February’s new-home closings fell to their lowest point this decade as prices tumbled five percent from Januar - but the Las Vegas housing market had a bit of a silver lining as housing starts reached their highest level since August, according to SalesTraq.
There were 1,441 new-home closings in February, a drop of nearly 50 percent from February 2006 and a decline of 30 percent from January’s 2,052, according to SalesTraq, which compiles housing statistics. That’s the lowest monthly total this decade.
In the resale market, the 2,594 homes sold in February was the lowest total since April 2001.
“I think it’s always disappointing to see dismal results, and let’s face it, those sales figures are disappointing,” said Las Vegas housing analyst/Nevada mortgage expert Steve Bottfeld, executive vice president of Marketing Solutions. “I would say they are disappointing numbers because the market is showing signs of recovery.”
Bottfeld noted that home closing figures are a look at the past because it can take 60 to 180 days to close. He added that cold weather in December and January may have kept many potential home purchase loan applicants from looking.
Traffic through model homes has been stable since February, according to Las Vegas housing analyst Dennis Smith, the president of Home Builders Research. But it’s still off 26.5 percent from the first two months of 2006.
None of the new numbers reflect the recent events in the subprime lending market in which it’s tougher for people with lower credit scores to obtain Nevada mortgages. In addition, for the second consecutive month, Nevada ranked number-one in the country in the number of cases entering some stage of foreclosure. That should bring even more homes onto the market, but Smith said it won’t pose a problem.
“I believe that investor demand for owning property in Las Vegas and pent-up consumer demand will absorb the homes going through foreclosure in a relatively short period of time,” Smith said. “Consumers will buy foreclosed homes if they perceive a steal or deal.”
With the decline in home sales, prices came down in February with the median price at $321,555, a drop of 5 percent from January’s price of $339,253. The new-home price is the lowest since March 2006 when it was nearly $320,000.
When mid-rise, high-rise and condo conversions are removed from the equation, the statistics show prices for new single-family homes and condos have dropped 3.4 percent over February 2006 to $331,088, SalesTraq reported.
The home prices don’t include the incentives that some builders are offering and have yet to disappear. Meritage Homes recently had a 48-hour weekend sale in which it was offering $60,000 in incentives for homes in Mountain’s Edge to those considering mortgage loans there.
“Home builders have attacked the inventory of unsold new homes,” Smith said. “The selling incentives they have offered have been working. That is the difference with the resale (market). Homeowners are not prepared to slash the bottom line to whatever it takes to sell their home. That is why it will take so much longer to bring the inventory of active listings down to a more normal market level.”
The bright spot in the new-home market: Builders are taking out more permits than they were at the end of 2006. There were 1,005 permits issued in February. Although that’s 61 percent lower than the 2,548 permits issued in February 2006, it is the highest total since 1,764 permits were issued in August.
With about a one-month supply of new homes and the demand for new homes outpacing supply over the last six months by more than 9,000, that should begin to cut in the resale inventory, Bottfeld said.
Smith remains optimistic about the long-term prospects for the housing market and suggested Nevada home prices will go higher despite the slump, he said.
The key is the job growth, especially with states like Michigan losing manufacturing jobs and people looking to relocate to places like Las Vegas, Smith said.
“It’s that simple,” Smith said. “As long as we can show job growth, people from other parts will seek those jobs, and require housing. Our housing market has a much better outlook than most others around the country.”
Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun.
Posted by Jed Moss on Apr 01 2007 under Nevada
While Southern Nevada loan officers believe the local housing market will improve in the coming months, no one is sure what’s going to happen to the subprime lending industry.
Subprime loans are typically made to borrowers with less-than-perfect credit or those without proper documentation. It’s a big part of business for Southern Nevada mortgage companies that deal with many customers who don’t qualify for prime (or A-plus) paper. These include people who don’t have traditional jobs, immigrants and even some who make their living from casinos.
Jose Sanchez (pictured) is a loan officer at American Natinwide Mortgage located at 720 South Jones. “Money is tight right now,” he says.
