Sunday, November 05, 2006

The Changing Las Vegas Real Estate Market

My wife just informed me that she was told by one of her insurance agent friends that there is the beginning of a dip in the real estate market here in the Las Vegas Valley, evidenced by many people she knows losing their jobs in real estate and construction. The reason for the dip is probably a glut due to overbuilding and also the effect of projected higher interest rates. Las Vegas homes are currently about 33% overpriced, according to one statistic I've read. Many investors in second (vacation) homes in Vegas are now taking a more cautious "wait and see" attitude. Not having dutifully researched the statistics myself and not knowing any real estate agents personally, I can only give a phenomological summation of my experiential evidence (see my disclamer below, I've never posited myself as an expert on anthing) - in other words, there aren't quite as many for sale signs on my block as there were a few months ago, and those that are there aren't being removed, 'cause the homes are not selling.

No wonder. When I was in the market for a house in the late 90's, I saw some real bargains in the low 100's as the signs say. Now you have to fork out at least a quarter mil for the same house.

This is causing a local recession in the construction industry which has been booming for years. This boom was fueled by a long term trend of a general flight to the Southwest by retirees, cheap construction labor from migrating Mexican workers, the flight from neighboring Californians taking advantage of the price differentials and lower taxes, the marketing of Las Vegas for vacation condos and homes, etc., etc., - all this making Las Vegas and neighboring communities like Henderson the fastest growing areas in the country. The prices of homes has more than doubled since I moved back here in late 1999.

Also, obviously, the real estate companies are cutting back due to the slowing down of sales. Houses for sale are remaining on the market for longer number of days, currently averaging over 50 days, up 10% from last year and increasing. This might explain why our property management company just recently renewed our annual lease at the same rental rate as last year, when I was expecting a large (no rent control here in Henderson) rent increase. Luckily the owners have no intention to sell at this time.

I beleive that Las Vegas is destined to be a town where the "help" (dealers, maids, cooks, cocktail waitresses, show girls (?) etc.) can not afford to live here. The areas, now relatively sparsely populated, within an hour or two commute of the city will become the more affordable bedroom communities of the future. That's where I would buy. A recent trip "over the hump" to Pahrump revealed that there is a price frenzy there too. Maybe the commute distance from Sandy Valley ain't so bad? But, I've never been that very lucky predicting real estate trends, so take all this with a grain of desert sand.

I invite any of you "really real" real estate experts out there, and I know there are many of you, to comment here with corrections and elaborations. I won't be offended, promise! Thanks!

See, for example, the following thread from the Valley 702 - Las Vegas Locals Forum: Home Prices Topped Out?

Expert Opinion Found?



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