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The Las Vegas Valley

2nd Quarter and Mid-Year Edition

REAL ESTATE QUARTERLY Existing Home Sales - Substantial Climb...Again Home sales continue upward as June finished off the quarter with the highest sales ever recorded. This is clearly a reaction to prices being reset to those of nearly one decade ago. Single Family April

May

June

Listings Available Average price Median Price

12,391 $231,145 $169,000

10,720 $213,315 $170,000

9,956 $416,579 $189,000

3,202 $166,304 $141,950

3,258 $172,487 $140,000

3,785 $167,425 $140,000

Units Sold Units Sold Average Price Median Price Avg. Days on Market

67.0

66.7

67.3

Condo/TH April

May

June

Listings Available Average price Median Price

3,915 $159,409 $98,700

3,369 $129,834 $85,578

3,080 $279,224 $115,000

727 $84,235 $64,500

737 $84,072 $65,000

917 $85,931 $66,000

Units Sold Units Sold Average Price Median Price Avg. Days on Market

80.0

76.7

71.7

The story for the second quarter was one of declining for-sale inventories, multiple offers on high-quality or well priced fixable bank owned homes, especially those priced below $200,000 and banks slowing their releasing their inventory to the market. We presume that had more inventory been on the market, our sales numbers would be even higher. While banks, homeowners who purchased during the boom years and others have suffered from price declines, first-time buyers have been ecstatic. Some astute investors have also shifted into purchasing mode as they have recognized that many homes cash flow well as rentals.

1000 900

600

2000

500

1500

400

Residential Pricing

2

Sales Greater than List Price

3

Commercial Real Estate

4

Chicken Little

5

New Home Sales

6

Graphical Recap

7

Indicators

New Home Permits Apartment Rental Rate

300

1000

1

Median Price (soldexisting)

700

2500

The Mortgage Market

Closed (existing)

800

3000

1

Housing Total Available Housing Inventory (existing)

Condominium/TH Sales

Single Family Sales 3500

Key Resale Data

The charts below show the magnitude of the climb in sales both month-to-month and compared to 2008.

Source: GLVAR

4000

ALWAYS INFORMED

Q2' 09

Q2' 08

13,036

21,546

4,695

2,613

$124,673 1,616

$223,675 4,414

$856

$871

10.2

8.1

3-Month Libor

0.51

2.78

30-Year Fixed

5.41

6.14

Prime

3.25

5.00

6-Month CD

1.34

3.16

871,200

929,800

11.1

5.7

200

500

100

0

0

April

May 2008

2009

June

Apartment Vacancy Rate (%) April

May 2008

June

Rates (%)

2009

The Mortgage Market Update

Employment

Homebuyers are back in the Las Vegas market big time. June while often a strong month for sales, surpasses sales records as price declines are being responded to by investors and individuals seeking a place to call home. While we have often heard of well financed investors buying up homes, we know there are many kinds of buyers out there and with current prices, they don’t have to be ten figure folks. Our agents, as well as our friends at PHH Mortgage have recently dealt with many people who are finally able to realize their dream of owning a home, due to today’s prices and low interest rates. One couple of note made less than $10 per hour working for a major retailer and was able to purchase a home for just over $100,000. This is great news for these buyers and this demonstrates the possibility of how far money can go in the current real estate market.

Total Employment Unemployment Rate (%)

Source: UNLV CBER, Bloomberg, Mlxchange, Salestraq, Coldwell Banker Premier Realty. Note: Rental rates are lagged one quarter, employment is lagged by one month.

-Continued www.lasvegashomes.com


The Las Vegas Valley

2nd Quarter and Mid-Year Edition

REAL ESTATE QUARTERLY Continued from page 1.

