With 14,527 homes on the market (and an additional 4,200 condo/town homes), Las Vegas’ supply is certainly decreasing, when compared to just two months ago (November 2006: 17,200 single family, and about the same number of condo/town homes).
2006 proved to be an adjustment period for the real estate market, not only in Las Vegas, but across the country. Markets slowed (of course some more than others) resulting in a subsequent rise in the number of resale homes on the market. Builders submitted substantially less building permits, offered very attractive incentive packages on their standing inventory to buyers, and higher co-ops to the agents who could bring them in. Even still, new build was suffering some losses due to this slowing. House prices in Las Vegas decreased in 06, primarily due to oversupply. Many reports say buyers stopped buying because of several factors: some say due to the war, some the economy (i.e. interest rates), and others blame overall income levels. The reality is that its probably a combination of all three.
Is it gone? Predictors are saying that 2007-2008 should be slowly increasing markets. For Vegas, that should mean a slower price increase, and a slower but steady appreciation (when compared to 2005). Several “guess-timations” are predicting that 2007-08 are preparing the market for a more rapid increase in both house prices and appreciation in 2009. This lull in the market can be very good for those looking to buy and hold, both as investors and primary house buyers. With little increase in house prices, and a continued low in the interest rates (the FED is expected to hold interest rates at 5.25 for the fifth straight meeting), affordability becomes a greater likelihood for many. A slow increase in appreciation is still an increase none-the-less, and that would fit right in with the 3-5 year average hold time for houses.
Another interesting tidbit is the idea that the baby-boom generation has reached retirement age, and a large majority will be doing so over 2007, 2008, and 2009. This is a generation that will be looking for a new place to live. One with warm, dry climates, 360 sunny days out of the year (it could happen), country clubs, golf courses, and plentiful activities (like gambling hint hint). Most retirees target Florida (hurricanes?), Arizona (maybe?), and Las Vegas for their residences. With the Sun Cities (Pulte/Del Webb communities that are age restricted, but have golf and activities galore geared specifically for seniors and retirees), Las Vegas is among, if not the leading destination for retirement. (Feel free to contact me for more information on the Sun Cities, located in Henderson, Anthem, North Las Vegas, and Summerlin).
There has been a slight increase over the last two months in the number of new build permits, it would appear builders are preparing for an optimistic 2007. This means that incentives should continue on new construction, and resale home prices should stay steady with little increase for at least a few months. Real estate, like any other investment out there, has its risks (though they are far fewer than some others), and has its rewards.
The key to finding the end of the rainbow is to watch what is going on, make well informed decisions, and also learn to run with the ups and occasional downs as opposed to against them. If a market has a slow or bad year, rather than cutting losses and running, look ahead and hang in there with it (if feasible). Most times it will make an up-turn and you will re-coup and even come out ahead.
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Disclaimer: These reports reflect the views and opinions of the Advisors and are not necessarily the views and opinions of NARREIA.
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