BluefoxToday blog : Southern Nevada resales stellar, new home sales lacking

Southern Nevada resales stellar, new home sales lacking

The Las Vegas real estate market has turned into a rather disjointed spectacle. As the July stats show, compiled by local housing specialist SalesTraq, existing home sales continued on its recent accelerating pace by recording 3,173 closed transactions in July, which is a nice 56.5% jump from July of last year. What's important to keep in mind, however, is that around 60% of these sales were foreclosure-related. Banks have been pricing their REOs, real estate owned, with passion just to get rid of the non-performing inventory and that is one large reason why resales are doing so well now.

On the other hand, new home sales are heading in the opposite direction. In July there were only 731 units closed, reports SalesTraq. It's a bone-chilling 57.5% drop from the year before. Why such an inconsistency?

A lot is explained by how each category's price levels have shaped up in the last several months. Influenced heavily by bank-owned homes, the median sales price at the resale segment leveled at $210,000 in July, whereas the median price for new homes comes in at $262,185. It represents over a $50,000 advantage to the existing home category. This is not small change. The economy being as weak as it is, the buyer is more conscious about value than ever and will undoubtedly run for the existing property so long as he gets a nice house at a rock-bottom price. And he is getting it right now.

This trend is probably going to persist another few months until a point is reached where foreclosures start losing the current dominant share of closings.

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Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 4 commentsEsko Kiuru • August 21 2008 10:14PM

Comments

As a Builder and a Realtor for over 30 years, I think you are right. The reason is that the discounted foreclosures are way under the market curve. A builder can not put in the land and structure and overhead and make a profit. In markets like this building comes to close to a trickle. It is hard in heavy foreclosure markets to compete with high cost building against a bank which wants to unload. It is a builder's hope to not loose money, but to make a profit. This market is not granting builders profits.

 

Richard

Posted by Richard Stabile, Bergen County New Homes Builder Realtor (Re/Max Real Estate Limited) about 10 years ago

Richard,

Right now new home builders cannot compete here with these bank-owned resales.

Posted by Esko Kiuru about 10 years ago

I have sold quite a bit of new construction this year.  People get sick of the "bidding" process to buy REO and decide to forgo the special warranty deed and get something brand new, even if it costs just a bit more!

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) about 10 years ago

Renee,

That REO purchase dance can get old real soon.

Posted by Esko Kiuru about 10 years ago

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