In addition, FHA loans are still popular and while one has to compete to a certain extent with conventional and cash buyers for some homes, this still opens a door of possibilities for first-time buyers. In addition, the $8,000 tax credit is still available until December 1st. If you are considering filing for this credit, if you haven’t done so already, its time to do some homework, find out how much home you need, what you can afford and start the pre-approval process so you can begin looking at homes. Dave Reichert CMP & Ray Melton Mortgage Advisors PHH Mortgage

Back to the Future In the 1985 film Back to the Future, Marty McFly takes a ride in Doc Brown’s Delorean into the past. In terms of pricing, we have also gone back. While we did not need a flux capacitor to get back in time, we are back to levels of the earlier part of the decade. While this has hammered balance sheets, caused distress among owners who purchased during the high-flying years and has yielded further uncertainties through feedback effects, the bright spot has been with first-time buyers and investors looking for cash flow, rather than the speculation of appreciation that was abundant in the past. Many first time buyers are finally looking for a place to call home. What a wonderful concept we have returned to...the reason for the asset to exist in the first place. This is a healthy response to actual demographic demands. Further, cash flow investors tend to hold for the long-term and are not contributing to restricting supply as speculative activity did in the past. This is positive news. While homes under $200,000 have experienced dramatic sales, other segments are lagging in sales and price declines. The market cannot be considered fully functional until further buyer Single Family Home Prices by Square Footage Range segments return to the market, such as move-up buyers. Y-O-Y Change 1,000 to 1,500 Y-O-Y Change 2,500 to 3,000 1,000 to 1,500 2,500 to 3,000 80%

$550,000 $500,000

60% $450,000 $400,000

Back to the early 2000’s

20%

$300,000 $250,000

0%

$200,000 -20%

$150,000 The 1990’s

$100,000 -40% $50,000 -60% Ja n-

96 Ju l- 9 6 Ja n-9 7 Ju l- 9 7 Ja n-9 8 Ju l- 9 8 Ja n-9 9 Ju l- 9 9 Ja n-0 0 Ju l- 0 0 Ja n-0 1 Ju l- 0 1 Ja n-0 2 Ju l- 0 2 Ja n-0 3 Ju l- 0 3 Ja n-0 4 Ju l- 0 4 Ja n-0 5 Ju l- 0 5 Ja n-0 6 Ju l- 0 6 Ja n-0 7 Ju l- 0 7 Ja n-0 8 Ju l- 0 8 Ja n-0 9

$-

Source: GLVAR, Clark County, Coldwell Banker Premier Realty.

Year-Over-Year Change

40%

$350,000 Median Price

For individuals who have not owned a home, or those who have not had a mortgage in three years and can be considered a first time buyer (or cash buyers), it’s a great time as you can basically go back in time on the prices of your home and investment.


The Las Vegas Valley

2nd Quarter and Mid-Year Edition

REAL ESTATE QUARTERLY Multiple Offers and Bank Owned Homes

89 00 2 89 01 1 89 01 4 89 02 1 89 02 7 89 03 1 89 04 4 89 05 89 2 06 1 89 08 1 89 08 89 5 10 1 89 10 3 89 10 6 89 10 8 89 11 0 89 11 5 89 11 8 89 12 89 0 12 2 89 12 4 89 12 89 9 13 1 89 13 5 89 13 9 89 14 2 89 14 4 89 14 6 89 14 8 89 15 6 89 16 9 89 17 9 89 81 5

Single Family Sale Prices above List Prices, Bank Owned - June The current market is very dynamic with 100% trends and procedures shifting quickly. Not 90% too long ago an offer below list price on a 80% bank owned property might easily be considered. Our recent experience shows that many 70% of the quality bank owned (REO) properties 60% are receiving multiple offers, thus buyers have 50% often written their offers above the list price. Instead of lingering on the market above mar40% ket clearing prices, banks are listing below or 30% near the estimated market price and allowing offers to make a price discovery. So far this is 20% 10% more than common with 48 percent of the June sales exhibiting this behavior. The ex0% hibit to the right displays the proportion of homes sold for higher than list price in each zip code (note that some zip codes had only 1 Source: GLVAR.. Note: Some zip codes are not depicted as they recorded no sales. or 2 sales, although 44 of the 65 with sales had sales above list). Part of this is due to REO’s becoming more scarce and because the probability of closing on an REO is much higher than for short sales.

