The Scoop

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Vegas Home Prices Are Up 23% Since Last January

the Las Vegas mountains behind rooftopsA new report from the Greater Las Vegas Association of Realtors showed that the median price of an existing single-family home in the Las Vegas valley was $185,000 last month, which is up over 23% from January 2013. Condominium and townhome prices are up by nearly exactly the same amount, increasing from $75,000 to $96,000 in the past year.

The report also highlighted a few significant changes in the local market, including a switch from “distress” sales to traditional sales in which no banks are involved. In 2013, traditional Las Vegas home sales increased by 25% compared to 2012.

This report reminds home owners that they now may have the option of the traditional sale. With home prices increasing at this magnitude, these folks went from being in a position where a possible short sale or loan modification may have been their only option to now actually being able to sell the property and walk away with money in their pocket.

They’re no longer a prisoner of being “upside down” in their home loan and forced to stick it out. The weight off of their shoulders should help them sleep a bit better at night!

Another plus is that interest rates are still hovering around record lows so there are buyers out there looking to buy their first home as opposed to renting. There are also situations where families that are in need of upgrading their current living conditions are able to do so now.

The report also shows that short sales have slowed down significantly in the valley, with the trend beginning even before the Mortgage Forgiveness Debt Relief Act expired on December 31st. In 2013 short sales accounted for less than 10% of the overall monthly real estate transactions.

The bottom line is that home owners who have to short sell their home still can still do so. They just need to discuss tax options with a knowledgeable CPA who can assist them with taking advantage of other tax laws that are now available to off-set the loss of the Mortgage Debt Relief Act.

You can learn more about the new Vegas housing report here: GLVAR reports home prices started 2014 where they left off in 2013

 

 

 

LV Photo by Sarah Nichols

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2014 Home Buying and Selling Changes

2014 real estate changes in Las Vegas, NevadaSaying goodbye to a successful 2013 will be tough but Kandis and I are gearing up for an even better 2014!

There are a few real estate changes taking effect on 1/1/2014 that will impact both Buyers and Sellers so everyone should be aware of them.

The first is with regards to the Federal Housing Administration (FHA) maximum loan amount decreasing from $417,000 to $287,500. The typical FHA borrower might include a first time home buyer, those looking for a down payment as low as 3.5%, buyers with a higher debt/income ratio or anyone with credit challenges. Luckily while this reduction is substantial, $287,000 still buys a lot of house in Southern Nevada considering that the median housing price as of today is only 189,000!

Keep in mind that the home doesn’t have to close by 12/31/13. It  just needs to be in contract by that date in order for the loan limit to be up to the previous cap of $417K. The FHA will provide your lender with a “case number” that will follow the transaction to assure that the loan max will be grandfathered. Otherwise these buyers will have to settle with a maximum borrowing amount of $287,500 which could adjust their buying power. I’m advising my sellers to be aware of the change if they’re considering an FHA buyer for their home come the new year. As long as we’re in contract before that 1/1/14 all parties will be fine.

The second change is that the Mortgage Debt Relief Act will not be renewed for 2014. When it was instituted in 2007, it allowed those Sellers in a short sale situation from having to pay income tax on the waived deficiency difference from their loan amount to the selling amount of their home (up to $2,000,000.00). For example if the homeowner owes $300,000 on their loan but short sells it for $180,000 in 2014, that $120,000 difference will now be treated as “1099 income” and will be taxable at the end of the year. We are still able to have the deficiency of the loan waived assuring you that your Mortgage Company will not come after you for the difference!

As a Real Estate Agent who specializes in short sale transactions, I found that the Mortgage Debt Relief Act was a nice feature in the process but by no means dictated the decision of whether or not to short sell one’s home. If there is a financial hardship and you’re unable to make your ongoing Mortgage Payment, a short sale is still one of your best options in avoiding a foreclosure. Just as before I will recommend that you always consult with a CPA about any tax ramifications.

While neither one of these changes will be catastrophic they may impact your future real estate goals or plans. As REALTORS®, we want to position our clients to take advantage of all situations as they present themselves.

Happy Holidays and we’re looking forward to helping you, your friends, family, co-workers, etc. in 2014!