“For us, B paper (bad credit home loans) are more than 50 percent,” added Sanchez. “A lot of our customers are Hispanic and many of them don’t have the proper documentation for A-paper loans. They’re hard workers and they pay their bills - so it’s tough.”
And it’s getting tougher. In recent weeks, the nation’s subprime lending industry has imploded, as rising home values and interest rates have driven up monthly mortgage payments on adjustable loans, as well as defaults and foreclosures.
Accredited Home Lenders Holding Co. and New Century Financial are among subprime lenders teetering on the edge of bankruptcy. Fremont General Corp. has told “significant numbers” of its 2,400 home loan employees to expect pink slips in two months. Ameriquest Mortgage, which also plans layoffs, announced March 19 its name was coming off the Texas Rangers’ baseball stadium in Arlington.
NO DOOMSDAY ON HORIZON
Still, mortgage experts in the Nevada housing market believe the crisis will abate. “There are still many unanswered questions but I don’t have a doomsday sense,” said Reno-based mortgage lender Paul Havas, former president of the Northern Nevada Mortgage Brokers Association.
Havas believes other companies will snap up beleaguered subprime lenders at bargain basement rates, and eventually conduct business as usual … or almost as usual. “We’re going to see some consolidations but there will probably be some changes,” he said. “I imagine the new companies will be more careful and take out some of the risk.”
One who agrees is Bill Ochs, owner of Las Vegas-based Nevada Mortgage, a mortgage company that has been in operation for nearly 30 years. “These companies that are in trouble will probably become absorbed by larger entities but there will be changes down the road,” said Ochs, who believes greed and escalating real estate values have contributed to the problem.
“As houses went up in value, there were a lot of deals made with no money down,” he continued. “There were speculators who said, ‘I’m going to occupy the house’ — wink, wink — and the plan was to flip the house, and make a profit and move on. It’s fine until the market flattens and the investor can’t make the payment.”
Those who are hurt are the honest subprime customers. “Money is tight right now,” Sanchez said. “I have a Latino couple who have saved 5 percent to buy a $200,000 house and their FICO (credit) score is 600. I don’t know if they’re going to qualify. They want to hear assurances and all we can tell them is, ‘We are going to try.’ Do you know how long it took this family to save 10 grand?”
SOURCE: Las Vegas Business Press
Posted by Jed Moss on Mar 28 2007 under Nevada
A Nevada Appeal editorial observes that the recent drop in Nevada mortgage demand and the slowdown in the housing market’s prices has done what growth legislation only hoped to accomplish.
The Sustainable Growth Initiative in Douglas County was designed to limit the Nevada housing market’s growth to perceived healthy levels.
But it was only a matter of time, the newspaper opines, before skyrocketing home prices and increased inventory conspired to bring home sales back down to a screeching halt.
That’s the way it goes in Nevada, big boom followed by a bust.
As large a pool of potential home mortgage applicants as our neighbor to the west (California) is, occasionally folks figure it’s better to stand pat than to gamble on moving to Nevada.
It surprises the Appeal editorial board that there are those who believe SGI is responsible for the present slow-down.
The initiative has never been law in Douglas County, and frankly, anyone looking at the regional real estate market saw the same thing happening in places where no growth controls were in place, such as Reno and the Las Vegas housing market.
The market is already starting to correct itself, with housing prices dropping slightly as fewer and fewer buyers show up. Douglas County leaders remarked on the level of ill will over growth shown by those attending their meeting on Thursday.
While there has long been housing uncertainty in this part of Nevada and bitter debate over growth, perhaps the recent slowdown is feeding the rancor.
Approving any sort of growth cap is going to be just the opening shot in a long battle to determine the future of Douglas County and if the recent past is any example, the battle will be brutal.
SOURCE: Nevada Appeal
Posted by Richard Barber on Mar 09 2007 under Nevada
Home appreciation in Las Vegas has slowed dramatically from the torrid pace of two years ago, even turning negative in some areas of the valley last year, a local housing market analyst said.