As a result of the intensified interest in bank owned homes and the aforementioned proportion of properties selling for greater than list, the average sales price as a percent of list price is 100%. While noting the scaling of the chart below, we see that sales price/ list price has increased 3% just since March. This is a noteworthy change in the market since a deterioration market is usually characterized by chasing prices on the downside with multiple adjustments to list price. The reverse is occurring now, with the list price acting as a trigger for what is basically an auction process. On a practical note, one has to be quick to react in this market. One has to make offers quickly since you are competing with many other buyers. If you don’t actually quickly, you could be wasting the time you had spent searching. While one needs to be quick, to decide, patience is also a virtue. If you don’t get an offer accepted, keep trying, the right home is out there!

Single Family Sales Price as a Percent of List Price, Bank Owned - January -June 103%

100% 99% 98%

98%

98%

97%

100%

98%

Sale % of List

95%

93%

90%

88%

85%

83%

80% Jan-09

Feb-09

Mar-09

Source: GLVAR, Coldwell Banker Premier Realty.

Apr-09

May-09

Jun-09


The Las Vegas Valley

2nd Quarter and Mid-Year Edition

REAL ESTATE QUARTERLY Commercial Market - Another Dynamic Sector of Our Market

Transactions are happening across the board in the commercial real estate market, however, downward pressure remains constant. “They are not even close to the pace of deals in 2008 yet deals are getting done”, explains Ron Opfer, CCIM. “There are many more incentives involved in these transactions, such as higher TI allowances, shorter leases, and lower rents.” A look at the overall commercial leasing market shows industrial deals as low as 25 cents per square foot (sq.ft). per month, retail deals as low as 60 cents per sq.ft per month, and office deals as low as 55 cents per sq ft/mo. Not all deals were done at these prices, but, “there are not many tenants looking to expand. Tenants are looking for the best deal possible and not moving fast to find one”, says Opfer. “Most tenants are experiencing downward pressure on their business from the economy. They simply cannot afford to pay the rents they used to pay.” Elle Gaensslen’s experience in the market is similar. Gaensslen notes, “Most businesses are downsizing to smaller square footages and lower rates to alleviate the financial pressures during these market conditions. As noted, deals are happening. “I have a retail client that is expanding into the Las Vegas market from California to take advantage of the lease opportunities and to secure prime space for less,” said Gaensslen. Most economic indicators reflect a lot of downward pressure on the economy. During the 2nd quarter of 2009 we saw vacancy rates across the board increase. With unemployment still rising we can expect to see even more vacant spaces in the coming months. “I don’t see signs of a turnaround coming soon. That means there are great deals out there for those looking to expand in Las Vegas,” stated Opfer. “Take U-Swirl Frozen Yogurt for example. They are a fast growing company. They will open 10 stores in Las Vegas in less than 1 year. Not to mention their franchise locations opening in other states. The change in market conditions has proven to be a big positive in their expansion plans,” explains Opfer. “The same goes for the medical profession” added Opfer. Another adjustment in the market is the terms of leases. Gaensslen notes, “landlords are agreeing to shorter term leases because they don't want to be stuck with discounted leases when the market stabilizes. Tenants want shorter term leases due to uncertainty with their respective businesses, anxious about Vegas as a market to stay in long term, and some feel the market will slide even further, giving them the opportunity to secure an even better deal in 2010.” Much of the recent leasing activity has been between one and three years. Further pressures are expected to come as banks are expecting more commercial defaults during the remainder of 2009. “This could be a great opportunity for those with cash,” said Opfer. “It may be that the deals of the not so distant future will resemble those of the RTC (Resolution Trust Corporation) days,” added Opfer. Property values have had downward pressure and are in need of a price re-set. “The LTV’s are no longer in balance and when the banks complete their re-appraisals, they will be in need of moving those underperforming assets”, explained Opfer. The properties on the market today are being sold to raise capital. Large real estate holding companies like Weingarten and General Growth are selling some very good properties. Some will pay down debt and others to expand. Sonic, the restaurant franchise, plans on doing sale-lease backs on several of their properties to fuel some of its western growth plans. Whether it is a bank, growth oriented company, or a debt heavy REIT, properties are on the market for sale and investors are underwriting the properties and making offers. “There is a bit of a disconnect between how investors and sellers value properties. I still see seller proformas valuing their property on last year’s lease rates assuming full occupancy, when the center is 20% vacant. Investors are looking at the rent rolls and assigning the tenants in risk categories. They are assuming re-tenanting the centers on what they think lease rates will be 6 months from now and are assuming a lot of incentives will be needed to attract tenants. That all has an effect on the price they will offer for the property”, said Opfer. “We are in the midst of some amazing real estate opportunities. The affordability factors of owning commercial real estate are very favorable for those with cash. This is going to be looked at as a highly opportunistic time to buy commercial real estate,” concluded Opfer.


