Forrest’s Blog

Again you really have to be motivated by this month’s resale closing stats for the Greater Las Vegas real estate market!  It is clear that  we are moving a great deal of bank owned property off the market.  This month sixty-five percent (65%) of all residential closings were REO properties; seventy-two percent (72%) if you include short sale closings.  The number of available listings is holding while the closings are very nicely up again and the inventory is taking about the same time to sell.

Great, so let’s dive right into the positive news and numbers this month . . . but first download and take a look at: June 2008 Resale Market Snapshot.

Increasingly again, more and more properties are coming on the market “in the selling zone” and selling in a relative short timeframe while those “out of the selling zone” continue to age in MLS without selling. Approximately 36% of June 2008 closings (those in the selling zone at listing) were under 90 days on the market with an average of 60 Days on Market. That is up from 25% based on March closings. The remaining 64% suffered an average of 230 Days on Market (that’s nearly 8 months … definitely out of the selling zone).

Listing prices have now dropped 19.5% since September 2007 while closed sales are up 149% since their low in December.  June closed sales represent another 5% improvement over May; more importantly, this is the only the second month since August 2006 that we have witnessed more than 2000 single family home closings. Closed sales prices dropped another 5% in the past month; that means that closed sales prices continue to decline faster than listing prices . At the same time overall inventory generally held constant. The average Cumulative Days on Market is still 169 days despite the fact that many overpriced listings remain in inventory.

June closings mays still set the tone for the balance of 2008.  This is the first time since 2006 that June closings were above the May closings!  So at the very least June has given this market some momentum going into the summer months! You really have to love that!

But even with all the good news, let’s stay Focused on Price Reductions! Anyone “out of the selling zone” resisting a price change should view the following video: Crazy About Our Over Priced House.

And please take time to vote in the upcoming GLVAR elections beginning July 10th.  I am running for one of the Director vacancies and would really appreciate your vote!

2000 SFR Closings - First time since August 2006!

You just have to be motivated by this month’s resale closing stats for the Greater Las Vegas real estate market!  There are several excellent signs this month that the sluggish Las Vegas market is poised for a nice rebound. The number of available listings is down while the closings are very nicely up and the inventory is taking less time to sell. You’ve got to love that!

Great, so let’s dive right into the positive news and numbers this month . . . but first download and take a look at: May 2008 Resale Market Snapshot.

Increasingly, more and more properties are coming on the market “in the selling zone” and selling in a relative short timeframe while those “out of the selling zone” continue to age in MLS without selling. Approximately 35% of May 2008 closings (those in the selling zone at listing) were under 90 days on the market with an average of 60 Days on Market. That is up from 25% based on March closings. The remaining 65% suffered an average of 230 Days on Market (that’s nearly 8 months … definitely out of the selling zone).

Listing prices have now dropped over 16.6% since September 2007 while closed sales are up over 137% since their low in December.  May closed sales represent another 17% improvement over April; more importantly, this is the first month since August 2006 that we have witnessed more than 2000 single family home closings. Closed sales prices stabilzed and curtailed their decline and offer some hope that this market is genuinely poised for some more good months ahead. At the same time overall inventory continues to decline. The average Cumulative Days on Market has dipped to 170 days despite the fact that many overpriced listings remain in inventory.

This month could set the tone for the balance of 2008.  Just a small amount of momentum from June closings could set the stage for a fourth quarter that has a legitimate chance of being better than the last quarter of 2006!  At least that is the optimist in me!

But even with all the good news, let’s stay Focused on Price Reductions! Anyone “out of the selling zone” resisting a price change should view the following video: Crazy About Our Over Priced House

Are you a Winner at a Losing Game? 

You may be if you continue to take listings that you love, but at listing prices that will not love you in return.  Rascal Flatts certainly didn’t have over-priced listings in mind when releasing “Winner at a Losing Game”, but the lyrics sure capture the pain of not “dancing to the same beat”.  Seventy percent of April’s closings finally sold after causing seller’s and listing agents many months of time and money to get the desired results.

However, there is even more positive news in the numbers this month . . . but let’s first download and take a look at: April 2008 Resale Market Snapshot.

There are now properties coming on the market “in the selling zone” that are selling in a relative short timeframe while those “out of the selling zone” are just aging in MLS without selling.  Approximately 30% of April closings (those in the selling zone at listing) were under 90 days on the market with an average of 59 Days on Market.  That is up from 25% based on March closings. The remaining 70% suffered an average of 224 Days on Market (that’s nearly 8 months … definitely out of the selling zone).

Listing prices have now dropped over 12.3% in the past six months while closed sales are up over 103% since their low in December. April closed sales represent a 21% improvement over March; more importantly, this is the first month in 2008 that closing are up over the same month in 2007. Closed sales prices continue to decline bringing more buyers off the sidelines and into the market. At the same time overall inventory continues to decline. The average Cumulative Days on Market is dipped to 174 days while too many listings remain woefully overpriced.