Median existing home prices increased 3.6 percent valleywide to $285,000 in 2006, based on more than 90,000 existing home closings recorded by the Clark County assessor’s office in 2005 and 2006, Larry Murphy of Las Vegas-based SalesTraq reported.
Murphy’s breakdown of 52 ZIP codes in the Las Vegas Valley showed 35 areas with positive appreciation, seven unchanged and 10 on the negative side. These figures would affect anyone applying for a Nevada mortgage.
“These results fly in the face of the doomsday sayers who only a year ago were predicting that property values in Las Vegas would drop precipitously when the real estate bubble burst in Las Vegas,” Murphy said. “It also flies in the face of local analysts who have been declaring all year long that property values are dropping. The fact is that following the boom of 2004 when we saw appreciation rates of 40 percent, the only thing that has dropped has been the appreciation rate itself.”
Murphy has had to make adjustments over five years of reporting appreciation by ZIP code, “tweaking” his calculations to account for factors that can skew the numbers. For example, he separated luxury high-rise condominium market sales in ZIP code 89109, which includes the resort corridor east of the Strip, from single-family home sales to come up with 5 percent appreciation for 2006.
Murphy said potential home purchase loan applicants and/or current owners need to keep in mind when they look at the ZIP code appreciation map that a two percent increase in 89134, for example, does not necessarily mean that their specific home appreciated by two percent. It means that half the homes in 89134 appreciated by more than two percent and half the homes appreciated by less than twp percent.
Click here to continue reading this article from The Review-Journal.
Posted by Jed Moss on Mar 06 2007 under Nevada
The Las Vegas Business Press tells the story of Tony Antoine, a seller who very much looked forward to moving into a $400,000 Palm Beach County, Fla., home.
The Florida home seller who sold him the place was even more relieved. His home was finally purchased after nearly six months on the market.
The next day, Antoine could hardly believe the news. His mortgage lender, Silver State Mortgage of Las Vegas, had gone belly up.
Although the papers were signed the day before and the money ostensibly was in the title company’s account, Antoine couldn’t pay the seller his money and was stuck in limbo.
“My loan officer worked very, very hard on that loan. It took almost 30 days to accomplish,” said Antoine, a Haitian-born businessman, and himself a former mortgage broker.
“The money is in his (title company) account. But he is afraid Silver State will file for bankruptcy and the trustees will ask for the money back.”
The writing was on the wall for months.
Employees at the mortgage company’s office in Addison, Texas (the division that packaged and sold loans to investors through securities traders), were seeing second mortgage loans being sold for losses of millions. Employees then warned executives that things would have to change - and fast - but were rebuffed.
Last month, Silver State CFO Tom Edington quickly resigned, citing personal reasons. Again, employees were told there was no need to worry.
“We were told everything’s fine. That the owners have deep pockets,” said one, a five-year veteran of the Nevada mortgage business, who is 12 weeks pregnant and now finds herself out of a job. Between 800-1,000 employees worked for Silver State nationwide.
The day before Silver State closed, pricing-support unit employees finally got the confirmation in a company-wide e-mail that the end was near, despite management’s calm denials throughout the previous weeks.
Employees were assured that everything possible was being done to make any transition as easy as possible. Silver State closed the following day. Employees have not received any further communication from the company, not even their final paychecks or payment for accrued vacation time.
“I heard the owners were told not to come to the office, that they received death threats,” onr Texas employee said.
Silver State joins a host of high-flying companies - 22 have gone under since December - that took advantage of expansion in the bad credit home loan market in 2001 to offer mortgage to a wide variety of borrowers who would be denied credits in less-robust economic times.
Scott Bice, commissioner of Nevada’s Mortgage Division, which is currently in the process of investigating Silver State’s collapse, says he remembers seeing outrageous home mortgage loans being made by alternative lending companies.
One borrower, he says, took out a $1 million loan with no down payment and received the money despite having a very low credit score.
“Because of the (high) default rates, the market has changed,” Bice said. “A home loan you could get six months ago are no longer available. The credit market has tightened up.”