The Las Vegas Valley

2nd Quarter and Mid-Year Edition

REAL ESTATE QUARTERLY Chicken Little

Whether relating to the lives of pop stars, the landscape of our political environment and the state of the national and local economy, there is absolutely no shortage to bad press…the bigger the headline, the more media and the better the sales. Throughout the last 18 months, positive press about our local market has been dripping as quickly as a leaky faucet. Turn on the tap! The surge in positive articles and reports surrounding many aspects of the greater Las Vegas Valley has started! Between CNNMoney.com ranking Clark County in their Top 25 places for jobs, Henderson honored for being one of the most Playful Cities in the country for kids by KABOOM, Las Vegas ranking in many Forbes.com reports and even being honored as The Best Adventure Town in the nation by National Geographic Magazine The doom and gloom must be drying up and Las Vegas is, once again, back on top!

New home sales...making a comeback? Advantages of buying a newly built home While the data still shows that single family new home permits in Las Vegas were below 500 for the 10th consecutive month, we did see an increase from May to June and sales activity at new home communities is also increasing. This trend is occurring across the country. With the substantial reduction in resale inventory since the first of the year and many homes receiving multiple offers, some buyers are opting to purchase a new home to avoid what they consider hassles of purchasing an REO property along with numerous other advantages. These are some of the top reasons today's buyers are considering and purchasing a newly built home including • • • • • • • • •

Conforms to today's building codes and often have more safety features and fewer health hazards than older homes. Offers warranties in case certain problems develop over time - - and the home's major appliances and systems are typically covered by manufacturer's warranties. Reflects the latest in modern architecture and layout. Great rooms, bigger closets and additional bathrooms often replace the formal dining and living rooms found in older homes. Is more energy efficient in design with better windows, more efficient heating and cooling equipment and a more extensive use of insulation. Is built with materials requiring less maintenance, such as aluminum siding, vinyl windows and pressure-treated wood decks that resist rot and insects. Has the ability to be customized more easily than a resale home, since you can often select many options and details ranging from floor plans and paint colors to faucets and light fixtures. Boasts wiring for today's technologies such as multiple phone lines, high-speed Internet connections and extra cable outlets. Provides additional opportunities to meet new friends as the neighborhood develops and new households move in. With energy costs near the top of consumer concerns, it's good for them to know that today, new homes are more energy and resource-efficient than ever before. Through the use of new materials and construction techniques, today's homes are built twice as energy efficient as new homes a generation ago, making them more affordable to own and operate.

New home construction has and always will be a key driver of GDP for the U.S. economy. Purchasing a new home supports local jobs and the local economy. While a large segment of the market will continue to be driven by foreclosures, the new home market, while having experienced its toughest test to date in its history, will survive and eventually stand tall again.


