There are a few myths that keep bouncing around the Las Vegas real estate community that are worth a closer look:
Myth #1. Inventory is higher than the what the data shows because unsold Palms Place and Trump units are listed as pending, but will actually go into active inventory if they don’t close.
Fact: Leaving aside for now the argument that these are high-end, very specialized Strip/near Strip projects that have very little, if anything, to do with the vast majority of Las Vegas real estate, let’s look at Palms Place:
Of 599 units at Palms Place there are a grand total of five units that are pending. There are another 12 showing as contingent. Not exactly earthshaking numbers. By the way, in its first six weeks, Palms Place closed more than 45% of its units.
Things at Trump are a little slower, with 20% of their units reportedly closed in three months. But out of the 1200+ Trump units in the project, there are zero showing as pending or contingent.
We’re not saying these units couldn’t eventually end up in active inventory if they don’t close, but the fact is that they are not impacting either pending or contingent numbers on the MLS as of today. Also, most developers don’t put that many units into inventory on the MLS. They put a few sample units on to draw prospects to the sales center, but sell most of their new units “off-MLS”.
Myth #2: Measuring inventory by looking only at active homes on the MLS is inaccurate because pending sales may be inflated by short sale offers that will not be accepted by the banks that own the mortgages on these homes.
Fact: Measuring inventory by active units is the ONLY way to accurately gauge inventory. If and when homes put in pending status fall out of short sale status and come back into active inventory then the FrothingDeveloper numbers will reflect that. But in the meantime, the trends simply don’t back up that assertion. The fact remains that if you want to go out and buy a house today there are 25% fewer of them to chose from than there were at the peak.
Counting all of your Pendings and Short Sales as inventory is like counting all your A’s as F’s, or counting all of your wounded soldiers as Killed in Action, because some of them won’t recover. It’s just not accurate.