Las Vegas Homes for Sale Drops Nearly 50% Since November, 2011

As of today, there are just over 6,400 homes that are not under contract and available for sale in the Las Vegas real estate market. Back in late November, we had over 12,000.

That drop is significant and is causing a lot of frustrations for buyers looking for properties. They are encountering multiple offer situations on all the best homes and are having to run out immediately when a property comes on the market to have the best chance of getting the home they want.

Reviewing the market conditions, there are two situations that I see that are causing this drop in available homes:

  • Nevada legislators passed AB 284 that went into effect in October, 2011, forcing banks to produce original documents before they could file notices of default and foreclose on properties in Nevada. Banks have taken a few months to figure out how to work through this, and are just now getting back up to speed. Bank filings during the last few months have decreased well over 90%, reducing the number of available bank-owned homes on the market.
  • As bank properties became less available, Las Vegas short sale homes became the focus.  However, since the properties can take time to actually sell, buyers have been placing offers on more than one and ‘locking up’ several properties per buyer.  I believe this has caused a temporary reduction in inventory that will change as the time to process short sales with banks decreases.

In the meantime, inventory is low and buyers are panicking.  In my opinion, this will change over the next several months and we will see more inventory.  Educating Las Vegas home buyers is essential to ensure they understand how to buy in this market.

If you or someone you know is interested in purchasing a home in Las Vegas, it is a great time to buy, a little patience is necessary, and I’m here to help.

Visit my real estate site to search for homes.

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My Real Estate Absorption Rate Formula

The standard calculation for absorption rate takes the number of homes that are available and divides that by the number of homes sold over a period of time to determine how long it takes the market to ‘absorb’ (sell) all the properties.  That part sounds fine and makes perfect sense.

To explain it – if we sell 100 homes per month and there are 1,200 homes on the market, it would take 12 months to sell all of those homes.

Of course you are wondering why I would even bother bringing this up and arguing a standard method of calculation.  If you look around and read the explanations of absorption rate, one of the key phrases that you will read frequently is that ‘absorption rate is not an exact science.’  That’s why I’m challenging the methodology of determining the calculation.

The part that concerns me is the definition of the ‘available’ homes, which is why I’m writing this blog. I don’t agree that a home is ‘available’ if it isn’t sold.  Homes that are ‘contingent’ and ‘pending’ are under contract and at various stages of the sale process.  No, those aren’t sold, but they technically aren’t available either. My belief is that these homes don’t fit in either category.  If they sell, they count toward sales.  If the deal falls apart, they go back into available inventory.  So, they don’t count while in limbo.

As a real estate professional, I do not take my clients out and show them homes that are currently under contract.  I would venture to guess that most agents feel the same way.  Why waste the time of the client, and possibly show them a home that they fall in love with, only to tell them that it is under contract and they can’t have it unless the other buyer backs out?  Yes, in some cases this does happen, but it isn’t significant enough to consider these properties available for sale.  Don’t you agree?

The homes that are under contract exist, and there are many statistics that we refer to these properties for – but absorption rate should put these properties in a neutral category, where they don’t count for either side of the equation.

As of this writing, there are approximately 25,000 homes in Las Vegas that are available, contingent and pending.  Of those, only 12,000 are not under contract.

Those 12,000 are the ones I’m showing my clients, and the ones that my sellers are competing against for offers. When I’m out with my buyers and they tell me they want to make a ‘low’ offer on a property to get a ‘deal’ – that is when the fictional absorption rate distorts what I need to tell them.  With 25,000 homes on the market, they believe they can offer 10-20% below list price right?  That’s a lot of homes and that is what the media is telling them.  Yet they can really only choose from 12,000 if they want to get an accepted offer and be under contract to get to a closing.

In the Las Vegas real estate home market right now, homes are selling for 96-99% of list price and it is a Seller’s Market, if you use my calculation and leave out the contingent and pending homes.  If you include the under contract properties, it’s somewhat of a neutral market.  Yet when we look at the final sales prices of homes, closing at 96-99% of list price, it supports the Seller’s market theory, which I determine based on absorption rate using only available homes.

The skewed absorption rate and ‘available’ homes information that the media reports makes it challenging to explain to my buyers that the Las Vegas home market isn’t what they think and that the offers they submit must be reasonable.

Those ‘25,000 homes on the market’ stick in their head.

For a while.

Then they find a great little house, write an offer, and what happens next – we get a notice that the property is in a ‘multiple offer’ situation.  Reality finally sinks in after a few of these situations.

This is what is ACTUALLY HAPPENING, and I have many buyers that can confirm that this is what they are experiencing.

Bottom line – there are only 12,000 homes available, in my opinion.  That is the number I work with every, single day.  That is the number that is important to my buyers and sellers.  That is the number that determines where my sellers price their properties, and how much my buyers are willing to offer. It doesn’t matter that there are another 13,000 homes out there that are under contract because my buyers can’t have them.

Therefore, my absorption rate calculation will leave all those Little Houses in Limbo where they belong, until they either sell or come back on the market.