The Las Vegas Valley

2nd Quarter and Mid-Year EditionÂ

REAL ESTATE QUARTERLY Single Family Sales by Price Range - Q2, 2009

Single Family New Listings by Price Range - Q2, 2009

5M +

3

5M +

18

3M - 4,999,999

3

3M - 4,999,999

34

1M - 2,999,999

1M - 2,999,999

37

500,000 - 999,999 400,000 - 499,999 300,000 - 399,999

493

250,000 - 299,999

593

200,000 - 249,999 180,000 - 199,999

300,000 - 399,999

861

250,000 - 299,999

882

140,000 - 159,999

100,000 - 119,999

1,302

120,000 - 139,999

1,173

1,629

100,000 - 119,999

1,141

Under 99,999

1,437

Under 99,999

2,704

800

1,093

140,000 - 159,999

1,131

120,000 - 139,999

600

839

160,000 - 179,999

882

400

2,081

180,000 - 199,999

708

160,000 - 179,999

344

200,000 - 249,999

1,346

200

481

400,000 - 499,999

183

0

220

500,000 - 999,999

146

1000 1200 1400 1600 1800 2000 2200 2400 2600 2800

3,090

0

Single Family Prices by Home Type - Q2, 2009

400

800

1200

1600

2000

2400

2800

3200

3600

Single Family Sold by Time on Market - Q2, 2009

121 +

$365,259

1,889

4+ Bdrm $168,054

91 - 120

844

$132,737

61 - 90

3 Bdrm

1,237

$122,508

31 - 60

1,836

$123,279

2 Bdrm $104,341

$-

$50,000

$100,000

1 - 30

$150,000

Median Price

$200,000

4,439

-

$250,000

500

1,000

1,500

2,000

Average Price

Type of Financials by Units Sold - Q2, 2009 AUCTION

110

CNOFLSE

6

PRIVATE

17

OWC

16

LSEOPT

2

EXCH

1

CTL

6

AITD

5

VA

686

FHA

3,671 2,639

CONV CASH

3,092 -

Source: Mlxchange.

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2,500

3,000

3,500

4,000

4,500

5,000


The Las Vegas Valley

2nd Quarter and Mid-Year EditionÂ

REAL ESTATE QUARTERLY Condo/twh Sales by Price Range - Q2, 2009 5M +

0

3M - 4,999,999

0

1M - 2,999,999

2

500,000 - 999,999

10

400,000 - 499,999

6

300,000 - 399,999

Condo/twh New Listings by Price Range - Q2, 2009 5M +

4

3M - 4,999,999

4 29

1M - 2,999,999

66

500,000 - 999,999 30

250,000 - 299,999

21

200,000 - 249,999

38

180,000 - 199,999

37

160,000 - 179,999

42

400,000 - 499,999

69

300,000 - 399,999

98

250,000 - 299,999

51

140,000 - 159,999

160

77

180,000 - 199,999

181

100,000 - 119,999 90,000 - 99,999

93

200,000 - 249,999

62

120,000 - 139,999

112

160,000 - 179,999

109

80,000 - 89,999

130

140,000 - 159,999

152 224

70,000 - 79,999

220

120,000 - 139,999

60,000 - 69,999

300

50,000 - 59,999

305

258

100,000 - 119,999 Under 49,999

693

0

100

200

300

400

500

600

2,251

90,000 99,999 - 99,999 Under

700

800

0

Condo/twh Prices by Home Type - Q2, 2009

200

400

600

800

1000 1200 1400 1600 1800 2000 2200 2400

Condo/twh Sold by Time on Market - Q2, 2009 $94,184

121 +

519

3 Bdrm $79,454

91 - 120

222

$83,996

61 - 90

2 Bdrm

322

$64,350

31 - 60

435

$69,216

1 Bdrm $44,950

$-

$25,000

1 - 30

$50,000 Median Price

$75,000

$100,000

881

-

100

200

300

400

Average Price

Type of Financials by Units Sold - Q2, 2009 CNOFSLE

-

AUCTION

49

PRIVATE

2

OWC

3

LSEOPT

-

EXCH

-

CTL

-

AITD

-

VA

34

FHA

254

CONV

376

CASH

1,663

-

Source: Mlxchange.

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

500

600

700

800

900

1,000

The Las Vegas Valley Real Estate Quarterly and Mid Year Edition 2009  

This report provides in-depth information on the ever-changing Las Vegas real estate market including: -Key Resale Data -The Mortgage Marke...

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