If I may, let’s start with all the bad news. December home prices “dropped sharply“. If you look at the money-green line representing Vegas on this Case-Shiller index chart, you’ll see that on average, our prices are at 2003 levels. This is consistent with what I am seeing on the ground. I’m just glad I don’t own property near Detroit! If you read articles like this one about how home sales have plummeted and not even super-low prices are helping, then you might have missed the fact that sales in the Western region of the country “surged”, and “Las Vegas, Los Angeles, Phoenix, San Diego and San Francisco made up the top five major metro areas in the country to register an increase in home sales, according to the Associated Press-Re/Max Monthly Housing Report, released Wednesday.”

Now then, on to what you and your Realtor need to know this weekend if you are buying or selling real estate in the Las Vegas Valley. Data from GLVAR MLS.

Available listings for sale:  16187 available single family homes, 4577 condominiums and townhomes. A very slight decline.

Distressed Properties: Of those listings, 6958 are known to be short sales (up just 28) and 7001 are bank-owned (a drop of 204). I expect this trend of slightly up shorts and slightly down REOs to continue for several weeks.

Contingent and Pending listings:  Properties are in the process of being purchased are 6637 single family homes (over 400 more than last week), 1238 condos and townhomes (up about 50). This is a great sign for continued health in our local market.

Single Family Home Prices: 286 under $50,000; 2087 between $50,000-$100,000; 7001 between $100,000-$200,000; 5008 between $200,000-$500,000; 1189 between $500,000-$1,000,000; and 795 over $1,000,000. The trend towards more sub-$100k homes continues; fewer homes in all other price ranges. This could reflect dropping prices, more purchases in the higher price ranges, or both. Prices are for available units, not pending or contingent units.

Condo and Townhome Prices: 402 under $50,000 (up 5); 1613 between $50,000-$100,000 (up 5); 1394 between $100,000-$200,000 (up 2); 765 between $200,000-$500,000 (down 10); 294 between $500,000-$1,000,000 (down single digits); and 168 over $1,000,000 (down just one). Not enough has changed to see any forming trends.

Recently sold: An incrdible 778 properties have closed in the last week, 2858 in the last 30 days, and 4913 have closed since the first of the year.  Of the properties closed in the last week, 58 properties were on the market less than a week; 5 properties were on the market for longer than a year; median was 54 days. Median sales price was $135,000 while median list price was $139,900. 76 properties closed for $50,000 or less (one of them under $10,000); 709 sold for $250,000 or less. The majority of properties sold for less than $300,000 had sales prices within a few thousand dollars of list price. 

Other data to consider: This is the last business day of the month. February totals will soon be available for analysis.

Have a great weekend, and be sure to click the “Contact Me” link in the sidebar or call the number at the top of this page if you need more detailed information or help buying or selling a house, condo, or townhome.

Yesterday, the Review Journal pointed out what those of us on the ground already knew: local housing prices are way, way down. The average price decline was 27.7%, and in one zip code the decline was 64% year over year. That’s not from the peak, that’s just a year!

Today, the Review Journal and other sources are reporting the National Association of Realtor’s Chief Ecconomist said the Vegas housing market will be one of the first to recover at a local event. 

There is some evidence to support this theory when you actually look at the data instead of the For Sale signs. Inventory has steadily declined for the last year, and pending sales have trended upwards. Low prices have brought out buyers, including many first time buyers.

Neveretheless, let’s hope Mr. Yun is right about something for a change.

Here’s what you and your Realtor need to know about local market conditions before touring homes or making offers this weekend. Figures are from the GLVAR MLS system, including outlying areas.

Available listings for sale:  16406 available single family homes, 4578 condominiums and townhomes. That’s down slightly from last week.

Distressed Properties: Of those listings, 6930 are known to be short sales (up almost 100) and 7205 are bank-owned (down over 200). This reflects several bank-driven initiatives designed to reduce foreclosures.

Contingent and Pending listings:  These properties are in the process of being purchased and are likely to close in the next 30-60 days.  6,200 single family homes (up over 250), 1176 condos and townhomes (close to unchanged).