Las Vegas Foreclosure Report

Earlier today I posted that there were just under 12,000 homes available on the market for sale (single family, condos and townhouses) in Las Vegas, Henderson and Boulder City.  When we talk about these three cities, they are practically intertwined, though Boulder City is actually on the outskirts near Hoover Dam, but still close enough that someone wanting to buy a home in Las Vegas might consider this area also.  We exclude locations such as Pahrump, Mesquite and Laughlin, because it’s a long drive to each of these and Las Vegas home buyers really don’t want to be out in the boonies.

What I didn’t break down was the number of homes by type of sale – bank properties, short sales, traditional sales and flips.  The later two are both considered traditional because they involve either a normal homeowner as a seller, or maybe an investor or group of investors, but not a bank.

Everyone has been on the bank-owned home bandwagon in Las Vegas for quite some time.  “Buy a Las Vegas foreclosure, you’ll get the best deal,” has been a frequent statement.

Not so much anymore.  Let me explain why.

With 12,000 available homes on the market (read my other post today to determine what ‘available’ means), let’s look at how many of each there are:

  • Traditional homes and flips – 4,021
  • Short sales – 5,596
  • Bank-owned or foreclosures (which are the same thing) – 2,389

Notice anything special about these numbers? That’s right.  We don’t have as many foreclosures as other types.

Now look at how many SALES have happened with each type of property in the last three months:

  • Traditional homes and flips – 2,971
  • Short sales – 2,840
  • Bank-owned or 5,532

What stands out?  We’re selling bank foreclosures at a significantly higher rate than the other types of properties.

And we don’t have a lot of inventory.

The absorption rate (I’ll write a blog on this too) indicates that we only have enough bank-owned properties in Las Vegas to supply about one month’s worth of inventory to the buyers.

What does this mean to you?  Higher prices and more competition for these types of homes.  Be prepared for multiple offers on many foreclosures.

As a real estate professional working the Las Vegas market, I understand these numbers and what my clients need to do to get their offers accepted.

If you’re considering buying a Las Vegas bank property, or any other property, visit my Las Vegas real estate website to search for homes at your leisure.  You’ll have access to all the homes on the market and can search based on various criteria and save your results.

I’m here to help, so contact me when you are ready to buy.

Las Vegas Homes Selling Fast

Search for Las Vegas real estate here

Want to buy real estate in Las Vegas?  Of course you do!  You just need to know the facts.

The media may tell you that Las Vegas has been hit hard and prices are very low, and they would be right. What they aren’t telling you is that the best properties are moving fast.

So here’s the skinny on the actual numbers:

  • A total of 25,114 homes are ON THE MARKET as of this writing.  This includes single family homes, condos and townhouses in Las Vegas, Henderson and Boulder City.  Properties in Pahrump, Laughlin and Mesquite don’t count because I don’t normally drive my buyers THAT far out of Las Vegas to find a property.  If you are looking for a home in Las Vegas, you aren’t considering these other areas.
  • Of those 25,114 homes, 13,120 are CONTINGENT OR PENDING – meaning they are UNDER CONTRACT and both buyers and sellers have come to terms, it’s just paperwork and time now.  As a real estate agent, I want you to be able to buy a home, so I’m not going to show them to you and you aren’t going to write backup offers on these.  It’s a waste of time for all concerned.  What I’ll do is create a ‘search’ for you in the system and if one of these properties doesn’t actually sell and becomes available again, THEN we’ll consider it.  Good idea right?

Now do the math. 25,114 minus 13,120 leaves us with …. (drum roll please) 11,994 properties.

In the last 12 months, we’ve SOLD 45,792 homes.  Looking at the last six months, we’ve SOLD 23,614 homes.  In the last three months, 11,333 Las Vegas homes have SOLD.

There is a formula we use called ‘absorption rate’ that tells us how long it takes us sell the current inventory, if no new homes were to come on the market at all.

Depending on the length of time it takes to sell them all, that is how we determine whether it’s a Buyer’s Market, Seller’s Market, or pretty much neutral.  If it takes six months to absorb the entire inventory, then it is pretty even and neutral.  If it takes longer, then it is a Buyer’s Market because homes stay on the market longer, meaning sellers will probably consider taking less than asking price.  If it takes less than six months, it becomes a Seller’s Market, and sellers get the upper hand.  Does this make sense? (if not, email or call me and I’ll explain further)

Now, based on the above numbers, and considering ALL TYPES OF PROPERTIES – meaning single family, condos and townhomes, regardless of whether or not they are bank-owned homes, short sales, flips (that’s another blog) or traditional Las Vegas homes for sale, it will take about THREE MONTHS to sell all the current inventory.

Here’s how we come up with that number – 11,994 homes on the market right now and we sold 11,333 in the last three months.  Pretty easy math I’d say. Three months and all the inventory is GONE.

Guess who is in charge of the market?  Yes, Mr. & Mrs Seller, it’s YOU!

Does that mean you shouldn’t buy now?   Not a chance!  It means your Las Vegas real estate agent needs to stay on top of the market so that you can look at homes as soon as they come on the market and get your offer in fast.

Just be prepared to pay current list price or close.  It’s still a heck of a deal.

Visit my Las Vegas real estate site and search for the perfect home