Both the good news and the bad news comes complete with pictures. I’ll start with the good news.

Even the Case-Shiller figures indicate that housing prices nationally are stabilizing. Vegas is the two lines at the bottom. Part of this is generally thought to be due to the tax credit for first time buyers, which will be expiring soon. Frankly, if you don’t already have at least a counter-offer in hand, don’t count on closing on time. Will that tax break be extended? Nobody knows.

The bad news is that Fannie Mae reports that serious mortgage delinquencies are up. In fact they are up sharply. Note the “hockey stick” part of the chart: since January of 2008, the rate of homeowners with Fannie Mae loans went from 1% — which was alarmingly high at the time — to over 4%. This tells me that distressed sales will dominate real estate for at least another couple of years.

Frankly, that bodes ill for price appreciation for the next 5 years. Those seeking a home that costs about the same as their rent will still be fine, and savvy investors will always be able to find a good deal, but this is the wrong time to be a speculator.

It’s time for Friday Figures! All information from the GLVAR MLS system. This is what you and your Realtor need to know when touring, making offers, or listing property this weekend in the Las Vegas Valley.

Summary: Total available units dropped insignificantly to 11575. Of note is the decline in prices on non-distressed properties. These owners represent both private sellers and investors with a “fix and flip” strategy. This is good news for those who don’t want to deal with banks, but bad for owners who must sell. We’ve broken over 15,000 pending and contingent sales, a truly remarkable thing, but over half are short sales that are at risk of going back on the market (either as a short sale or a bank owned property). Newer listings continue to be “where the action is”; priced right means sold quick.

Other Information: A growing problem is the “strategic default“, people suddenly walking away from their homes. This trend is exacerbated by banks trying to get homeowners to pay the balance on short sales. Oddly enough, a court ruling effecting as many as 60 million homes may limit the ability of banks to foreclose! Unfortunately, it’s really difficult to find out if any particular property is effected. Here’s the first figures I’ve seen breaking down sales to reflect condition of bank owned homes. One last thing: locally, price declines mean this is a great time to rent commercial property according to the Las Vegas Sun.

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I am a real estate professional and homeowner in Las Vegas, NV. As you surely know, Vegas has been hard hit by foreclosures. We continue to have a high number of foreclosures in process and a substantial number of bank-owned homes available in our local real estate market. All the major banks and mortgage servicers have homes for sale in our area: Wells Fargo, Bank of America, Deutsche Bank, Chase, etc.. In addition, they are lien holders for the thousands of additional homes owned by people attempting a “short sale”. Thus, the banks collectively control over 75% of our real estate market before even considering their role as a lender for new sales.

The banks are using this position to further drive down prices, and exacerbate the decline in property values. This is a direct threat to Americans’ retirement accounts and municipalities’ tax rolls. Moreover, it has the potential to drive builders out of business altogether as it is impossible for them to compete with ludicrous prices well under $100 per square foot.

Banks are setting prices locally around $70-90 per square foot for nicer foreclosed single family homes that need a minimum of work. For under $60 per square foot, the property needs serious work but is still habitable. Only once a property is priced under $45 per square foot are homes “gutted.”

The initial low price is designed to bring in many offers in a short period of time – often dozens and sometimes over a hundred in just a few days. This feeding frenzy of bidding is hidden under most MLS systems. While locally, the final sales prices is a matter of public record, that is not true everywhere. The bank’s goal is to quickly get rid of the property no matter what, minimizing maintenance/utility costs, taxes paid, and homeowner’s association fees due.

This combines with the new appraisal rules in a toxic fashion. Under HVCC, many inexperienced or out-of-area appraisers are choosing to use these artificially low priced homes as comparables to non-distressed sales. They do this without regard or even knowledge of the condition of the properties in question. In one recent case, an appraiser compared a home that had been recently renovated to a home that was in desperate need of work. Thus, the values of all local homes are deflated by the big banks dumping inventory.

This practice is almost certainly not limited to our local market. These issues threaten the long term housing stability of our nation. Banks collectively control our markets, and they must be made to “play fair” rather than distorting prices for short-term gain. I have not even addressed the abusive practices of banks towards the potential buyers of these homes: mandatory pre-qualification with the lender that owns the property; contract addenda that strip the buyer of many protections they have under their original purchase contract; capricious and arbitrary closing dates. Nor have I addressed the bank-imposed labyrinth of frustration faced by all participants in a short sale.

