Friday, September 30, 2011

Las Vegas Home Sales in Aug. Highest in 5 Yrs, But Mostly All-Cash, FHA-Financed and Distressed Sales

DQ News -- "Las Vegas area home sales jumped to the highest level for an August in five years, the result of a relatively long month for escrows closings and robust buying by investors and first-time buyers in the sub-$150,000 market. Home prices seemed to trend sideways to downward last month, with the median sale price dropping to its lowest level in more than 16 years.  In August, 5,412 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County), up 19.3% from July (4,536 homes) and up 26.4% from August 2010 (4,281 - see chart above)."

 Some of the details for August sales are pretty interesting:

1. In August, a popular form of low-down-payment financing for first-time home buyers – government-insured FHA loans – accounted for 39.9% of all home purchase loans. That was down from 42.1% in July and down from 46.6% a year earlier and a peak of 55.1% in September 2008. 

2. Cash buyers purchased 52.3% of the Las Vegas-area homes that sold last month. That was down from 53% in July and 48.8% a year earlier. The record was 56.7% this February. Cash purchases are where there is no corresponding purchase mortgage in the public record. 

MP: That means that 92.2% of Las Vegas-area home sales were either low-down-payment FHA financed purchases or cash sales, which must mean that only 7.8% of sales were conventional purchases with 20% down payment, etc. 

 3. Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 57.2% of the Las Vegas resale market in August. That was down from 59.5% in July but up from 52.5% a year earlier. Foreclosure resales peaked at 73.7% of the resale market in April 2009.

4. Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 12.8% of Las Vegas-area August resales. That compares to an estimated 11.1% in July, 16.5% a year ago, and 9.2% two years ago. 

5. In other words, distressed sales – the combination of sales of foreclosed homes and “short sales” – continued to dominate, representing 70% of the resale market last month.

MP: The good news is that Las Vegas home sales were the highest for the month of August since 2006, indicating an increased level of transactions and more property changing hands, but the real estate market there is certainly a long way from "normal" based on the high concentrations of FHA-financed properties, cash sales, and distressed sales. 

8 Comments:

At 9/30/2011 1:08 PM, Blogger Benjamin said...

I find it hard to believe that half of homebuyers in LV are paying 100 percent cash. I suspect the record-keeping has a glitch in it.

Especially given the lavish benefits for homebuying instilled into our federal tax code--let alone the chance to leverage and boost gains when it comes time to sell.

 
At 9/30/2011 2:07 PM, Blogger VangelV said...

Real Estate is still in trouble. Expect Bernanke to act to save the bankers and flood the system with liquidity again.

 
At 9/30/2011 3:29 PM, Blogger BxCapricorn said...

What keeps sales from growing more, are Home Owners Association rules. Several friends would like to buy the homes in their neighborhood but the HOA doesn't allow for this type of investment or there is an outstanding balance due to the HOA that complicates the transaction. The market would take care of itself, if we did indeed live in a capitalist society. Capitalists are often simply "legalists" who buy situations through political backing.

 
At 9/30/2011 4:21 PM, Blogger Innovation rules said...

The economy may not revive until the debt in general recedes from its 30-40 year rise. Saving the banks hurt this process, even as it transfers fixed income to the banks.

If you have cash now, there are deals to be had. An acquaintance just bought a $1.3m Florida house for $400k. You can bet that is not recorded in the MLS listings, and it is not uncommon.

I urge Mr. Perry to increasingly take the real estate numbers with a grain of salt. There is great incentive to fudge the numbers by many parties in the transaction; introducing even more fudging into the system is another product of TARP.

 
At 9/30/2011 4:37 PM, Blogger Benjamin said...

With mortgage rates sub-four percent, and monthly mortgage payments at under $800 in LV, why would anyone pay all cash? Something is not right with these figs.....are these industrial-scale flippers?

 
At 9/30/2011 5:02 PM, Blogger Marko said...

Here in Phoenix/Scottsdale, a large number of sales are also being done in cash, according to my real estate agent and the guys at the title company - they should know. The rest are mostly short sales and most of the contract put on those houses fall through because they take too long. The day I was at the Title company to close on my house, they said that had around 70 deals that day and mine was one of only two that were normal mortgage purchases.

That being said, nice houses are going fast - but the cost is not going up. The whole thing is a mess. Who knows what would be happening if an actual market free from gov't distortion was allowed to form.

Oh and BxCapricorn, how is it that HOAs are not free market forces? It is purely private contract law, isn't it? That is about as free market as you can get - the developer sets up a corporation and makes it a condition of sale. If you don't like it, don't buy it.

 
At 9/30/2011 6:27 PM, Blogger sethstorm said...


Oh and BxCapricorn, how is it that HOAs are not free market forces? It is purely private contract law, isn't it? That is about as free market as you can get - the developer sets up a corporation and makes it a condition of sale. If you don't like it, don't buy it.

But when all you can get in an area are HOA's, it becomes force by practicality.

 
At 10/01/2011 2:46 AM, Blogger Ron H. said...

"But when all you can get in an area are HOA's, it becomes force by practicality."

For instance..where?

 

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