Mike Rebarchick

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New Guide: 7 Steps to Buying a Las Vegas Home

Helpful tips for buying Las Vegas real estate

The process of buying real estate in Las Vegas or Henderson, NV can be a big challenge, especially if you’ve never done it before. Even 2nd-time buyers can easily run into problems.

There are many required steps and lots of laws, regulations, documents, signatures, etc. The negotiation process alone can be overwhelming to the uninitiated. Confusion and frustration can set in if you’re not careful!

Finding good help from a local expert is a must. A knowledgeable real estate agent can make the home buying process smooth and even enjoyable.

We’ve put together a short guide with a few of the best tips for buying your next Vegas valley home. It can help save you time, money, and frustration… click here to view it now!

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Financed Buyers Now Have A Chance in Vegas!!

photo of sunrise behind Las Vegas mountain homesUp until recently, the fact that interest rates continued to be at record lows meant nothing if you didn’t have an accepted offer. Cash was definitely king as investors came to our valley and bought up everything they could to gain a steady monthly rental income. Hedge Funds and Private Equity Firms would pay $5k, $10k, even $15k ABOVE asking price just to secure a home. As much as financed buyers would have loved to get an accepted offer and move forward with their dream home, they just couldn’t compete based on appraisal contingencies.

Having great credit and a pre-approval letter giving notice to sellers that you have serious buying power was as useless as a bag of money in a store where everything is free. While the supply of homes became less and less, the investors continued to gobble up homes. They started at properties valued less than $100,000, then they went after homes up to $125,000, then it was $150,000. All the way up to properties listed at $200,000. There was a total disregard on their part for finding homes that would bring in a cap rate of 10% or more.

With real estate investing there’s a basic rule of thumb…. getting a home that returns a strong capitalization rate. To calculate a “cap rate”, you divide the annual gross rents by the purchase price of the home. The goal is to obtain a property that has a cap rate of at least 10%. Obviously anything greater than 10% is icing on the cake, cherry on top, a successful two-point conversion, etc.

When dealing with individual real estate investors (the “Moms and Pops”) or Small Groups, that 10% return decides whether or not to move forward with buying a specific property and/or the purchase price. Those Hedge Funds and Private Equity Firms were dealing with Millions and Millions of Dollars flexing their muscles and buying every home they could. It was like watching an episode of “Super Market Sweep”. They’re running down the “neighborhood aisles” grabbing home after home and jamming them in their cart/portfolio. This of course dwindled our inventory and caused a surge in property values this past year where some areas have seen an increase close to 40%!! Due to their actions, there was very little inventory. As I referenced in my last blog post, the supply was outweighed by the demand.

While they were successful building their portfolio of rental homes, they were spurned by the monster they created. This “Frankenstein” rental market became flooded and property values increased to a point where the cap rates were maxed at 9%, then 7% and when these groups finally decided to stop buying, some rental returns were as low as 5%! Even with the mass bulk they accumulated, that return was not going to cut-it for their investors and they stopped buying in Southern Nevada for the time being.

So what does this actually mean for our housing climate and the opportunity out there for financed buyers? It means that the individual home buyers now have a chance since they’re not competing against these Hedge Funds or Private Equity Groups. Instead of competing against potentially ten other buyers  and their offers, our competition has been reduced and the market has stabilized, returning to a more “normal” housing climate… oh and by the way, as of today the interest rates are still around 4% depending on the loan type. It might actually be cheaper for you to own than to rent!

Sure the home values have increased locally but highly intelligent economists throughout our country still believe that our Southern Nevada Housing Market is undervalued. You’re able to take advantage of historically low interest rates with a low down payment, own versus rent, and make the American Dream a reality! We all strive to make a better life for our families and owning our own home is one of the most impactful actions to achieve that success.

To get started seizing the opportunity and making your dream a reality, contact us today!

 

Photo by bludgeoner86

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Supply & Demand in Las Vegas Real Estate

amazing aerial photo of dozens of Las Vegas Valley homesEveryone knows that with sales, supply and demand helps with determining the pricing of goods. Whether you’re a vendor selling the best hotdogs on the street corner or your name is Spacely and you’re selling sprockets, the fact is that if you have more of a product than there are buyers, an increase in the product’s value can stall. On the flip side, if there is less availability of a product and too many buyers, your sales can explode allowing your prices to increase higher and higher!