Single Family Home Prices: 282 under $50,000; 2048 between $50,000-$100,000; 7126 between $100,000-$200,000; 5120 between $200,000-$500,000; 1204 between $500,000-$1,000,000; and 808 over $1,000,000.

Condo and Townhome Prices: 397 under $50,000; 1608 between $50,000-$100,000; 1392 between $100,000-$200,000; 775 between $200,000-$500,000; 300 between $500,000-$1,000,000 (a big drop); and 169 over $1,000,000.

Recently sold: 469 properties have closed in the last week, and 4086 have closed since the first of the year.  Of the properties closed in the last week, 42 properties were on the market less than a week; 7 properties were on the market for longer than a year; median was 50 days. Two $1,000,000+ properties closed. Whether a property finally sold for more or less than list price varied wildly by area and condition — be sure your Realtor runs the numbers in the neighborhood you are considering before you write an offer. Five properties bigger than an acre sold, ranging in price from $69,000 to $495,000. Square footage ranged from 520 to 10,728, with median square footage at a mere 1564.

Other data to consider: Thanks to a friendly title office, I was able to get the actual number of closed properties total, including those that were never in the MLS system. That totals 39,881 houses, condos, and townhomes, but does not include land, apartment buildings, or commercial property. That’s still quite a lot more than the 27,857 reported through the MLS system, and supports my theory that the banks are in fact not sitting on thousands of properties waiting for better market conditions. The average single family home sold in 2008 was $259,084 and 1951 square feet.

And one more thing: Here’s some interesting thoughts on the new housing relief plan.

There’s been several articles and commentaries lately to suggest that as bad as things are, banks are sitting on a huge stockpile of foreclosed properties and not selling them. Some people claim that as much as 70% of foreclosed property isn’t making it into the MLS, and a superficial glance at MLS vs foreclosure statistics seems to support the idea. In last week’s Friday Figures, I observed a gap too.

The logic in a nutshell is that banks might hold the property, deferring a big loss, and hoping that prices stablize or even go up. Until they sell the property, they don’t have to post the loss in their books. Of course, fear of prices collapsing when these theoretical thousands of properties hit the market may well be artificially keeping prices lower now. 

There are a few problems with this approach. First, these properties — if they exist — are sitting vacant. Vacant properties are likely to deteriorate and drop in value substantially, particularly if a catastrophic event such as a fire or flood happens. Vacant properties are also a magnet for criminals, mischeivous kids, unscrupulous “landlord” scams, and homeless people. All of these things do negative things to the value of the property.

Second, there are still bills to pay, and sadly banks can sometimes be slow to pay them. Perhaps it’s just because the bank is such a big bureaucracy that it’s hard to find the right person to cut a check. The taxman and the homeowners association (HOA) doesn’t care who owns the house, only that the taxes and dues are paid. I have seen dozens of situations where the HOA has served foreclosure papers on the bank! I am also increasingly seeing properties that are owned by the county because taxes weren’t paid. 

Third, and perhaps most important, we Realtors tend to forget that there are other ways to sell a house than to put it into the MLS. All the figures we have been using compare foreclosure data to MLS data, not to sales recorded by the county. How many foreclosed homes are sold by the bank at auctions such as REDC or Hudson and Marshall? How many of them are purchased by a party other than the bank “on the courthouse steps”? How many of them are sold to investors on a wholesale basis outside of the MLS system?

I am willing to believe that banks are sitting on hundreds of properties, but not thousands. Furthermore, I am willing to believe that this problem is regional but not national.

Let me tell a true story. There is a neighborhood that I keep track of. At this point, I know a lot of the property owners and residents. Last summer, a short sale went bad. The owners moved out before the Notice of Default — the first step of a foreclosure — was filed. Long before the bank actually owned the property, they had changed the locks, made several repairs, removed all the trash, and secured the swimming pool. The house went into the MLS within 72 hours of the bank actually owning the property, and a sale was closed roughly 45 days later. I have seen other houses in this same neighborhood sprout “For Sale” signs within a week of the bank taking them back.

