The final count is still coming in, but the MLS already reports 3132 closed sales for the month of September in Las Vegas. That will easily break the July record. What’s also impressive here is that we are now getting closings where the sale took place in Las Vegas’ hot summer months as opposed to its balmy spring months. You don’t usually see sales strengthen from spring to summer.
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.
It’s becoming increasingly difficult to ignore all of the good news about the Las Vegas housing market. Brian Wargo writes:
May home sales are up 29 percent over May 2007 and prices increase[d] fo the first time since last summer…
He also notes that May sales were 13% higher than April sales, and mentions what almost no one has picked up on: median price of homes in May was higher than in April. I.e. Prices in Las Vegas are going up.
May marks the fifth straight month sales have been higher than the month before…
The article isn’t 100% accurate though. Wargo republishes the highly misleading GLVAR inventory numbers that include units in contract as “inventory”. We’ve talked at length about how wrong this is.
The LVRJ numbers published earlier this week citing more than 12,000 in-construction “tower” condominiums, which come from Salestraq, include 83 condominiums at Luxe, except that Luxe is now being converted into a hotel.
And they include 100 condominiums from Metreon. Except that the actual number of condominiums at Metreon is 14.
I’ve already mentioned the improper inclusion of 1200 timeshare units in a previous posting.
The numbers included 1140 units at Sullivan Square. That’s misleading on two different levels. In the first place, the project at Sullivan Square has been halted. In the second place, even when it was going, it only had a single building, of about 200 units under construction.
ManhattanWest is listed as 700 units under construction, but only the phase 1 is being built right now, with 228 units.
One Las Vegas is listed as under construction with 961 units. A couple of problems there: Only two buildings, with a couple of hundred total units, have been put under construction, and, well, they’re done. So there are actually 0 condominiums under construction at One Las Vegas.
Streamline was included as “under construction” and it’s done too.
So, as posted below, the LVRJ’s number is off by about 50%.
In fairness to Salestraq, the LVRJ published numbers from an April report. At that time, Streamline was still under construction.
Overall, though, this misreporting is pretty unfortunate and indicative of the tendency of media to overstate the doom and gloom scenario.
Las Vegas Home Inventory Down from 13 months of Inventory to 9 months of Inventory in the Last 60 DaysJune 4, 2008
For May, there were 2,395 closings. There are currently 21,914 available homes and condos in inventory. That means that there are only 9.1 months of inventory in Las Vegas. One month ago, that number was 10.6 months of inventory. In March, Las Vegas operated at 13 months of inventory. This is HUGE improvement.