The Las Vegas Valley
1st Quarter edition
REAL ESTATE QUARTERLY Existing Home Sales - Substantial Climb
Last quarter we noted that sales were consistent, varying by about 300 per month. In January and February we experienced solid year-over-year increases, followed by rocketing sales in March. ALWAYS INFORMED While we know that home sales have Single Family trended up significantly since the early March M-M Change February Y-O-Y Change days of 2008, March’s figures of Key Resale Data Listings 14,750 -3% 15,137 -21% Available nearly 3,000 homes sold for single $318,237 -1% $321,279 -26% Average price family and 600 for condominiums and The Mortgage Market $174,990 -3% $179,900 -38% Median Price townhomes is highly notable. We Units Sold haven’t seen sales like that since 2005, Valuation Measures 2,977 30% 2,288 91% Units Sold albeit at lower price points. $173,095 -6% $183,319 -43% Average Price Homebuilders $149,000 -4% $155,603 -39% Median Price Active listing inventory continues to 71 3% 69 -17.8% Avg. Days on Market decline. While some of this is due to Graphical Recap strong sales, there is inventory being Condo/TH March M-M Change February Y-O-Y Change withheld from the for-sale market due Listings to the foreclosure moratorium with 4,454 -1% 4,510 -6% Available notices of default continuing to stack $230,782 -2% $235,660 -28% Average price $104,500 -5% $110,000 -42% Median Price up, presumably early foreclosures. Units Sold Units Sold Average Price Median Price Days on Market
602 $90,752 $70,300
37% -4% -6%
73
440 $94,689 $75,000
0%
188% -59% -54%
73
-14.5%
The current climate of lower home prices and low mortgage rates have culminated into increased home sales. Many first-time homebuyers and investors are jumping into the game. Condominium/TH Sales
Single Family Sales
1 1 2 2 3
Indicators Housing Total Available Housing Inventory (existing)
Q1' 09
Q1' 08
19,204
23,361
8,890
5,534
3500
700
3000
600
2500
500
Median Price (soldexisting)
2000
400
New Home Permits
853
1500
300
$874
$876
1000
200
Apartment Rental Rate
500
100
9.8
7.7
0
0
3-Month Libor
1.32
2.72
30-Year Fixed
4.96
5.62
Prime
3.25
5.25
6-Month CD
1.51
2.78
880,000
921,400
10.1
5.1
January
February 2008
March
2009
Closed (existing)
Apartment Vacancy Rate (%) January
February 2008
March
2009
The Mortgage Market Update Mortgage applications increased by five times the rate seen in the 4th Quarter 2008 fueled by all time low interest rates (PHH Mortgage Corporate Conference Call 3/2009). The lower interest rates were due in large part to the Federal Reserve’s decision to pour $550 Billion (a figure that was later revised to $1.25 Trillion) into the purchasing of Mortgage Backed Securities. The buying and selling of Mortgage Backed Securities on Wall Street determine mortgage loan interest rates.
$142,500
$232,000 2,521
Rates (%)
Employment Total Employment Unemployment Rate (%)
Source: UNLV CBER, Bloomberg, Mlxchange, Salestraq, Coldwell Banker Premier Realty.
The announced roll out of President Obama’s Homeowner Affordability and Stability Plan (HASP) in April, while aimed at current homeowners, sparked an overall interest in the housing market for those “waiting for a bottom” to purchase or inquire about purchasing. The single largest driving force for first time homebuyers was the previous administrations tax credit that was augmented by the Obama administration that both increased the maximum dollar -Continued www.lasvegashomes.com
The Las Vegas Valley
1st Quarter edition
REAL ESTATE QUARTERLY
amount to $8,000 (or 10% of the purchase price of the home, whichever is less) and turning the tax credit from a loan to an actual “cash in hand” credit. To qualify you cannot have owned a home in any way in the previous 36 months. The credit is for purchases that take place between January 1, 2009 and November 30, 2009. If you purchased in that time and have already filed your 2008 taxes you can file an amended return (for a fee of course) and apply for the credit on this year’s tax return. While the nation enjoys a refinance “boom” with lower mortgage interest rates, closed loans in the Las Vegas Valley continue to be largely purchase loans at a rate of approximately 3:1 to refinance loans. Dave Reichert PHH Mortgage Advisor
Further Valuation Measures We employ several measures in the attempt to value homes with a fundamental perspective. You may have seen a lot of historical price trend charts, but price-to-rent ratios are another indicator. In the current environment we understand that soft employment and a stiff credit market have hindered demand for new homes and affected mobility. However, taking a longer view we see that the price-to-rent ratio is at the lowest point since 2001. While apartment vacancies have increased due to competitive supplies in traditional housing, it has not changed rents to strongly affect the denominator. There is a lot of evidence that homes can be purchased with monthly payments at or below monthly rent on a similar property. The long-run price-to-rent ratio was probably realized in 2001, hovering between 175 and 200. We are near 125 today and this is significantly below the 2001 average. Price/Rent Ratio Price/Rent Ratio
The Wall Street Journal1 has picked up this theme as well, stating that “the relative cost of owning versus renting is swinging back in favor of homeownership in some U.S markets.” By the measures the Wall Street Journals cites, the ratio of after-tax mortgage payments to monthly rent is below its 18-year average. Unless the prior 18 years has been anomalous, then it’s within the feasible range to believe in an eventual return to these levels. It’s all part of a self-correcting market process and we are back to reality. Ultimately, these processes will yield a net positive for many people and we are seeing very strong interest the Las Vegas market especially.
