The foreclosure problem is has been so bad here that Las Vegas, North Las Vegas, Henderson, and Clark County are teaming up to best get and use Federal stimulus money.

People who signed up to buy condos in the City Center project are not very happy right now. They bought near the top of the market, and prices in general have plunged 52% since then according to Case and Shiller. Worse yet, many of the people who bought high and early were MGM executives and high rollers. Ouch.

This is more interesting than bad, but the nice folks at Rain City Guide wonder about the wisdom of spending lots of money on rooms your family doesn’t even use.

Office vacancy is up to 15.9%, and apartment vacancy rates are at at 22 year high.

And mortgage fraud is is up… or at least awareness of it is.

If you want the good news too, come back tomorrow for Friday Figures. I will be focusing on year-over-year figures. Except for the drop in prices, things aren’t that bad.

Because Vegas has lost jobs over the last year, our population is down. And that in turn has caused apartment vacancy rates to rise and rents have dropped to 2006 levels.

Economist and real estate expert Robert Shiller (whose name you may recall from the Case-Shiller index) says that real estate prices will continue to drop “for some time.” Please remember that he is speaking about a nationwide trend, not particularly about any specific real estate market.

Important news for our do-it-yourself crowd! If your home is in an unincorporated section of Clark County (NV) and perhaps you’ve forgotten to pull a permit on a home project, you can still make your upgrades perfectly legal and avoid penalties through a permit amnesty program. Contact the county right away, because this program won’t last long. If you are in Las Vegas, North Las Vegas, or Henderson, you will still have to deal with the city permit office.

In News of the Obvious, someone points out that the real estate market won’t really get better nationwide until we have better job creation numbers. Since it’s been months since jobs were really created in this nation, and we spent most of the first half of the decade not making as many new jobs as were really needed, it may take a while to catch up.

A bad economy, lost jobs, and lost real estate values have created a situation where foreclosure is now no longer a sub-prime problem. Nor is the problem just in residential real estate any more: commericial defauls are at a 17 year high.

Here in Nevada, our legislature passed a bill to require mediation in some foreclosure actions. The rules for these mediation sessions are currently being written by our courts. I predict that most homeowners trying to force mediation will discover that large multi-state banks are federally regulated, and banks will claim they are exempt from this state requirement. The truth is there is very little state regulators and courts can do to them.

New rules that were supposed to make appraisals more uniform and less subject to influence by Realtors and lenders are actually making things worse.

And last, a bit of humor — Squat 2 Own Realty. I do NOT advocate any of the methods described! It’s strictly meant as humor. On a serious note, pay attention when viewing “vacant” homes, because they are a target for real life squatters.

First, a big Welcome Home! to almost 300 airmen of Nellis Air Force Base, returning from overseas missions. 

Another welcome sign, Mojave Max has emerged from his hibernation at the Desert Tortoise Conservation Center. That makes it “officially spring” for some Las Vegans. 

If you live in Vegas, your mortgage is with Chase, and you are having trouble making payments, please be aware of their Nevada Homeownership Center near N Rainbow and 215. They would rather help you out than own yet more houses.

Maybe things are slower than usual here in Vegas, but City Center is still under construction, with parts set to open later this year. 

It seems that in many parts of the country, apartment vacancy rates are way up! While it is true that when people lose their jobs, they often lose their means for paying for housing, I wonder where all those residents have gone. Mom and Dad’s place? Bunking with friends? I wonder what will happen when summer “leasing season” arrives.

Last item: Realtors, their clients, and title officers need to be on the lookout for mortgage fraud. Read your closing statements. Do your best to understand them. Here’s a place to start. Ask for explanations where you do not understand. If it’s not on the closing statement, it isn’t supposed to happen. 

I’ll see you again for Friday Figures!

While homebuilder confidence remains near a record low, it turns out that actual housing starts are up 22% mostly due to apartments (official Census report). It sounds like the homebuilders have put in a “panic bottom”.

Renters, beware of the NAR lease scam. “In this scam, rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants and, upon receipt of the deposit, to deliver the keys to the property to the tenant. The tenant is instructed to send money via Western Union to NAR’s purported agent, in the United Kingdom. NAR is not involved in this business and believes it is a scam.” At least it isn’t Elvis. 

A new HUD and DOT initiative is designed to tackle both housing and transportation costs at the same time. Many Americans have found themselves in a situation where they can’t really afford to live anyplace near their work. This is expensive and stressful for the entire family. 

