It must be made abundantly clear that Las Vegas real estate market has nothing to do with free market or free market forces. Our current real estate market is artificial, man made and as such it is impossible to do a prediction on Las Vegas real estate market in 2013.
If nothing changes we may be looking at 20% or more appreciation for homes priced below $250,000 in 2013 as price appreciation for Las Vegas homes have accelerated in the third and fourth quarter of 2012. Las Vegas home prices will not stabilize until there is resistance to rising prices on the buyer?s side and there is no sign of it as of now. Las Vegas residential real estate that are priced low, or at current market prices sell for much more than asking price with many offers.
If things change, depending on how they change we may be looking at same, stabilized pricing or price cut from current levels.
Las Vegas has thousands of homes with delinquent mortgages where ?home owners who have been living mortgage free in their home for more than 2 years, have no motive to short sale their severely under water homes. In a normal market threat of foreclosure would motivate these home owners to seriously market their home as Las Vegas short sales, right now Las Vegas MLS is full of no show, highly over priced short sales that are marketed just to prevent foreclosure. A good example is an agent who has put his own no-show home in Las Vegas MLS at twice the price of comparables; he knows that his home has zero chance of selling.
All I know is that something has got to give as this situation is not sustainable, but who am I to talk, even though I was the only one predicting more than 10% appreciation for 2012 ( all others said 10% depreciation) in my wildest dreams could I see today?s real estate market. But what drives today?s market is that good deals can still be found, and we are finding them. I can still find good homes in very good rental sub-divisions that offer cash on cash returns of 7.5%-9.5% or more after HOA fee and property tax based on Las Vegas rental comps with very good upside.
But these homes are hard to find and harder to get our offers accepted since we offer current market prices and lose to unreasonable offers made on other buyer?s behalf. Majority of current asking price are highly speculative ($20K higher than current market prices) and I am not comfortable with these speculative prices.
I can tell you what will happen until March, 2013 and Median prices published in news organizations will keep rising until March, 2012 as sales prices for homes that are currently going under contract will show up in the median numbers for February and March, 2013. I have explained why in previous blog post. Additionally, this December has been exceptionally competitive and that leads me to think that January and February will be worst as they always are.
What happens after March, 2013 is unclear as Nevada Legislature will meet again and what they do about AB 284 will greatly influence Las Vegas real estate market. There is no hard news about our legislature going to do anything about this matter, but I have heard rumors that they may change ?lenders have personal knowledge of mortgage? to ?personally review mortgage? or something like that, thereby enabling banks to foreclose without fear of committing a felony.
Notice of trustee sales which is the last step before foreclosing on a property is too low to produce more than 300-450 bank owned homes per month and this number will not be enough to stop our increasing prices let alone decrease prices as the last few months have proved.
Keeping in mind that prices for homes priced below $150,000-$200,000 have increased by 35%-40% or more (I see homes that sold for $55 per square foot in December, 2011 selling for more than $85 per square foot) this has removed many homes from under water status and good deals in 2010 or later are no longer under water. Additional price hikes will remove more homes from under water status.
But imagine that banks start foreclosing in mass, then what will happen to 70,000 or so severely under water homes in Las Vegas and how will it affect Las Vegas real estate market.
I will discuss this in a future blog post
Source: http://www.lasvegas4us.com/wordpress/2013/01/05/las-vegas-real-estate-market-2013-prediction-part-1/
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