Las Vegas Real Estate Trends

We are often asked "What the Listing Inventory" is for Las Vegas real estate and it's often cited in the local news such as the Las Vegas Review Journal.

I never have really liked basing a decision to buy Las Vegas real estate because of the amount of inventory available and that's because there are so many more factors that are more important in my opinion... like..um... does it make financial sense?

Back in June of 2004 when the Las Vegas real estate inventory numbers were ridiculously low, it was pretty common to hear that "you've got to buy now, we are running out of homes", land, etc.. Appreciation was going through the roof and it seemed buyers were buying anything that had a roof on it -- no matter what the price was. (And honestly, I still have to shake my head and consider some of the new subdivisions thrown up to meet the demand a travesty that they were even approved in the first place.) All of a sudden, everybody became an expert in real estate investing, ARM's started being the preferred method of financing.. and here we are today. (If it was really all so easy... everybody would have been millionaire real estate investors decades ago.)

With a normal real estate market, Available inventory can be a somewhat important gauge but it's important to understand who it affects the most and that is the Las Vegas real estate seller. Low inventory, less competition in showing your home to prospective buyers. More Inventory, more competition... simple as that. Las Vegas real estate buyers do not have to buy under either condition and if prices don't make sense.. it's as simple as not buying and inventory levels will eventually go back up and balance it out. (I never remember a shortage of rental homes available or a big spike in rents so it's not like people did not have a place to live. And yes.. I did rent homes out during this entire period and the phone was never ringing off the hook with a line of people waiting to move in.)

Unfortunately, auction concepts applied to the entire real estate industry does more harm then good in the long run.

Las Vegas real estate has not been a normal market for quite some time. We went from an extreme sellers market to an extreme buyers market and all the while, New Las Vegas home builders were adding to the inventory trying to keep up with the artificial demand. (You've got to buy now, appreciation is 20%+ a year, prices go up with each phase... all the wrong reasons to buy.)

Regardless of what's happened in the past, here is what's happening today that you need to be aware of. Listing inventory being reported in the Las Vegas Review Journal has been going down but it's still the wrong gauge to base your buying decisions on and that's because of Las Vegas Short Sales, the number of Las Vegas homes being taken off of the market due to the sellers giving up on getting their price, the number of homes that are still on the market that are way out of the selling activity range, Las Vegas bank owned homes that are going to be coming on the market and the number of Las Vegas short sales in a contingent/pending status that may never be approved by the bank.

In other words, Las Vegas is still not a normal real estate market and basing your Las Vegas real estate buying decision based on inventory reports may not be in your best interest. Buying Las Vegas real estate because it makes financial sense is...

Yes... there are multiple offers coming in on bank owned Las Vegas homes that are priced below current market value but not on all of them and then let's not forget the ridiculous offers submitted for Las Vegas bank owned homes which still count as offers even though they are not worth the paper they are written on. Some of the terms and quotes I've read such as "feeding frenzy" would make you think you are missing out on something. Were you really missing out on anything if you did not camp out for days waiting to buy a new home during that supposed "VIP Grand Opening"? (I've never seen so many VIP's.) Would some people have paid the prices they did if they had the time to actually contemplate it and not fear that the 500 buyers behind them on the "VIP List" were going to buy it if they did not? These were all auction concepts (get several people in one place at one time and create urgency) and they were based on the reporting of low inventory. (Long story on how that was created and events in 2001 played a factor in this.)

In my opinion, it's been the best time to buy since early 2004 and that's because of prices... but don't get caught up in it and buy for the wrong reasons. Is it better then late 2001 or early 2002 on a pure investment analysis? My opinion.. No... and that's where inventory comes into play. Will we see the same opportunities we saw in 2001/2002? Tough to say with all of the uncertainty that still needs to be played out so I can't honestly say to wait. But, I can't tell you that you have to buy now either and I certainly don't advise our clients to up the bid in a multiple offer situation if it goes above our strike price.

Sound complicated? It is...We are dealing with mentalities, an increase in commodity prices, a slowing down of the national economy and even award winning internationally known economists are at odds of what is exactly going on.. Sorry, but I have to laugh when somebody gives a definite answer on this topic when investors far more educated with Master degrees from world famous business schools can't give a definite answer.

But.. if you buy right to begin with, you should be able to weather the storm. In other words, buy for the right reasons. Experienced real estate representation can help you determine if your reasons are the right reasons.

My wife and I are primarily a referral based real estate service and look at things a little closer... We have to because our business is based on previous clients and their referrals since 1997 and the long term trust of our clients is everything. We can't always tell you what you want to hear, but we certainly tell our clients what they need to hear.

As always, you can contact us with the following information below.

Paul Francis, CRS
Coldwell Banker Premier
Las Vegas Real Estate
702.592.3058