This morning, I was forwarded a report on average closing prices here in Clark County. No shock that prices have declined again and foreclosure sales are up.  Prices are down roughly 60% from their peak, and have declined for 11 straight months. But the rate of decline is slowing. Greed and fear say to wait for prices to fall more, but the fact is that we won’t know where bottom is until prices begin to rise again. That’s one of several reasons I track not only average prices, but the number of homes in various price ranges.

At least we aren’t in Detroit, where the median home price is $7500, roughly what you would pay for a Hyundai. Yet more evidence that housing markets are fundamentally local, not national.

And one last item, how to spend time in Vegas without spending money.

I hope everyone will join me tomorrow for Friday Figures!

In the meantime, if you have a real estate need, please be sure to click the “Contact Me!” link in the sidebar, or just call the phone number at the top of the page.

Right now, there are 818 condos available in the Las Vegas Valley listed at $100,000 or less, and a few more in age-restricted communities. Of those, 537 were built 1990 or later. And of those, 244 are less than 10 years old. 

For the moment, let’s drop from consideration the 108 condos that are listing for under $50,000.  Those units are going to need some serious TLC, and probably won’t qualify for FHA financing.  Leave those to some investor:  a savvy investor can pay cash, put $10,000 or even $20,000 into the place, and flip it for roughly double thier money in 3-4 months. 

That still leaves over 700 condos that can be purchased for $50,000-100,000. While some of these will need work, many are very close to move-in ready. These units are in any part of town you could possibly want to live in.

Thursday, new FHA requirements go into place. That means the smallest down-payment allowed will be 3.5%. Let’s flesh out this example with a place that costs $80,000.  Like maybe this one, or that one, or maybe this other one. A 3.5% downpayment would only be $2400 cash, and you might still find a downpayment assistance program with the help of your mortgage broker (or the “First National Bank of Dad”). But let’s also say for the sake of argument that after closing costs, you still end up with roughly $80,000 of mortgage. I have mortgage brokers telling me that with a conventional loan, you can get interest rates below 5%, but an FHA loan is more like 5.5% today.  Don’t blink, because those numbers will change tomorrow. Our hypothetical mortgage payment, principle and interest, is something between $429 and $454. 

You can’t rent a place for that money.  Anywhere. 

Granted, that doesn’t include taxes and insurance and HOA dues, but you can’t find a “real” apartment in Vegas for less than $600.  

And let’s not forget that there are lots of programs out there to help you buy a home, particularly for first time homebuyers.  A good mortgage broker will be able to tell you about the local programs available to you: some require you to live in a particular city or county, some are only open to people in certain jobs (teachers, firefighters, etc.). There’s also the federal tax credit for first time home buyers. The feds will credit you $7500 on your taxes — yes, three times the hypothetical downpayment — but you will have to pay it back over 15 years. 

It’s hard to see a downside to this:  the buyer gets a home for less than it would cost to rent in most cases; the buyer gets the benefit of the home mortgage deduction on his/her taxes every year; prices will at some point start going up instead of down (these are already “can’t build it for that” prices); even if the buyer decides to upgrade to a better place in a few years, these will make great rental properties; and finally, there are all sorts of incentives to buy now rather than wait.

If you want more information, or help finding and buying one of those condos, give me a call or hit the “Contact Me!” link.

I’ve been studying the latest information on the Las Vegas housing market. This week, we had just under 17,000 single family homes available, and an additional 4500 condos and townhomes. Sure, prices are down almost 30% over last year, but actual closed sales are up over 40% from last year. That’s simple supply and demand: prices dropped low enough to stimulate demand.

I am still concerned about the fact that rental inventory is pretty slim, but it’s up from where it was a couple months ago as investors are starting to snap up some fantastic deals in the under $150,000 range. This is in turn creating a competitive market for young and working-class people who are using this opportunity to purchase their first home in the mid $100k range. “Lowballs” just aren’t being taken on homes listing below about $250,000.

I’ve been telling you for a while that we have relatively little supply of rental housing here in Las Vegas.  Between newcomers to the Valley and investors losing rental homes to foreclosure, there are very good reasons for constrained supply!  That doesn’t even account for people who are in rental housing after losing their primary residence to foreclosure.