And here’s a few tidbits to think about: housing starts, the NAHB Housing Market Index, mortgage credit levels, and architecture billings are all at record low levels. Could this be a panic bottom? If you are trying to figure out the new home buyer tax credit and how it compares to the previous one, Brand Candid has a handy chart.

Here’s what you and your Realtor need to know about local market conditions before touring homes or making offers this weekend. Figures are from the GLVAR MLS system, including outlying areas.

Available listings for sale:  16,454 available single family homes, 3,252 condominiums, 1,301 townhomes.

Distressed Properties: Of those listings, 6,860 are known to be short sales and 7,244 are bank-owned. Several hundred additional properties may be “corporate owned” or in some other ownership status that is functionally the same as REO.

Contingent and Pending listings:  These properties are in the process of being purchased and are likely to close in the next 30-60 days.  6,200 single family homes, 807 condos, 352 townhomes.

Single Family Home Prices: 275 under $50,000; 1,955 between $50,000-$100,000; 7,193 between $100,000-$200,000; 5,197 between $200,000-$500,000; 1,205 between $500,000-$1,000,000; and 809 over $1,000,000.

Condo Prices: 265 under $50,000; 1,219 between $50,000-$100,000; 777 between $100,000-$200,000; 565 between $200,000-$500,000; 304 between $500,000-$1,000,000; and 164 over $1,000,000.

Townhome Prices: 115 under $50,000; 355 between $50,000-$100,000; 623 between $100,000-$200,000; 214 between $200,000-$500,000; 10 between $500,000-$1,000,000; only 1 over $1,000,000 (a 3 bedroom, 3 bath, 2956 square feet offered for $1,090,000).

Recently sold: 344 properties have closed in the last week. 27 properties were on the market less than a week; 3 properties were on the market for longer than a year; median was 47 days. Only one $1,000,000+ property closed — only 10 so far this year. Properties over $315,000 generally sold for a discount from list price; below that level, roughly 6 out of 10 properties sold for near or above list price; below $85,000, closer to 8 out of 10 properties sold for near or above list price. In the last 30 days, 2,667 properties have closed. Year-to-date, 3,468 properties have closed.

Other data to consider: the Review-Journal tells us that foreclosure filings are down 20% from last month, but still far elevated from this time last year. They also say “Las Vegas had a total of 31,416 real-estate owned, or bank-owned, homes in 2008 and some analysts are projecting as many as 50,000 foreclosures this year.” Luckily, these properties are being priced to sell, as 27,857 properties sold last year according to the MLS system. Additional properties were sold outside the system. I still find this data bothersome because at the beginning of 2007, we had 23,940 active listings in the MLS. Add those listings to last year’s foreclosures, take away last year’s closes and current active listings, and we are missing roughly 6500 properties. Where did they go? Locally, banks are trying to dispose of property quickly, so it’s hard to believe that they are sitting on almost as much unlisted property as they have listed.

USA Today tells us that nationwide, 1 out of 9 homes is sitting vacant, a figure that is jaw-dropping if it is true.

Another USA Today item, banks are working to halt more foreclosures.

And the final bit of news you need, the $15,000 home buyer tax credit was stripped out of the stimulus package, but it could resurface in another bill.

Some time back, I wrote the Truth About REO. It’s still one of the most popular posts on the site. Today, I will add a post on a common but misunderstood kind of listing, the short sale.

1. In real estate, a “short sale” is when the mortgage holder is going to be “short” money at the end. This is either because the mortgage owed is higher than market value, or because the homeowner is behind on payments. Often, both.

2. It’s not the same thing as a “short sale” in stocks or commodities. That kind of short sale is when the seller actually sells something he doesn’t own, hoping to “buy to cover” at a lower price later. There’s a nice example of this at the end of the movie, “Trading Places”. You might recall last year’s temporary moratorium on short sales of certain banking stocks.

