Today the Case-Shiller October numbers were released. It takes a couple months to process the data for these indices, hence the December release of October data. Importantly, the measure is confirming what we have felt at the ground level with many homes receiving multiple offers and inventory levels falling to less than four months. We have seen median prices bouncing between positive and negative month-to-month changes for several months. Now one of the most watched repeat sale measures is also demonstrating flattening.

How organic is this price leveling? Some measures we employ attempt to gauge where prices are relative to fundamental values. This includes, price/rent ratios, price/income and the amount of homes present in the Valley relative to the employed population. Employment is a wildcard, although we believe a lot of this is already baked into current prices. So should many of the vacant homes on the market and the amount of homes in default, although significant guesswork is involved. By these measures, home prices have returned to fundamental values (locally, though nationally it looks like some more room for decline). When prices are at levels that make sense, it makes it difficult to forecast. Last year, we had good predictability in house price declines. Currently thats hard to say.

The other primary ingredient in recent months has been the tax credit. This probably has served to hold up prices. Thats not a very organic component. What we need long-term is greater household formation.

Nevertheless, we see that based against the long-run, pre-bubble trend, prices are deeply, deeply below trend, embodying a serious correction and probable over-correction. There still is a potential for further house declines as information often arrives randomly and can quickly alter behavior. But many believe we will have higher interest rates staring us in the face in 2010. That implies that there is a pretty good chance that this is one of the best opportunities to seek out residential real estate, even though there are some artificial ingredients in the recipe for housing prices. The key is to buy smart and if possible below where you think the market is. Then you have a built in buffer on a downward slide or built in equity if prices flatten or bounce up.

 

 Source: Standard & Poors.

Closing out 2009 with an eye towards opportunities in 2010. Click here to read the latest newsletter and see valuable market statistics for the Las Vegas Valley. Expensive to compile but free to you!  Yes, even analysts will post stuff in the spirit of the holidays...

The Moodys/REAL commercial properties indices were released today. Looks like the industrial and apartment sectors continue to post declines. Office displayed a bump but I am not sure what is driving that. I suspect it is not a change in trend but just a temporary blip. The levels have appeared to reset back to 2004 and early 2005 levels.

 Source: MIT, Real Capital Analytics, Real Estate Analytics, LLC.

Check out this recent article in the Wall Street Journal.  Las Vegas is seeing more sales activity at the trustee auctions and will most likely be a viable source for investors in the next few years, particularly in 2010.  http://online.wsj.com/article/SB126022588878780861.html

According to a recent Forbes study, here are the most overpriced U.S metro areas.

 

1. Orlando-Kissimmee, Fla.
2. Miami-Fort Lauderdale-Pompano Beach, Fla.
3. Jacksonville, Fla.
4. Baltimore-Towson, Md.
5. Chicago-Naperville-Joliet, Ill.-Ind.-Wis.
6. San Antonio
7. Denver-Aurora, Colo. (tie)
7. Tampa-St. Petersburg-Clearwater, Fla. (tie)
9. Indianapolis-Carmel, Ind.
10. Austin-Round Rock, Texas (tie)
10. Nashville-Davidson-Murfreesboro-Franklin, Tenn. (tie)

 

Naturally, Las Vegas, after having deep price declines, now far below long run trend (excluding the bubble) is not in the list. They do mention Las Vegas however, noting, "In Las Vegas, it looks like homeowners are pricing homes to clear the market," says Delores Conway, a visiting real-estate economist at the Simon School at the University of Rochester." This is true, after an incredibly weak late 2007 and early 2008 where sales bottomed, we have seen re-ignition of interest in Las Vegas homes as several segments appear to be a bargain. The chief wildcard being how fast employment can bounce back. Conway is right that sellers are more realistic and we have seen very strong sales.

http://realestate.msn.com/article.aspx?cp-documentid=22857795&GT1=35000 

Ron Opfer, CCIM with Coldwell Banker Premier Realty was recently recognized with three others.  ESRI, the CCIM Institute and the CCIM Education Foundation announced the first recipients of a $1 million grant program. Grant money will be distributed to up to 50 recipients per quarter through next summer. The first quarter recipients are:

• Benjamin R. Baldwin, CCIM (Innovation) — Baldwin will design and implement a geospatial mapping and data subscription service for Socialserve.com, a North Carolina 501(c)(3) with a mission to increase access to information about affordable rental housing.
• David L. Bode, CCIM (Workflow) — Bode will identify trends and forecast the impact of the potential loss of Harley-Davidson in his community with the ultimate goal of empowering individuals, businesses and community and government organizations to make informed decisions that produce stable economic growth and minimize the impact of a potential economic downturn.
• Ron Opfer, CCIM (Workflow) — Opfer will develop analytical tools to help bank officials and credit risk managers analyze distressed commercial real estate, thereby providing value to their overall goals for property management and disposition.
• Ben Poh, CCIM (Innovation) — Poh will improve processes for quantifying the gap between supply and predicted demand for senior housing products for different income segments by analyzing demographic data and trade areas for different product types.