300
250
Ratio
200
150
100
50
20 01 -1 Q 20 01 -3 Q 20 02 -1 Q 20 02 -3 Q 20 03 -1 Q 20 03 -3 Q 20 04 -1 Q 20 04 -3 Q 20 05 -1 Q 20 05 -3 Q 20 06 -1 Q 20 06 -3 Q 20 07 -1 Q 20 07 -3 Q 20 08 -1 Q 20 08 -3 Q
0
1.“Renters Lose Edge on Homeowners.” The Wall Street Journal, February 25, 2009.
Source: Census, Bankrate.com, Economy.com, Salestraq, National Association of Realtors, Coldwell Banker Premier Realty.
A Glance at the Homebuilding Industry
The homebuilding industry is going through many changes as all other sectors of the housing market are. After observing increasing inventories, decreased traffic and the beginning of price declines, the industry began to cut back, pulling few permits and attempting to sell standing inventories. Currently, new home inventories are barely substantial against the backdrop of the re-sale market. The numbers of active subdivisions and the number of builders has declined significantly. This is all part of the adjustment process, returning us toward normalcy. Number of Builders
200 179
180 167
171 164
160
149 143
140
# of Builders
140 120
130 121
118 112
108 102
97
100
77
80 60
47 38
40 20 0
1992
1993
1994
1995
1996
1997
1998
Source: Homebuilders Research.
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
While the homebuilder turmoil has hurt many, there are some (however diminishing) excellent, competitively priced new homes available and buyers can take advantage of these offerings. These homes may include incentives such as upgrades, discounts on select homes and favorable financing. Advantages include quick move ins, customization, attractive floor plans and finishes and efficiency in terms of design and energy usage. While REO homes dominate, buyers have some nice options in both existing and new homes.
The Las Vegas Valley
1st Quarter edition
REAL ESTATE QUARTERLY Single Family Sales by Price Range — Q1, 2009
Single Family New Listings by Price Range — Q1, 2009
5M +
-
5M +
3M - 4,999,999
3
3M - 4,999,999
1M - 2,999,999
25
500,000 - 999,999
221
500,000 - 999,999
159
513
400,000 - 499,999
300,000 - 399,999
555
250,000 - 299,999
560
2,081
180,000 - 199,999
160,000 - 179,999 140,000 - 159,999
902
100,000 - 119,999
1,312
120,000 - 139,999
691
1,452
100,000 - 119,999
Under 99,999
1,515
600
1,114
140,000 - 159,999
828
120,000 - 139,999
925
160,000 - 179,999
769
400
895
200,000 - 249,999
1,346
180,000 - 199,999
814
250,000 - 299,999
200,000 - 249,999
200
328
300,000 - 399,999
446
0
36
1M - 2,999,999 120
400,000 - 499,999
17
800
1000
1200
1400
1,274
Under 99,999
2,522
0
1600
400
800
1600
2000
2400
2800
Single Family Sold by Time on Market — Q1, 2009
Single Family Prices by Home Type Price Range — Q1, 2009 121 +
$365,259
1200
1,275
4+ Bdrm $300,000
91 - 120
737
$173,206
3 Bdrm
61 - 90
$158,000
1,081
31 - 60
1,430
$130,249
2 Bdrm $109,000
1 - 30 $-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2,968
$400,000
Median Price
500
1,000
1,500
Average Price
Type of Financials by Units Sold — Q1, 2009 57
AUCTION CNOFLSE
4
PRIVATE
3
OWC
9
LSEOPT
-
EXCH
1
CTL
4
AITD
2 571
VA FHA
2,600
CONV
2,251
CASH
1,993
-
Source: GLVAR’s Multiple Listing Service
250
500
750
1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000
2,000
2,500
3,000
3,500
4,000
The Las Vegas Valley
1st Quarter edition
REAL ESTATE QUARTERLY Condominium Sales by Price Range — Q1, 2009 5M +
0
3M - 4,999,999
0
1M - 2,999,999
1
Condominium New Listings by Price Range — Q1, 2009 5M +
6
3M - 4,999,999
7
500,000 - 999,999
11
1M - 2,999,999
400,000 - 499,999
11
500,000 - 999,999
50 105
18
300,000 - 399,999 250,000 - 299,999
400,000 - 499,999
15
200,000 - 249,999
30
180,000 - 199,999
29
160,000 - 179,999
61
300,000 - 399,999
83 101
250,000 - 299,999
36
140,000 - 159,999
200,000 - 249,999
64
120,000 - 139,999
120
100,000 - 119,999
122
90,000 - 99,999
130
180,000 - 199,999
110
160,000 - 179,999
106
92
80,000 - 89,999
140,000 - 159,999
116
70,000 - 79,999
157
133 221
120,000 - 139,999
160
60,000 - 69,999
100,000 - 119,999
50,000 - 59,999
257
175
Under 49,999
90,000 -99,999 99,999 Under
326
0
25
50
75 100 125 150 175 200 225 250 275 300 325 350 375 400
1,778
0
Condominium Prices by Home Type — Q1, 2009
200
400
600
800
1000
1200
1400
1600
1800
2000
Condominium Sold by Time on Market — Q1, 2009 283
121 +
$127,759
3 Bdrm $102,000
159
91 - 120
$109,408
2 Bdrm
61 - 90
217
$89,250
282
31 - 60 $118,386
1 Bdrm $69,950
$-
$25,000
$50,000
1 - 30
$75,000
Median Price
$100,000
$125,000
$150,000
542
-
50
100
150
200
250
Average Price
Type of Financials of Units Sold — Q1, 2009 CNOFSLE
-
AUCTION
24
PRIVATE
-
OWC
2
LSEOPT
1
EXCH
-
CTL
-
AITD
-
VA
21
FHA
165
CONV
295
CASH
975
-
Source: GLVAR’s Multiple Listing Service
100
200
300
400
500
600
700
800
900
1,000
300
350
400
450
500
550
600