These same principles apply in my field of Real Estate. Just as I noted in my last blog, after an extreme shortage of homes available here in Las Vegas (less than a one month surplus of available homes), our home inventory has nearly doubled since the beginning of summer. It’s caused many here locally to wonder if we’re heading for another “bubble” and if we can expect prices to drop. I chalk this up to an overreaction by those who are unfamiliar with the fact the prices have just temporarily stabilized after a recent flood of homes being listed for sale. This started with the slowdown of investors gobbling up homes to rent out and the combination of current homeowners deciding that the time was right to sell with the property values increasing.

Another key factor is that historically the beginning of Fall through to the Winter months is the slow time in real estate. During these seasons a lot of families have already settled in to their current residence and are not looking to relocate during the school year. However many are forced to move for a new job, outgrew their existing home, are done renting and want home ownership, etc. There is still plenty of movement happening….especially with the continuation of ridiculously low interest rates!

The recent article I read on www.vegasinc.com shares my opinion. You can read it here:

Run of rising Las Vegas home prices reaches an end

The key thing to remember is that we’re still at a National Shortage for inventory and homeowners have priced their homes accordingly because of that. It’s just instead of a home being on the market only a few weeks before getting an offer, it’s now slightly longer as long as the price is realistic and within reason. There will always be buyers and sellers. It’s just a matter of realizing who benefits from the current “supply and demand” situation.

To find out if you can take advantage of the current situation to buy or sell, contact me today to get started.

Mike Rebarchick

 

(Las Vegas aerial homes photo by delbz)

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Las Vegas Bank Owned Properties are a Desert Mirage

photo of a desert mirageLike most of us, I have a morning routine. While I can’t get into the full details of this routine (for your benefit), it typically consists of: getting a cup of coffee, reading the latest headlines in the news, going to the gym, walking the dog and most importantly logging into the Las Vegas MLS.

Before the sun comes up and while most are still sleeping, I’m reviewing new listings, seeing what has gone into contract, what is now sold, etc. This exciting step immediately sets the tone for my day! As a REALTOR, it’s my job to do this research for my clients and find out what is happening in the real estate market and their neighborhoods so they/you can benefit.

Take this morning’s search for example. As of right now the inventory in Southern Nevada has reached a high for 2013. We’re sitting at just over 6700 homes currently available at any price range which is more than double from only four-months ago! Let me put it this way; that’s less than two-months of inventory and in a healthy market six-months of inventory is ideal. Clearly we still have a long way to go before we’re “healthy”.

What’s the reason for the sudden increase? Many assume that the banks are finally releasing this “shadow inventory” which is the reason for the inventory….nope. That’s not it. The vacant bank-owned properties that have investors drooling and homeowners hoping that pride-of-ownership is restored in their neighborhoods is but a myth at the moment. Only 369 of those 6764 homes are bank-owned. That’s less than 6%…that’s right 6%.

Truth of the matter is that the banks are still holding onto these properties for now and in my opinion it’s to help the house prices increase enough for existing homeowners to feel confident in their home again and/or to get the loan assistance/refinance options they’ll need to stay in their home and avoid foreclosure. It’s also helping banks on new loans as with values increasing, new homeowners have to borrow more in order to own a house these days….this is a way for banks to temporarily hedge their bets in the housing recovery (even with record low interest rates). Eventually the banks will have to let go of these homes as they’d of course rather “Loan than Own”. I just don’t see that happening any time soon.

The inventory of homes for sale are made up of:

a) homeowners that have seen their prices roller coaster up and down and with values now increasing so they can sell without having to short sell

b) they’re homes owned by investors who are now deciding to cash out on their investments instead of continuing to be landlords

c) investors “flipping” homes for profit.

To find out what is happening on the day-to-day and for expert real estate advice, contact me today.

Mike Rebarchick

 

 

Desert mirage photo by Michael Gwyther-Jones