3. Real estate short sales must have the approval of the mortgage holder, and that takes time. Although the homeowner is the person who accepts the buyer’s offer, the mortgage people are the ones who will be losing money on the deal. It’s only fair for them to be involved in the process. I have personally seen approval come in as little as 2 weeks, but I have also seen it take 5 months. A general rule of thumb is to count on it taking 30-60 days. Some properties are “approved short sale.” That means that the mortgage holder has already approved a sale for a certain price — usually a previous offer has fallen through — and another offer at that price can be quickly approved within a week or two.

4. Both buyers and sellers need to have a lot of patience to make a short sale work. Not only should you count on 30-60 days before there is an answer from the mortgage holder at all, be prepared for the idea that they might say no! If they decide that market value is above the offered price, they may well come back with a price they would like to see instead.

5. Buyers need to be aware that they cannot count on the seller to make any repairs or concessions. The seller probably does not have the money for repairs, and the bank will not allow concessions such as a contribution to closing costs. The buyer may even be required to purchase their own HOA documents. However, unlike an REO property, the buyer has every right to expect the disclosures of property condition they would receive from an “ordinary” buyer.

6. Like REO properties, some are bargains and some are not. Remember, if the price is “too good,” the bank won’t approve it and the buyer will be back to square one in 30-60 days.

7. Although they are often in better condition than bank-owned properties, many of them still need work. You will find that a lot of these homes are still occupied by the owner (or a tenant). Sure, that means they are in livable condition. However, when somebody can’t afford their house anymore, maintenance can and usually does suffer.

8. Having a really good Realtor on both sides of the transaction makes it more likely to happen at all. This time last year, conventional wisdom was that only 1 out of every 3 contingent short sale offers ever got approval. That number has changed a little bit as banks don’t really want to own more property. Nevertheless, you need a strong buyer’s agent and an absolutely tenacious seller’s agent to make everything come to pass. Choose someone with experience and enough time to do the job right.

9. The seller needs to count on handing over a lot of information. The seller is asking the bank to write off many thousands of dollars. Anybody who has ever had to argue with a bank knows how hard that it can be to resolve a dispute involving far less money. The seller needs to be prepared to help prepare a “short sale package”, explaining to the bank why they should go with this plan. The package will probably include financial statements, bank statements, tax returns, a letter of hardship, and a full market analysis by the selling agent. In many cases, a negotiator is involved to help make the final deal with the bank. Even so, the mortgage company will still do its own research on the seller’s finances, an independent appraisal, and one or more Broker’s Price Opinions (BPO). It is important for the seller to understand that if they don’t provide this information, there will be no short sale approval.

10. The seller also needs to know that a short sale will effect their financial future. It will effect your credit score, making it drop by at least 100 points (some sources say more like 200 points). That in turn will effect your ability to buy real estate in the future, and the interest rates you pay on other debt. Until 2007, the debt that the mortgage company wrote off could be considered taxable income. In any event, you should consult a tax and accounting professional for more detailed information.

I hope this post has been helpful to you.

I have a better than average approval rate on short sales, both as a buyer’s agent and as a seller’s agent. If you have a question for me, or you would like to talk about hiring me as your Realtor, please use the “Contact Me!” link in the sidebar, or call the number at the top of the page today.

Last night, the United States Senate approved a proposal for a home buyer tax credit of up to $15,000.00 (or 10% of the home’s value, whichever is less) to any home buyer. The current first-time home buyer tax credit is $7,500.00, and must be paid back over the course of 15 years — still not a bad deal. The Senate proposal does not require repayment.

Please keep in mind, this proposal has not yet been discussed or passed in the House of Representatives, and has not been signed into law by the President (who does support the proposal). Furthermore, there are people who think this is a bad idea, because it will “re-inflate the housing bubble” and won’t make banks any more stable. Since the housing peak, Americans have lost $3.3 Trillion — $3.3 Million Million — in property values.  In some regions, there is no sign of a bottom, but here in Las Vegas we have a stable number of listings, plenty of buyers, and some signs of price stabilization. 

More information will be added as it is known.