A lot of time and money is spent annually in foreseeing the future in a variety of areas. From the familiar to the strange. As expected, the mortgage and real estate markets have seen their fair share of this. Some of these studies are more accurate than others, after they are later independently checked for accuracy. But overall, the results of these novel exercises appear to be off the mark, sometimes way off.
In any case, here is the latest for Las Vegas. According to a new housing market study completed by the Concord Group, Southern Nevada can expect its new single-family home sector to pick up in the first quarter of 2012. That comes to about three years from now. This national projection relies on analysis of unsold inventory, anticipated shifts in the employment picture and demand, rather decent criteria.
One key component, however, ought to be included, and that is the foreclosure category. Currently bank REOs, or real estate owned, clearly dominate sales at the Las Vegas housing market. Banks are now unloading property at fire-sale prices and first-time buyers and savvy investors are all over them. The average existing home value is today at $125,000 while for a new home it is at $226,000, says SalesTraq. That is a huge gap and leaves the builder product at a distinct disadvantage.
With that in mind, foreclosures seem to be the single most important factor determining the Las Vegas market's future performance for new homes. Once the REO segment is whittled down to somewhere near the historical norm, then the new home front will start recovering, when it'll be in a much better position to compete in price.
So, when will that happen? Good question. Could be that the Concord Group is right.