Silver State not only made such loans, it also served as a clearing house for other mortgage brokers. The company packaged the loans and sold them to investors as mortgage-backed securities.
At one point, the company held more than $500 million in home loans. But when the housing market began to slow (housing starts in January were the lowest recorded in more than a decade), borrowers started defaulting and investors forced Silver State to buy back the loans, which then could not be resold without significant losses.
Follow the link to continue reading this article by the Las Vegas Business Press …
Posted by Richard Barber on Feb 27 2007 under Nevada
A slump in the Nevada housing market?
Not according to some local Realtors, who told The North Lake Tahoe Bonanza last week that any downturn has been greatly exaggerated.
Since the same homes are not sold every year, the average and median home prices don’t accurately reflect a change in property values, one Realtor said.
“The 2007 market has a good chance to do very well because 2006 was a very tough year - people just did not have confidence and did not make a move,” said Dan Schwartz of Coldwell Banker Incline Village Realty and Tanager. “I believe we’ve hit rock bottom judging from the activity we’ve had since the first of the year.”Now that prices are said to be at their lowest, first-time home buyers in the region are expected to move before they begin to rise again.
“Last year, we had a combination of a slow market and a buyer’s market,” said Tom Bruno of Tanager Realty. “With the feeling that prices were dropping, many Realtors didn’t know how to get buyers to buy and sellers to sell.”
Though the “official average” price was up in 2006, Bruno, who has worked in the area for 36 years, said he had a feeling that prices were actually dropping slightly.
With home prices reaching a low point, Bruno also expects this year’s market to experience a surge.
“Days-on-market will start to go down, while prices will either go down for the next couple months or remain stable,” Bruno said. “Prices can be expected to start rising by the end of summer due to increased activity.”
Others have noticed signs of life already this year after a disappointing 2006. Nevada mortgage activity is starting to pick up once more.
“I definitely feel that there’s been a marked improvement since the beginning of the year,” said Ken Cash, mortgage broker/owner of Century 21 Mountain Properties.
Cash, who has worked in Incline Village for 16 years, said the media often influences the public’s attitude. He said more positive predictions in the news should encourage buyers and sellers.
Posted by Jed Moss on Jan 31 2007 under Nevada
The Carson City, Nev., housing market has worked against Donaldo Palaroan.
According to the Nevada Appeal, he bought his Silver Oak subdivision home in 2004 - when every other California refugee was trying to get in, which fired up the market. Palaroan tried to sell in 2006 - the year the bubble burst.
Last year, the Nevada housing market saw the fewest amount of homes sold in 18 years, but at the same time, the Silver State saw the largest average sale prices ever recorded.
“The worst is over,” said City Assessor Dave Dawley. “I don’t see home prices going down more, but with more houses on the market. I think they are going to be on the market for a while.”
That’s little comfort to Palaroan, a 32-year-old civil engineer who moved from a San Diego apartment so that he could afford a home for his growing family. He and his wife, Veronica, had wanted to upgrade to a bigger home following the birth of their second child, Camryn.
Now it’s a dream deferred.
“We backed out of the idea of moving into another home until this one sells,” he said.
They’ve had their Taylor Way home listed on a for sale by owner site for $464,900, which they’ve reduced by $10,000 since October. They bought it for $347,000 in 2004; prior to that it was flipped by two other owners within four years, according to assessor records.
Carson City’s housing market peaked in 2002, with the sale of 1,181 single-family homes, the most ever recorded by the city, at an average cost of $199,000 - a reasonable Nevada mortgage amount, especially in comparison to neighboring California.
Housing experts say the rush to buy property was fueled by Californians with deep pockets eyeing fat square footage and low taxes. Nevada natives competed with these relocating buyers and speculators, who used creative home mortgage loans and all-time-low interest rates to buy above their means.
Speculators looking to fix up and flip these properties before adjustable-rate mortgages or interest-only mortgage loans increased in late 2005 were searching for buyers. Property values continued to decrease in 2006, what many in the real estate business call “a really bad year.”