Okay, let’s look at some more good news: Dowload the Under Contract Chart. This chart illustrates actual contract written on a monthly basis since January 2007.  The actual number are less important that the trend - which is showing a steep increase and is a leading indicator of future closings.

Stay Focused on  Price Reductions! Anyone “out of the selling zone” resisting a price change should view the following video: Crazy About Our Over Priced House

Remember the movie “Top Gun” with Tom Cruise?  

Maverick (Tom Cruise) is a real hot shot pilot flying in NO FEAR mode until he has a spin-out that kills his partner.  Most women will sooner remember that this is about the time Maverick “crashes and burns” in his attempts to have a relationship with Kelly McGillis.

That created a confidence problem that was difficult to overcome and he simply would not engage . . . at least until the script called for him to.  It’s fair to say that the media and all of the bad news from depressed home sales to mortgage fraud to foreclosures have created a similar confidence problem with the buying public.  Until the last few weeks very few have been willing to re-engage in the purchase of real estate.  This month’s numbers would suggest that more are engaging and closing.  Buyers may actually “Bring Back That Loving Feeling” to the Las Vegas Market once again.

There is some very positive news in the numbers this month . . . but let’s first download and take a look at:  March 2008 Resale Market Snapshot.

You can see from the attached pdf chart that the absorption rate has finally improved.  At 9% for March, that is nearly double the absorption rate of October and November 2007.  However, the market is now bi-modal, that is there is one thing going on with the properties that are selling and something quite different going on with those that aren’t.  There are now properties coming on the market “in the selling zone” that are selling in a relative short timeframe while those “out of the selling zone” are just aging in MLS without selling.  That’s why both the absorption rate and the Cumulative Days on Market are both up at the same time.  Let’s put it another way.  Approximately 25% of March closings (those in the selling zone at listing) were under 90 days on the market with an average of 57 Days on Market.  The remaining 75% suffered an average of 232 Days on Market (that’s nearly 8 months … definitely out of the selling zone).

Listing prices have now dropped over 11% in the past six months while closed sales are up over 67% since their low in December.  March closed sales represent a 38% improvement over February. Closed sales prices continue to decline bringing more buyers off the sidelines and into the market. At the same time overall inventory continues to decline. The average Cumulative Days on Market is now up around 186 days while too many listings remain woefully overpriced. 

We must remain focused on getting those critical Price Reductions! Anyone “out of the selling zone” resisting a price change should view the following video: Crazy About Our Over Priced House

Anyone who has kept up with my monthly Las Vegas Market updates realize that we remain in a maket with seriously over-priced residential resale homes.  Most sellers still do NOT understand that they must be willing to compete with bank-owned REO listing in their own neighborhood as well as comparable homes in subdivisions all over the Greater Las Vegas area.

So take this test on one of you own listings . . . just in its own subdivision.  Create a search on all listings in the subdivision  . . . one story, two story, the whole nine yards.  Then add the listing price per square foot field (LP/SqFt) to your results grid. [You'll find the column manager at the top left of the screen; just click on the 12 dots next to the name of the grid.]  Now sort on the LP/SqFt column in asceding order.  Where is your listing?  Remember only six (6) out of 100 listings are selling each month.  Therefore, if there are 100 listings in the subdivision . . . your’s better be in the top 6 to really be in the selling zone.

Now let’s say that you have a listing that is out of the selling zone . . . and remarkably it receives an offer . . . albeit a low one.  The first “knee jerk” reaction of many sellers will be to reject the offer because they are offended with the offering price.  Why?  Because they are still focused on exaggerated prices from the past.  But perhaps we can offer the seller another perspective on pricing! 

Maybe it is time to educate some of these sellers by looking at their original purchase and sale in a manner similar to what an investor would do . . . but much simpler.  Yes, we are going back to the time value of money and a good financial calculator . . . but much simpler.  I realize that most of us do not really enjoy doing those calculations anyway . . . with all those extra buttons! 

I ran the numbers on an offer that was recently rejected by a seller and the results were astounding.  The seller just rejected an eleven percent (11%) annual return because they were fixated on a price they were never going to get.  But tell me . . . where can anyone realize an 11% annual return on an investment with pretty minimal risk . . . at least compared to the stock market.  We all know that a 4-6% annual return on real estate over a long period of time is good.  This is just one good way to re-focus a seller back into the selling zone.

I’ve put together a very simplistic spreadsheet that will help you will this analysis.  It contains two Investment Calculators [Download this excel file and save on your computer].  The first let’s you put in the original purchase date, purchase price, expected sale date . . . and then calculated an anticipated sale price base on a 6% annual return.  The second one asks for original purchase date, anticipated sale date, original purchase price, and expected sale price.  In turn it calculates the actual annual return as if this property had been an investment.

Try it out!  You may find some of the results very interesting.