If any other industry attempted these business practices, the Federal Trade Commission would investigate sanction them. As much as the various states would like to come down on these and other abusive activities, the big banks are federally regulated and thus almost untouchable by state authorities. It is time for the Feds to investigate the big players in the foreclosed property market, punish those whose actions hurt both home owners and home buyers, and make sure that all parties follow the law.

Thank you for your consideration.

Thanks for reading Friday Figures! All information from the GLVAR MLS system. It’s what you and your Realtor need to know when touring, making offers, or listing property this weekend in the Las Vegas Valley.

Summary: Available inventory continues to slowly decline to 11687 units and pending sales continue to rise. However, well over half of those pending units are short sales which may or may not close. Actual sales remain strong, with the results of multiple offer situations showing up in the fact that median sales price is greater than median list price. This is not a time to “low-ball” if you are serious about buying.

Other Information: A bit of good news, your Vegas area Realtor is now able to search by (or exclude!) auction properties. Existing homes are selling fast, but new home sales are increasing too, just a little. Our available rental units may owe something to accidental landlords, people who can’t sell their homes so they put them up for rent instead. I am still a little nervous about the fact that our unemployment rate is up to 13.2%, and that by the narrow Department of Labor definition. And one caution to those considering a mortgage modification: 27% of modifications are resulting in higher monthly payments! Read carefully before you sign anything!

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The FDIC is ordering the liquidation of properties held by Corus Bankshares, which the FDIC took over last week. Corus lent a lot of money to condo developers locally:

Other local projects [besides One Las Vegas and Streamline Towers] financed by Corus include Meridian ($111.3 million), Platinum ($87.6 million), Loft 5 ($56.5 million), Juhl ($106.2 million), Newport Lofts ($67.1 million), Panorama Towers ($236.3 million), Village Green ($60 million), the Residence Las Vegas ($56.8 million), Soho Lofts ($49.3 million), Copper Canyon ($43 million), Boulders at Lone Mountain ($40.2 million), Verano ($39.5 million) and Spanish Palms ($28.2 million).

At least 3 condo developments and one commercial property are likely to be sold. Of $7 billion in loans, $2 billion are “non-performing” — bank talk for not being paid. While this could be a great opportunity for a well-capitalized investor, it more likely spells future trouble for our luxury and high rise condo market.

With the Treasury predicting that millions more foreclosures are coming, it is clear that the markets will be dominated by the banks for some years to come. While foreclosure filings are up month-over-month, they are thankfully slightly down over last year.  No surprise that Nevada has the most foreclosures, although an 8% drop from last month is impressive.

The Review-Journal has chosen to spin our sales and availability numbers in a negative light, telling us that both sales and prices are down. However, even they have to admit that once you take pending and contingent sales out of the figures, actual inventory is down. A bright spot is the media coverage of short sales, which done right do save families and banks money by preventing foreclosure. Remember, it’s called a “short sale” because the bank will be “short” money at the end.

Foreclosures aside, we also have a big problem moving high-rise condos. This is particularly true of the developments on the Strip itself, where resale prices are down 50-70%. Great deals can be had for cash purchasers who want to be in the middle of everything.

It’s that time again! Welcome to Friday Figures! All information from the GLVAR MLS system. This is the real data you and your Realtor need to know when touring, making offers, or listing property this weekend.

Summary: We’ve dropped to 11922 total available units, under the 12,000 mark! Unfortunately, the number of contingent and pending properties is down slightly; the drop is due to 700 expirations in the last week. Both distressed and non-distressed properties are moving. However, median time on market is down substantially. We’ve also broken through 30,000 properties sold since the first of the year.

Other Information: I meant what I said yesterday, that we won’t really be out of this mess nationally until the employment-foreclosure-banking triangle is fixed. Not much to add to that.

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The mortgage crisis won’t be over until the unemployment problem, job creation problem, and wages-not-keeping-up-with-inflation problems are solved. And until the mortgage crisis is completely worked through, there is no chance of completely fixing our banking crisis. The banking in turn is impeding job creation (and therefore impacting unemployment) by making it difficult for businesses (and individuals trying to start businesses) to get loans. Actually implementing mortgage modification plans is a good and necessary step to slow this circular dance, but it only works when people have at least some money to pay a reasonably priced mortgage — and when banks are willing to work with people.

On the other hand, it does look like housing prices in some markets are putting in a bottom. Someone with adequate capital and patience has the opportunity to put together a nice portfolio of properties, particularly if they can pay cash. For that matter, someone with adequate capital and patience could go into the venture capital business.