“The market was tenuous,” said Debra Nevins, broker/owner of Sierra Valley Mortgage. “By then, 646 houses only sold because home buyers were so cautious about purchasing in an unstable market.”
Buyers were uncertain where prices would go - so they waited.
The number of homes sold in Carson City decreased by 31 percent from 2005 to 2006. It decreased 45 percent from 2002, the height of the boom, to 2006.
Meanwhile, prices eclipsed the salaries of many locals. From 2003 to 2004, the average prices increased 24 percent, from $227,935 to $283,165. Average prices increased another 20 percent from 2004 to 2005, $283,165 to $339,800.
John Vettel, broker/associate at Realty Executives, said 2-6 percent is the annual sales increase that should be expected in a normal market.
“I think (Nevada home prices) are pretty close to bottoming out,” he said. “Everybody knows a sustained rate like that can’t continue. Already we’ve had indications that the market is receding.”
Houses that sold were priced reasonably, Vettel said. The average price in 2006 of $345,200 may seem high, but there were many properties priced much higher than that, and those are the ones that languished on the market.
Posted by Richard Barber on Jan 29 2007 under Nevada
Three years ago, the northern Nevada housing market experienced a boom that carried through until about six months ago, when it stabilized and left some homeowners in a difficult financial situation.
Sonny Lopez, a local loan officer, tells the Reno Gazette-Journal that he noticed an increase in the amount of foreclosures in the Reno/Sparks area in 2005. He believes the increase in foreclosures in this area is due to “the cost of living going up and the retirement not matching it.” he said, noting that the greatest group affected includes those in their 50s and 60s.
At this point, an investor comes in and offers the struggling homeowner money to move and pays off their Nevada mortgage, which is the remaining amount owed in the original purchase price of the house.
These investors end up buying the property for a lower rate than the market value and turn around and sell it for more. Although Churchill County does not experience this high number of foreclosures, Lopez advises struggling owners to refinance before falling into debt.
In essence, mortgage refinancing involves paying off an existing home loan to obtain a better interest rate or to spread out the duration of the mortgage loan, resulting in lower monthly payments.
Refinancing also allows borrowers to tap their home equity, or money they have paid on the principal of their home, to pay off other debts, such as credit cards. There are fees involved, and this is why loan officer Jane Capurro advises seeking out a reputable and licensed mortgage broker.
“If you’re having problems, you don’t want to get yourself backed into a corner,” said Capurro. “What you want to do is to work with a mortgage broker who you can be open and honest with,” she said.
Capurro advises against interest-only mortgage loans, as does June Young, president and director of Young & Associates Mortgage Services. She describes interest-only loans as a big, dangerous bet.
This process is a gamble because if the property value did not appreciate over that period of time, the homeowner cannot refinance and may be stuck paying more than they can afford. When searching for a fixed-rate loan in today’s market, Capurro identifies good fixed interest rates as falling between 6.0125-6.25 percent.
For some owners who need financial assistance, the best option may be home equity loans, which are like a second mortgage. These allow the owner to borrow against the amount they have paid toward the principal on their home loan combined with its appreciated value, providing the borrower access to these funds while placing their home as collateral.
The Nevada economy will see slower-than-usual growth, a continued housing market slowdown, and more increases in the cost of living, according to In Business Las Vegas.
But the portrait isn’t entirely glum, according to UNLV’s Keith Schwer, a local economist who believes that since growth will be higher here than throughout the nation, and the real estate market will pull through the slump in only a year, the region will emerge strong.
Schwer, director of the Center for Business and Economic Research at UNLV, said 2007 and 2008 would be good years for Nevada mortgage activity, despite a residential real estate sales slump.
He said 40 percent fewer housing permits would be approved in 2007, as a market glutted with inventory corrects itself. About 20,000 units will be approved in 2007, about 10,000 fewer than in 2006.
But the cost of home mortgage loans remains low, and the region’s economy should spark demand. By mid-2008, excess inventory will have been scooped up by residents and investors and more permits will be approved.