This was taken last night. I just had to get the shot with the Las Vegas Blvd sign in it. It was the top destination last night. After becoming familiar with the project just after it was conceived and watching its construction almost weekly, its really cool to see it lit up.

According to Freddie's weekly mortgage survey, rates are at 38 year lows, averaging 4.71%. This is good news for homebuyers today, although not everyone will obtain that rate. Many will get something lower (remember the 4.71 is an average). However, as we have said in prior posts, this may not last forever, especially as the Fed winds down it's program of purchasing mortgage backed securities. Further, as reported in the Wall Street Journal, if the Fed's expanding balance sheet creates "froth" in the markets, the Fed may need to raise rates more aggressively. Hard stuff to forecast but but we know a couple of things. One, rates are historically really, really low, and second, the probability of rate increases in the coming years is greater than one. If you think housing prices are in line with your expectations, you might want to consider a purchase fairly soon.

WSJ source article click here

 

 

Folks who may be first-time homebuyers or even those who may have owned homes in the past are recognizing that low interest rates, combined with low home prices, makes home ownership very desirable. Purchasing a home involves a lot of questions and one really needs to get these answered in order to make a wise decision.

Workshops are being offered at three Las Vegas Valley locations which will detail the whole homebuying process, from getting qualified to finding the right home. This will even be helpful for those who have owned homes before but had challenges, including credit issues.

Click here to see the times and locations of these informative workshops and to register for the events.

Dave Reichert Mortgage Advisor PHH Mortgages

There (still) hasn't been a better time for a person to purchase their first home or move up to a bigger home.  30 year fixed interest rates are below 5% again with no points.  A point is a 1 percent of your loan amount. Qualified borrowers can borrow money for less than $5.45 per $1,000 financed.  Compounding the good news is that home prices in Las Vegas are still at 5 year lows making for a perfect time to purchase.  The administration extended and expanded the homebuyer credit to first time homebuyers and now move up buyers (meeting certain criteria) can also benefit from an income tax credit through the spring of 2010.
 
These features of the market are coupled with the fact that there is less competition during the holiday season.  We have seen in recent months that you were up against anywhere from 2 to 15 other offers when attempting to purchase real estate in Las Vegas; historically people wind down their search for a new home because they either don't want to move during the holiday season or are spending their disposable income in malls, shops and restaurants.  Reducing the field of competition exponentially. 
 
Additionally, the Fed is winding down their purchase of Mortgage Backed Securities (in my opinion the single most determining factor for why rates are so low in this tumultuous economy) and when they no longer are a buyer of these securities it will be up to a gun shy global community to buy what has been a bad investment for them in the recent past.  We can safely assume that the appetite for these securities will diminish.  Simple economics tells us that if no one is buying what you have to sell; you are going to have to reduce your price to make it an attractive purchase to your customers.  When you lower a price on a security like MBS' you HAVE to increase the yield; read INCREASED INTEREST RATES.  The timeline on the wind down is March of 2010.  So rates will start to creep up leading into March and after March it's anyone's guess how high rates will go from their without good MBS auction participation.
 
Buying and not waiting should be on everyone's mind right now.  Even if we see a slight depreciation in the coming years to quote a famous quote "this too shall pass."   It makes sense over any 15 year period that you analyze the net outcome for real estate is appreciation (at least in nominal terms).  Now more then in a long, long time it still makes sense to get into the Las Vegas Real Estate Market.
 
 
PHH is funding loans and with a diminished pipeline usually attributed to the Holiday season funding and service are increased...

 

If you have buyers ready to purchase allow me the opportunity to give them great service coupled with a great rate today!

 

 

Conventional

30 year fixed

 

4.965% with 0 points

4.85% with 1 point

 

No Lender cost loan

 

5.125% with 0 points

4.942% with 1 point