September Will Be a New Record Month For Sales

October 3, 2008

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.


Debunking the Myths About Las Vegas Pending and Contingent Sales

July 23, 2008

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.

-Frothing Mark

Here’s the Las Vegas Housing Chart From Yesterday’s Paper

June 19, 2008


See this posting for more.

InBusiness LasVegas: Housing Market Numbers Improve

June 18, 2008

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.

More Inaccuracies in the LVRJ

June 5, 2008

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 Days

June 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.

In Business Las Vegas: “Shrinking Home Inventories Grounds for Optimism”

June 2, 2008

In Business Las Vegas ran a story today summarizing various expert viewpoints on whether we’ve reached a bottom or whether it’s still to come. According to the piece,

Sales of existing homes have picked up this spring, dropping inventory to a 13-month supply, and in April the market had its first year-over-year increase in more than two years.

Sales of new homes, although sluggish by historic standards, have bounced back slightly and stopped their downward slide.

There is about a six-week supply of new homes.

Realtors and builders report traffic has increased. It appears a more than 20 percent decline in new-home and existing-home prices over the past 15 months or so has triggered buying by people shut out of the market because of affordability.

The piece quotes several industry execs who are optimistic about Las Vegas’ prospects:

Terry Jones, vice president of AmTrust Bank, says the housing market is close to its bottom if not there already. He said some existing homes are selling for less than $90 a square foot, and it’s hard to imagine builders going much lower with prices.

Kevork Zoryan, executive director of Morgan Stanley in Los Angeles, said he’s surprised by the small standing inventory in the new-home market in Las Vegas, and it’s positioned for a rebound once foreclosures are eaten up.

…Because Las Vegas was hit earlier than other Southwest markets, it will recover more quickly, Zoryan said.

Some are even more optimistic. Tom McCormick, president of Astoria Homes, said he thinks the bottom was reached in the first quarter. Many foreclosed homes have gone on the market, home sales are increasing and prices are starting to stabilize, he said.

John Richardson, senior vice president of Countrywide Home Loans in San Diego, said, “lenders are spurring sales by making more loans available in recent weeks.

The piece goes on to quote other experts who offer a more “tempered” point of view.

Ken Perlman, vice president of Sullivan Group, said he expects slow going for the rest of 2008 and doesn’t expect any appreciation before 2010. “I wish I could tell you differently, but it will probably be slow in 2009, too,” Perlman said. “There is no way to spin it.”

Actually Ken, there are several positive ways to spin it, and you’ve conveniently provided us with the material yourself. Let’s take your points one by one:

1. Perlman says:

There is still plenty to overcome because consumers are frightened about the economy and because buyers expect further erosions in prices”

At the same time the article says,

Perelman himself discounts in the article predictions by some national experts that Las Vegas home prices could fall another 18 percent.

If you believe prices aren’t going to fall dramatically, then doesn’t that mean we’ve reached or are close to a bottom?

2. Perelman then discusses jobs:

“While technically we are not in a recession, what you feel is a recessionary environment,” Sullivan said. “We are not growing jobs.”

I’m not sure where you’re getting your stats Ken, but job growth is moving right along in Las Vegas. According to the most recent Bureau of Labor Statistics reports more than 20,000 new jobs have been created in Las Vegas just since December 2007, and unemployment is down .2% in that same time period.

We’re already starting the feel the ramp up of the huge hiring wave that will take place in late ’08 and early ’09, even before those projects start their own hiring campaigns.

Vendors to projects like CityCenter, Echelon, etc. have already started to make presentations and bid on goods and services. To get the business companies without a presence here already will need forces on the ground, up and running in Las Vegas well before those projects are complete.

3. Perelman adds another point that’s easy to spin positively:

Builders have been relying less on incentives and more on pricing. In May, the amount of incentives fell to $18,782, down from a high of $27,436 in October, according to the Sullivan Group.

This is a huge positive, not a negative. First, by eliminating incentives and pricing homes at market value builders have managed to get inventories down to a very low six week supply. . At those inventory levels builders have no need to lower prices further. As new home prices stabilize that’s one less downward force on resale homes. Second, as buyers stop seeing ads offering free cars, no payments for two years, etc., they’ll be less conditioned to assume that builders are hurting and prices are dropping further.

4. According to Perelman:

The good news is that savings rate increased in the first quarter and that will give people more of an ability to buy a home when they are ready.

We know your job is to hedge, Ken, but if prices aren’t going to fall any further, job growth is actually positive, new home inventories have stabilized, and people now have more money saved to buy new homes, how could you put anything other than a positive spin on the Las Vegas market?

-Frothing Mark

Read the full In Business story.