Schwer said Nevada home prices slowed down during the second half of 2006 to a rate of 1,400 permits per month. But the average resale home sits on the Las Vegas market for 55 days, compared to six months in Atlanta.
Industry experts say at 90 days sellers and the industry at large has cause to worry, according to Schwer. Before the downturn, 16 percent of homes purchased in the state were considered investment properties.
Schwer said the national housing market would be similar to the situation in Nevada - a bit slower than 2005 and the first half of 2006, but in the midst of a slump rather than a crash.
“Perhaps this market will be good for us, because we will be re-evaluating the risk situation,” he said.
Nationally, energy prices will affect the economy, too. Other variables in Nevada’s economy are factors out of the state’s control, such as terrorism or a national pandemic, which could affect tourism and travel.
Schwer said there is much to be learned from the last six years of data from Nevada. The bottom line is that the current real estate and economic conditions are strong, with good job growth prevailing throughout the state and plenty of first-time home buyers interested in the market.
Schwer said Nevada’s population growth will also continue in 2007-2008, with a 4 percent growth rate compared to the U.S. rate of 1 percent. In Clark County, growth should be at least that rapid.
Posted by Richard Barber on Jan 13 2007 under Nevada
According to The Nevada Appeal, the city’s new housing program was designed for people like Brian Reichle.
Although he makes “a decent living” at $51,000 a year working as an accountant for Marriott, he still needs financial help to capture the American dream. And that’s where the city housing department may come in -with a mortgage loans that help open doors.
The Texas native, who moved here six months ago, wants to own a home at Tahoe but feels the prices are out of reach. His scenario is common.
“Everything is so expensive,” Reichle said, adding he’s somewhat surprised by the rates. “I’m kind of, and I’m kind of not. It is Tahoe.”
Like a lot of locals, Reichle has no money saved and no known prospects with which to combine incomes. He explained one could buy “a good house” elsewhere for $200,000. That’s unheard of at Lake Tahoe. A few years ago, the area surpassed a telling threshold when no single family homes were listed for that amount.
Instead, condominiums would go such a figure.
With that, the city realized it needed to add tools to its toolbox to keep its citizens at the lake. Dovetailing off the first-time homebuyer program, the city approved last June another version that would appeal to the moderate income level of resident. And Reichle fits the bill.
South Lake Tahoe’s moderate income housing program will loan up to $100,000 to those who qualify at a 2 percent home loan rate with no maximum purchase price required.
For individuals of a household, one may qualify under a $55,000 salary - which is up to 120 percent of the area median income of $65,400. The area is defined as Placer and El Dorado counties as well as the city, the latter being about half the area’s median.
For a family of four, the household income may bring in up to $78,500.
Once qualified, the home buying prospect must chip in 10 percent of the city’s loan in order to qualify for a Nevada mortgage.
“And that can be a gift,” said Cathy Kope, who runs the city housing programs. She implied that some people get an instant chunk through inheritance or parental goodwill.
“We’ve been hearing for quite a while now the middle-income families are driven out of town,” she said, citing declining enrollment at schools. “That’s driving this program.”
Kope would like to see more interest generated in the program and admitted it requires more paperwork.
“But it’s a good instrument,” she said.
Re/Max real estate agent Cheryl Murakami, who also serves the community as the South Tahoe Board of Realtors president, would like to support the program because she’s noticed a growing market for those seeking a nicer home for the same money a house a few years ago could have secured.
“People have started looking in the moderate income housing category because houses have moderated somewhat,” she said. “The quality of the homes have gone up. A fixer upper is now one that’s been remodeled.”
She defined a $400,000 home as a step up from the usual less-than-flattering offerings the money would have bought five years ago. But she did point out that the South Shore’s median home price is still lower than the state.
The median sales price for a single family home is $476,000 last month - $2,000 more than last November’s and $11,000 more for October’s. The median haven’t fluctuated much between 2005 and 2006.
Posted by Jed Moss on Jan 08 2007 under Nevada
