It seems the media is trying a new message instead of their usual doom and gloom—hope. Today Dr. Phil had money guru Jim Kramer on his show. He was helping advise a couple going through a very tough spot and gave out some advice to the audience as well. His take on the real estate market—buy in the next 6 months.
He isn’t the only one that noticed the absolute steals available in real estate. The Las Vegas Review Journal published an article on a report by Massachusetts forecasting company IHS Global Insight and Ohio bank holder National City Corp. The report suggested the market’s worse price declines have passed…something that anyone who has been following the market could have told you. Home sales have surpassed the prior year and inventory has not been growing by leaps and bounds like it has in the prior year.
An interesting tidbit in the report were their findings on Las Vegas home values. Values have been in a sustained slide and six month ago home prices here were 3.1 percent below the values historic fundamentals warrant. (The historic normal values are calculated by using median prices from 2000, population density, interest rates and household income). Granted that’s not enough of a shortfall to qualify as undervalued, at least at that time. However, when you look at today’s numbers that figure is more than 14 percent according to the report and Las Vegas ranks at number 287 out of the 330 markets IHS Global Insight and National City track. While not at the very bottom of the barrel, we can certainly see if from where we’re at. So how did the market get to where its at? Mainly due to overbuilding, a lot of speculative investments and home buyers buying more home then they could comfortably afford with a loan that adjusted later on. Sales started to slow down, but builders kept on building and real estate investors and home buyers became overextend, flooding the market with homes, pushing prices well below equilibrium value.
Aside from a normal market correction of an overabundant inventory, Las Vegas is the foreclosure capital of the US and foreclosures often depress home prices. Builders have had to compete against bank owned properties in several Las Vegas communities, forcing them to lower their prices in order to stay competitive. Bank owned properties account for over 65% of all home sales at the moment. According to Sales-trac, the overall resale median in Las Vegas is $184,000.
According to the report, the devaluation of the housing market should slow down in 2009. Actually Las Vegas home prices have already stabilized in several areas around the valley and some areas have actually gone up in prices, although most of those areas have few bank owned properties. The report forecasts a bottom at a median of around $182,000. Richard DeKaser, chief economist of National City said “for consumers, undervaluation should signal purchasing opportunities. Real estate is now a good buy in Las Vegas”. Before you dismiss the report as Realtor optimism, DeKaser also predicted that housing values would fall back in 2005.
Yet, history shows that markets experiencing significant undervaluation provide a “strong likelihood that buyers will be rewarded over the longer term,” DeKaser said.
That doesn’t mean anyone will make money flipping local homes in the next 12 months. But it does mean buyers with time horizons of five years or longer are likely to realize “lucrative” returns on homes they buy today, he said.
There are some great deals out there. If you are thinking about making a plunge into the Las Vegas real estate market, call me at 702-493-8033 or send me an email with your contact information and the type of property you are looking for. Thanks for stopping by.
cforms contact form by delicious:days
Related reading:
{ 0 comments… add one now }