Land in the Las Vegas valley used to be a piping-hot commodity a few years ago, when the growth here easily topped all the other metropolitan areas in the country. The thirst for tracts of sand was such that prices zoomed higher year after year to reach a record $939,400 per acre - that is for land outside the Strip - in the fourth quarter of 2007, according to Applied Analysis, a local research shop. Housing prices closely followed the frenzied upward trend, median averages casually blowing past benchmarks that few real estate observers thought would be breached so soon.
That was then. New realities have replaced the go-go years.
Just like in residential real estate in Las Vegas, land owners by the dozen are being foreclosed on by banks. Applied Analysis reports that in the first quarter 74.4% of dirt transactions were tied to bank foreclosures. It's actually a touch higher from the fourth quarter of 2009 when the number stood at 65.6%. It's getting worse despite some tentative signs that the overall housing market in Southern Nevada is stabilizing.
Mortgage and land loan foreclosures keep terribly close company with falling prices.Las Vegas homes have given back as much as 60% of their values since the real estate market's peak. Land prices have done even worse than that. In the first quarter an acre of land could be purchased for a mere $182,441, a thoroughly steep decline of some 80% from the $939,400 it brought about three years ago, says Applied Analysis. Banks are not only struggling with delinquent mortgages but also with defaulting land loans. Scores of underwater homeowners in Southern Nevada are walking away from their home loans and now underwater land owners are doing the same thing. What is this world coming to?
However, a great opportunity awaits those who have some cash on hand and also posses a healthy dose of patience. Las Vegas housing market is being reset, starting with the price of land. It's going back to the days when average annual income and median home price were more or less in alignment, making for a stable residential real estate market. New home construction that will use today's land prices can be much more competitive with the REO- and short sale-infested existing home sale sector that has easily dominated the market in Las Vegas over the last few years because of a vast price disparity. Housing demand remains quite weak in Las Vegas despite attractive mortgage rates and decent inventory, but when the economy picks up those who bought low-priced land today will have something to crow about.