Las Vegas real estate, mortgage, appraisal blog

Nevada Foreclosure/REO appraisals in Las Vegas, Henderson and Clark County, Nevada

August 24, 2007 Las Vegas Area Foreclosure Facts, Figures and Analysis:

Facts and Figures: In Business Las Vegas reported that new second quarter foreclosures in this area of Clark County jumped to 353 which is 87 percent or nine times higher than filings reported in the second quarter of 2006.

More Facts and Figures:  There were 3,147 repossessions in the second quarter and 4,535 active cases that have yet to make it that far in the process, according to local tracking firm Applied Analysis. The unincorporated areas had the greatest number of repossessions at 1,263, or 40 percent, followed by 956 repossessions in Las Vegas, 487 in North Las Vegas and 433 in Henderson. There were eight repossessions in rural areas.

Analysis: "We remain concerned about the duration of the current cycle as foreclosures reside at elevated levels," according to Applied Analysis. "The number of new foreclosures reported through the next few quarters will certainly provide additional insight."

More Facts and Figures: RealtyTrac has crunched its foreclosure filing numbers for Nevada over the first half of 2007. It leads the nation with one filing per 40 households. The 25,208 filings involved 14,687 properties. Colorado was second at one filing per 60 households, while California had one filing for every 69 households. Its numbers include default notices, repossessions and other foreclosure filings.

Analysis: As the credit crunch worsens and consumer demand remains soft, Las Vegas builders are cutting back on their production of new homes.

More Facts and Figures: For only the second time since January 1992, homebuilders took out fewer than 1,000 permits in a month, according to Dennis Smith, president of Home Builders Research, who expects new-home prices to continue to fall through 2008. In July, 859 permits were issued, bringing the seven-month tally to 10,140. That's a year-to-year decrease of 36 percent, the lowest total through July since 1993, Smith said.

In the resale market, Smith said, 2,101 transactions in July brought the yearly total to 16,957, a yearly decrease of nearly 37 percent.

Given that the prices of new listings are declining and inventory continues to rise, Smith predicts the median price of resale homes will have fallen 7 to 9 percent in 2007 and prices will continue to soften in 2008 and possibly into 2009. Once prices stabilize, they will remain flat for a while. Smith said his timetable changes if interest rates are lowered.

News reports state that Las Vegas median home price fell $10,000 in July, 2007 to its lowest point since March, 2005; but, Las Vegas home appraisers have seen a greater drop than that for a very long time.

The problem with median home price figures is that they will always trend upward because new homes sell for more than existing homes.  This figure is also irrelevant when the market shifts to more high end or more low end homes.

The median price in June 2006 of $315,000 was reported as the peak of the market.  But, residential appraisers in Las Vegas saw prices drop much earlier.  That's because we see the value of the same home. We don't compare averages.  Now, the median price of resale homes sold on the MLS (Multiple Listing Service) is reported to have been $295,000 in July.  That is 3.3% lower than June and only 6.3% below the peak of $315,000 reported in June 2006. 

I laugh at these figures.  It is not as though they are inaccurate; but, they are misleading.  the value of the same home probably dropped 20% from June 2006 to July 2007, not 6.3%.

There are now over 30,000 residences on the market.  The definition of a buyers market is: an inventory of about 15 months because 30,000 homes (with many REO's) are available with only 1,300 selling per month (11% fewer than in June and 34% fewer than last year). 

The question of how far prices will fall yields a variety of answers. Some experts believe that the market already has reached its bottom, while others believe it will drop a few more percentage points. Some analysts predict prices could drop more than 20 percent from their peak in June 2006.

Experts say values will continue to fall.

Its silly to quote median prices failing 6.3% from a year ago when the comparison of the same house then and know is about 20%. 

But, Las Vegas appraisers are used to big numbers being reported.  The median price of Las Vegas homes reportedly jumped 97% from 2002 to 2006 (40% in 2006 alone).  They say prices jumped from $145,000 to $285,000.  The value of many homes did jump up like that during that period; but, those median prices were influenced by the huge number of larger and larger new homes selling during that period.  

The biggest jump was 40 percent in 2004 and the appreciation slowed to 3.6 percent in 2006.

I suspect their market will begin to recover in 2008 - especially if the Fed lowers interest rates.  But, as with some experts, I don't expect prices to jump up again until early 2010.