Today’s news is that Vegas apartment complexes are “running near capacity” thanks to foreclosures. For the moment, average rents are stable at only $1 more than last quarter. I don’t expect rents to remain this low for very long.  The law of supply and demand says that they just can’t while supply is limited and demand is growing!

With the banks wary of lending to investors — and unwilling to loan at all on certain condominium properties — the road out of our rental housing problem is going to be long and winding. On the other hand, there is great opportunity afoot for a well-capitalized investor.

I’ve been hearing a lot of ads on the radio lately for a website called RentalForeclosure.com. The ad does tell the truth about tenant’s rights during a foreclosure: the tenant has very few rights. Nevada does have a loophole for those (rare) cases when the tenant’s lease pre-dates the landlord’s mortgage. It also appears that Nevada is considering additional protections for innocent renters.

Here’s the problem:  legal notices are served to the owner, not the property itself, until the foreclosure is complete. That means the person living in the property might not know anything is wrong until the bank’s representatives show up with a new set of locks for the front door!  Often, the renter will get just a few days notice.  Another twist on the problem is a scam where an unscrupulous “landlord” leases out a random vacant property to someone who thinks they are getting a great deal on a rental. And it is a great deal, until the real owner (usually the bank) shows up.

So what can you do?

First, arrange your rental through a licensed property manager.  Property managers in Nevada are real estate agents — Realtors — who have gone through additional training and have an additional certification to manage rental properties.  The first thing these managers do is make sure the property in question is actually owned by the person who says they own it, and that it is not in foreclosure.

Second, if you don’t know the status of your rented house or condo and you live in Clark County NV, visit the Clark County Website and select “property lookup” from “online services.” Search for your address.  The search will give you the property’s APN or parcel number, which is how the county keeps track of individual properties for tax and recording purposes. From here you can verify the owner, and such.  Use your computer’s “copy” function on the APN, and go to the Clark County Recorder’s website. Select “Search Records”, and then choose “Advanced Search.”  Enter the APN where it says “ParcelNum”, remove all the dashes from the number you pasted, and click on the “Detail Data” button below.  If the most recent entry is something like “breach” or “notice of trustee sale” or “notice of default”, you have a problem and need to call your landlord immediately. Unless there’s a really good answer, start planning to move.

And one more thing,  just because the landlord is in default doesn’t mean you can stop paying the rent.

Although I don’t normally handle rentals except under very special circumstances, I will happily recommend a colleague who does upon request.

All week we have seen pundits and oracles talk about the imminent doom of Fannie Mae and Freddie Mac (I’ve written before about who they are and what they do, and why it’s a little problematic). Jim Cramer has been saying to get out of Fannie and Freddie’s stock for a year.  Warren Buffet told us about his concerns on Monday (scroll down this page for the link). Also Monday, some investors speculated about the impact that “The imminent failure of both Freddie Mac and Fannie Mae” would have on rental housing — which even at record homeownership levels represent over 30% of housing in America.

Now, of course, we aren’t talking about them collapsing.  We’re talking about a massive bailout. I did hear someone on CNBC talk about them merging, but that has to be the dumbest thing I’ve heard all week:  how exactly are you going to make one healthy company out of two companies said to be failing, ailing, and ready to collapse?

Robert Reich used the rumors of bailout to talk about “socialized capitalism” — keep the profit for the executives, but spread the losses across the taxpayers like so much fertilizer.  Business Week is asking just how much this bailout is going to cost, both up front and as impact on the economy.

In the medium to long term, there will be no normalization of the real estate markets on a national level until we all know exactly what is up with Fannie Mae and Freddie Mac, and what is going to be done to make the market for mortgage backed securities stable.

On a local level, however, there are signs of life.  According to our in-house research team, there are 16,408 single family homes available and year-to-date sales of 14,635.  That’s closings and keys changing hands, not purchase offers.  Over 550 of those homes sold for less than $80 per square foot — you can’t build it for that price. An issue of concern is that there is only a 2.23 month supply of rental housing while our population continues to grow every month.  Part of the reason it’s so low is that banks don’t rent out the REO properties they own;  thousands of homes that could be occupied are vacant, and current mortgage restrictions make it difficult to purchase investment property.  If you happen to have the cash for a big downpayment, this really seems like a great time to buy a rent house in Vegas.

And one last item on renting a house in Vegas:  be careful when renting a home from an Elvis impersonator.  The FBI is looking for him.

More links and a new topic in the sidebar.  Check it out!