Las Vegas Homes 2011-2012
Relocation or Exodus from the Vegas Real Estate Boom
The Las Vegas home market is in a state of steady and continual decline. Each month the value of properties drops further and further. While driving around the city of Las Vegas I like to look and see how many homes on each street are vacant or in the state of foreclosure. In my area it seems like every third house on certain blocks is for sale.
So I decided to do a little research today on real poor.com… oops I mean Realtor.com. A simple search using just the name Las Vegas brings up 19,151 homes for sale! This number of course does not include most of the foreclosures that the banks are just sitting on. Many Las Vegas Homes listed on Realtor.com have been on the market in excess of 6 months. The MLS listings are much larger than those that Realtor.com chooses to display. So how many Vegas homes are actually for sale? Good question. And what about the number of homes in pre foreclosure? Again a good question.
Las Vegas Homes Inventory - the Numbers Tell the Story
So lets take a look and see what we can find out about Las Vegas real home
inventory. Doing a quick search for
“Home Inventory Las Vegas Nevada” we find Housing Tracker.com and the following
information based on what they call the “last 5 weeks”.
January 31, 2011 SFH + Condo Inventory = 26,028 Housing Units
For those of you who are wondering SFH – Single Family Homes. In addition while the inventory is steadily climbing the prices are steadily declining. This should come as no surprise given the local economic conditions.
The banks of course have no reason to put homes back on the market in such an environment because the Federal Government gave them so much money on the backend. Many of the banks who received money from the Federal Government have no repaid their “loans” (and I use this term very loosely in this case) and probably never will. This has not stopped them from sitting on foreclosures. Why would they want to cut homes loose? They have the free money covering them on the backend. Yes I know this is a recurring theme with me… but someone has to bring it to light because it artificially inflates the market value of homes to no ones benefit other than the Bankers. Until this excess inventory is auctioned off the true market will not stabilize and there will be additional fear and “fence sitting” by those who are ready and able to buy now. It’s just not good for the residents of Las Vegas.
With an official unemployment rate in excess of 14%, and that's not exactly realistic, one can expect to see more foreclosures. 2012 could be even higher than 2011 if nothing is done to curb the job loss. At this time I'm not certain if Las Vegas leads the nation in foreclosures but there is no doubt they're in the top five and will probably retake the number one position at some point this year based on what I've seen.
This is not to say that homes are not still selling they are what they are selling at such reduced prices that the homeowners are losing all of their equity. But what does a person do when they lose their job cannot pay their mortgage and her stock with an inflated payment? Well the answer is pretty simple most of them bow out and walk away. This is bad for neighborhoods because the properties are seldom maintained by the banks who foreclose on them. It’s really bad for the community at large to see vacant run down homes block after block. It’s a joykill for those that do have jobs, and completely depressing for those who do not.
What is a Property Truly Worth?
So what is a property worth really? Is it worth the value of the land that it's built on plus the cost of the materials to manufacture the home? That would make sense wouldn’t it? Or is a property worth some arbitrary figure based on the value of the location and what a person is willing to pay? Traditionally the Las Vegas home market has been very affordable in comparison to neighboring states. Las Vegan’s prior to the big boom seemed to be rational sensible people capable of making good mortgage decisions. But there was so much credit available and everyone wanting to keep up with the Jones… and you get the picture.
During the boom years from the mid-1990s to about 2006 the price of homes escalated in a case that far exceeded the value of the land and the materials cost to build. I think by now everyone realizes this. So the real question now is what is valuable home. Here in Las Vegas we all need a pleased to live but most of us are living month-to-month to keep up with living expenses. Savings are seriously depleted and people are now exiting the valley in hope of greener pastures (Jobs).
Now there are a lot of you that would say well if you agree to pay X. amount of dollars at the time of the mortgage and now because the market says that your home is worth less than what you agreed to pay you want to walk away from it. This is an investor's mentality and not a homeowner's mentality. So there is a percentage of the market that panics and even if they can't afford to make the payment still walks away further escalating the downward slide. I don't have the answer to this question only to say that if investors stay out of the market in the government stops getting free money to the banks will finally find out the real and true value of homes in Las Vegas.
If the government continues to bail out banks and continues to give tax dollars to subsidize loans while at the same time doing nothing to create jobs in Las Vegas the market is probably going to completely collapsed. What investor in their right mind would jump into the market at this point? Investors know that the banks are sitting on large amounts of properties, and that unemployment is high so there's no real incentive for them to jump in at this point and start buying. And what can investor do with the property at this point? They have to pay the taxes and upkeep, but the rental market is diminished because the number of jobs available is diminished.
The outlook in future for Las Vegas Homes is simply not very good. However if you bring money in from an outside source perhaps leaving California, the Midwest or the East Coast looking for a place with better temperatures and then you'll probably be able to find a bargain on a home that suit your needs in Las Vegas.
If you are not an investor, but a person looking to retire to a nice home and not worried if the home prices escalate because you are not trying to cash in on or “flip” your home then Las Vegas could be a good market for you right now. But most of these people have other concerns like crime, neighborhood aesthetics, and access to services. So there is a deterrent for retirees to relocate as well.
Bottom line: Las Vegas Homes Market… scary proposition. Relocation nightmare or opportunity?
Please feel free to input your two cents on the local Vegas Residential Home Market in the comments area below.
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