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.