Las Vegas, one of the hardest hit real estate markets in the US, has recently found itself in a rising market as a result of its shrinking inventory. The market currently only has a six week supply of properties. The main factor in this is a change in legislation (AB284) which had the impact of preventing banks from issuing notices of default. This has result is a drying up of foreclosures which is just as extreme as the glut that was previously flooding the market with cheap homes. New homes builders are stirring from a long, cold hibernation.
The Las Vegas inventory was already declining, but it fell off a cliff with the passing of new state law AB284 after 1st October 2011. In 2011 Las Vegas sold a record 48,186 homes, of which 38,153 were single-family homes and 10,033 condominiums and townhomes. This year the market is on track to sell an even greater number of homes. Taking March 2012 we see that 4,388 homes were sold, versus 4,316 in the same month last year.
In March 2012 we have seen single-family home sales increase by 15.8 percent from the previous month, and sales of condos and townhomes increasing by 15.2%. In March 2011 single-family homes sales were up my a mere 4.4% and condos and townhome sales were actually down 8.4%.
But the factor that most people looking for Las Vegas homes for sale are interested in is pricing, and homes increased 1.7% from February, but are still down 2.3% on the same month last year – the March median price is $123,000.
This increase in pricing really results from the constrained supply rather than economic fundamentals, with 18,200 single-family homes listed for sale at the end of the month, down 3.6 percent from 18,870 single-family homes listed for sale at the end of February and down 18% percent from one year ago. If the foreclosures start again and all other factors remain equal then it is logical to expect a reverse in pricing, but whether those other factors remain equal is difficult to predict.
The cash-buying crowd remains the dominant force in the Las Vegas market, with 54.5% of all homes purchased cash. Another factor is that short sales made up 26.6% of the market. A large amount, although this is down from 34% back in June 2010. The banks are still the majority of the market at 40.7%, which is why a slow down in foreclosures has such an impact.
The total value of real estate transactions in March was $537 million, and 58.8 percent of all homes and 66.6 percent of all condos and townhomes sold within 60 days. .