Every month the RJ publishes an update on Las Vegas home sales and inventory numbers. And every month readers are left scratching their heads.
Let’s start with the headline,
“Streak of home-sales increases stopped.”
This seems like bad news. But the reality is that we had a tiny drop from July to August (which is one of the slowest months of the year), and sales are still up dramatically over 2007. Predictably, the RJ touts the bad news in the headline, and buries this hugely positive news below:
Sales increased 93.4% from 1,316 in August 2007
In case RJ readers aren’t already confused by the headlines, things get worse. According to the RJ:
The inventory of single-family homes for sale on the Multiple Listing Service declined to 22,710 in August… Another 5,390 condos and townhomes are on the market.
So according to the RJ, if we add SFR to condos and townhomes, there are 28,100 homes on the market available for purchase.
Yet just a few paragraphs later, the RJ says,
Las Vegas-based Applied Analysis showed a reduction in resale inventory to 21,941 as of Sept. 1.
I’m no math major, but even I can tell that something doesn’t add up here. How can inventory be 28,100 homes in one paragraph but 21,941 in another paragraph?
The answer is that Applied Analysis has it right, and the RJ’s quotes from the MLS have it wrong, because they include pending and contingent sales.
As we’ve said before, pending and contingent sales are NOT inventory. The difference between 28,100 and 21,941 is huge, and there is simply no excuse for reporting two completely different numbers without so much as an explanation.
Still not confused? There’s more:
According to the RJ:
Pending sales, or homes under contract to be sold, totaled 7,220 as of Sept. 1, down from 7,339 in the previous week. About 48.8 percent of the contingent units are identified as short sales, suggesting they may still be subject to bank approval.
Here the RJ uses the terms “pending” and “contingent” interchangeably. But these are two completely different terms in the MLS. There were actually 2,916 Pending Sales and 4,259 Contingent Sales on the MLS as of September 1.
The difference is important, particularly when looking at the number of short sales.
Let’s use the RJ figure and assume that approximately 50% of the contingent sales are short sales. That means we currently have around 2,100 short sales.
If the banks reject 50% of those 2,100 short sales currently marked as contingent, that would only put about 1,050 units back on the market, or roughly a 1/3 of a month’s supply. If you took the article at face value you might assume that more than 3,600 homes could be coming back to the market shortly.