and recommend that my clients invest, I create my marketing campaign to go find the investors.  I could easily write an entire book just on marketing for real estate agents, and I look forward to sharing more articles with you in the future on this topic, but for now I will share a few brief thoughts here to put you on the fast track. The marketing materials that I use are designed to aid the investor in making an informed decision on the investment they are currently considering. 

• The first item in this package is the “e flyer.”  This flyer is a colorful,
eye catching marketing piece that lists all the features and benefits of
the potential investment in a concise, easy to understand format.  I
send these flyers out to investors in the form of email blasts and
their purpose is to catch the investor’s eye and encourage them to read
more about the investment opportunity that I am offering.  To view an
example of one of my recent investment
flyers:www.viewpointequity.com/MGMFlyer.pdf  
• The second item that I include in my marketing package is a
proforma worksheet.  I have always used proformas to analyze
my own investments and I find it is an excellent tool to share
with my clients as they consider similar investments.  If the proforma
is done well and accurately, it will not only aid the potential client
in understanding the financials of the investment, but it will also
build your credibility in the eyes of your customers as not just a
Realtor, but a seasoned investor that actually understands the
investment process.  Having actual numbers plugged into a spreadsheet
gives the investor a sense of comfort with you and with the investment,
and helps to eliminate the feeling of the “unknown,” especially for
new investors.  All-in-all creating an informative and professional
marketing package for the properties that you are looking to sell
and including realistic projections and other data helps investors
to accurately evaluate a deal and establishes valuable credibility for
you that will result in repeat business, referrals, and client loyalty.
• Another tool that I use with outstanding results is my monthly
newsletter.  Different than a typical “Realtor” newsletter that might
feature recipes and other useful but non real estate related information,
my newsletter is filled with statistics, actual deals, potential
deals, education and opinions of the market in which I am currently
working.  Sending this out to my database on a monthly basis allows me to
stay in front of them and remind them that I am always looking for the
next best deal when and if they are ready to get involved.  To see my
latest newsletter: www.viewpointequity.com/newsletter.pdf
• My final, and perhaps most important marketing strategy, involves not what
I do, but what I don’t do.  I have found that my strengths as a
business person lie in my abilities to create leads, talk to clients,
sell properties and negotiate deals.  My strengths do not lie in the field
of internet marketing or graphic design.  Because of this, rather than
spend my time working on my own e flyers and newsletters, I employ an
internet marketing/graphic design firm to handle these details for me.  When
I am ready to create a marketing piece, I do the overall concept
management, writing, thinking, and analyzing and forward it on to
my specialist for the design of the marketing materials.  Once back to me
I make suggestions and changes to put the final touches on the material. 
I suggest that you too spend more time on the areas in which you
specialize and less time playing with graphic design programs on your
own computer.  This one idea (the virtual marketing assistant) has helped
me tremendously in getting more effective marketing material produced
faster than I could otherwise produce myself, leaving me free to
pursue sales.  If you are interested in contacting the firm that handles
my marketing, you can reach them through their
website:www.spiraldigitalmedia.com

If you follow these four simple steps, you will be well on your way to thriving as a real estate agent, even in a down economy.

Drop Bids at Trustee Sales

Drop Bids at Trustee Sales

The Arizona Republic recently ran an article discussing the practice of "drop bids" at the Maricopa County foreclosure auction. When a lender posts a Notice of Sale amount (often referred to as the minimum bid) and then drops the amount hours or even minutes before the opening of the auction, this process is known as a drop bid and is considered illegal in Arizona. Ideally, lenders are encouraged to post the Notice of Sale amounts for foreclosure properties that will be sold at the trustee sale at least 24 hours prior to the start of the sale.

According to the article, up until recently, the majority of homes brought to auction through the trustee sale were failing to sell and were reverting back to the banks. These properties would then re-enter the market as REOs. This all changed last month as a record 1,000 properties sold through the public foreclosure auction process. This was five times the number that sold in January. According to the Republic, "Real estate market watchers and unsuccessful bidders at the auctions say drop bids are driving the record number of auction sales."

No one seems to be sure why banks would choose to lower the minimum bid without adequate notice. Those who are up in arms over the practice tend to imply that the reasons are malicious, but there are other possibilities. Kelly Braaksma, a trustee sale expert and CEO of FAST (Foreclosure Auction Service Team) a company that specializes in helping investors to purchase properties at auction, says that the uncertainties surrounding properties coming to auction may have more to do with last minute price changes than anything else. "Lenders are inundated with foreclosure properties," Braaksma says, "of the hundreds or thousands of properties slated to be auctioned off at any particular trustee sale, only a few dozen may actually make it up to bid. The rest are postponed, canceled, reinstated, etc. All the aspects of the sale, including starting bid price, are constantly in flux right up until the last minute."

Whatever the reason, the Arizona Republic continues by saying, "Drop-bid purchases enable the few who know about the deals to buy homes and quickly resell them for hefty profits...Buyers aware of the "drop bids" scoop up the houses before other bidders know about the price drops."

Mr. Braaksma has developed a system that analyzes historical opening bids from various lenders, along with a myriad of other data and generates algorithms that predict which properties are most likely to actually make it to auction and which will most likely have opening bids that make them worthwhile to investors. I have formed an alliance with FAST in order to provide this service to my clients looking to purchase at the trustee sale. I don't charge more for the service, clients pay only my standard commission at the close of a sale. But for this commission, they are provided not only with all of the reports and data that FAST generates, but also with a representative that will be present at every Trustee auction, available to purchase these choice properties and take advantage of last minute drop bids.

If you are interested in using trustee sales / foreclosure auctions to acquire property, please contact me and I will send you a packet with more information on the process:
Glenn Plantone (702) 769-9872

Click here to read the full Arizona Republic article

Las Vegas Mayor Oscar Goodman to Speak at October Las Vegas Real Estate Insider Club Meeting

The Las Vegas Real Estate Insider Club is proud to host special guest speaker Mayor Oscar Goodman at their upcoming meeting, held Wednesday October 14th. In order to accommodate the increased number of guests expected to attend, the meeting will be held at a special venue this month… the conference center high atop the Newport Lofts in downtown Las Vegas. The mayor will likely address such topics as the state of the economy, the redevelopment efforts downtown, and the housing market in Las Vegas.
In addition to the presentation from Mayor Goodman, the Club will welcome its usual line up of speakers discussing current Las Vegas housing market conditions, the national economy, foreclosure properties and more. Tamara Bostrom from Spiral Digitial Media will discuss how professionals can use the internet to generate new business in this challenging economic climate.
The Las Vegas Real Estate Insider Club, which normally meets the second Wednesday of each month at Putters Grill on Rainbow at the 215, was founded almost three years ago by full time real estate investor Glenn Plantone. Glenn’s vision was to create a forum for other investors and professionals involved in real estate and related trades to meet and exchange ideas and opportunities as well as have the opportunity to hear timely, educational presentations from local and national real estate experts. Thus far, the Club has enjoyed tremendous success and anticipates welcoming over 150 members and guests to the Newport Lofts downtown for the October meeting featuring Las Vegas Mayor Oscar Goodman. Anyone interested in attending the meeting, can send an email to plantonearticles@gmail.com and request a registration form.