Nevada Real Estate Center, John Brassner

March 25, 2009 - John Brassner, Windermere Summerlin Real Estate.When the news media stops reporting bad news about the Las Vegas home market, it is noteworthy. What? There is actually good news now? You betcha: According to Fox 5 news, yesterday, “For the 11th straight month, existing home sales were up in the [Las Vegas] Valley.” My team has been saying that for months and finally the news is reporting it (and not just FOX, most local media outlets are finally seeing the light).Did you know that the combined unit sales of existing homes and condos in the first two months of 2009 are up 120% over the same period last year? Let me be clear, it isn’t up just 20% from 2008, it is up 120%; That is more than double!  [Source: Greater Las Vegas Area of Realtors MLS statistics].

Not only are sales consistently up, inventory is also shrinking. Think back to good old high-school economics; When demand goes up and supply goes down, prices go up (or they will at least stop falling). Also, look at the chart below from Applied Analytics showing pending and contingent contracts. Jan, Feb, and the first week of March show a steady rise in escrows opened.

• Homes are more affordable. The National Association of Realtors Housing Affordability Index is at its most favorable point since 1970. With Bank-owned foreclosures being listed for “sell it now!” prices, you can get a home at an unbelievable value. In the usually expensive Summerlin area, for example, homes are listed for as little as $79 per square foot. You can get a very decent home there for $140,000.
• $8000 Tax Credit. Provided you haven’t owned a home in the last three years (that classifies you as a “new home buyer”), you can get a credit up to $8000 on your taxes if you purchase a home before the end of the year. And, unlike last year’s $7500 credit, this one does not need to be paid back. See your tax advisor for details and eligibility.
• Lowest Interest Rates Ever. Qualified buyers could see their mortgage interest rate at under 5%! That is nearly free money.
• Mortgage Payments Cheaper Than Rent. In many parts of Las Vegas, you can buy a home with a mortgage payment less than what you might pay in rent.
• Investors See Positive Cash Flow. Although most investor loans require a minimum of 20% down payment these days, investors can see excellent cash flow with homes in the $100k-$150k price range.
• Confidence in Economy Showing Signs of Recovery. With many of the details of the “Obama Plan” finally made public, the stock market and consumers are taking positive notice. The stimulus plan should help get those buyers currently on the fence off of it and buying. Already 1 in 5 adults are planning to buy a home this year (Realtor.com, 3/23/2009).

No one can say in real-time when the bottom of the real estate market has arrived. But the market indicators are sure showing signs of a turn-around just ahead.

© 2009, John A. Brassner.

Have questions about real estate? Need advice or more market info on Las Vegas real estate? Want to purchase your dream home or investment property? Call John A. Brassner, REALTOR, MBA, Windermere Summerlin Real Estate at 702-808-0916 or email john@john4realty.com

The Housing and Economic Recovery Act of 2008 which is expected to be signed by President Bush today has a tremendously advantageous program within it called the “HOPE for Homeowners Act of 2008.” This has the potential to help the many, many homeowners who have lost considerable equity in their homes and who want to refinance. Essentially, participating lenders will forgive the amount of the loan above market value for your home and refinance into a new government-backed loan. This will take some time to shake out (probably well past October), but could be of great assistance to families and stabilizing the housing market. The summary of the HOPE program is below. 

The program is built on five principles:

Program Oversight. The new program will be overseen by a Board made up of the

Eligible Borrowers. Only owner-occupants who are unable to afford their mortgage

New Loan Amount. The size of the new FHA-insured loan will be the lesser of the

Equity & Appreciation Sharing. In order to avoid a windfall to the borrower created by

Eligible Mortgages. In order to protect against adverse selection, the program prohibits

Existing Subordinate Liens. Before participating in this program, all subordinate liens

Qualified Safe Harbor. The legislation provides servicers with an incentive to participate

Program Size. The program is authorized to insure up to $300 billion in mortgages and

Program Sunset. The program will begin October 1, 2008 and sunset on September 30,

Doom and gloom or new housing boom? A bit of both. If your trying to sell your home and you can’t price it to sell, it’s gloomy. But from a market standpoint certain segments are hot. Sizzling hot. Suddenly, those buyers and investors sitting on the sidelines are putting in offers on the best-priced homes. The homes that are “steals” are not only getting sold, they are receiving multiple offers, at least in Las Vegas. I called one listing agent on a bank-owned (REO) listing yesterday and she told me she had 27 offers on it. My own REO listings have also had several offers. Market slow, eh?

It really is a tale of two markets. The homes that are priced to sell, mostly bank-owned, some “short-sales,” and some non-distressed homes are moving. And moving briskly. In fact, this last week, the number of homes going under contract is up several percent over the previous weeks and months. The demand has been there, sitting on the sidelines until the price is right. And for many, that time is now. The other market, those homes priced significantly higher than the distressed sales, are sitting there. I guess the old economics professor was telling the truth.

Yes, the price adjustment is causing grief for many sellers but the reality is the market has spoken and those words are actually a blessing for some. Yesterday, I showed several decent homes to a schoolteacher client of mine in the below $200k range. She is excited about two of the houses and we’ll likely make an offer on one of them. I am so thrilled that I can actually find for an underpaid, hard-working schoolteacher, a home that she can afford. And I’m also thrilled that the investors are back. I will be showing an investor client several bank-owned properties in the under $200k range tomorrow. He intends to buy two homes for rentals. And with rental demand increasing, this is a good investment strategy.

So now with the new-home standing inventory drying up, the well-priced resales homes selling, it means that the market is coming back. Will the market return to frenzy status soon? Nope, but gosh, wouldn’t we all like to see at least a ”normal” market now. I do.

http://www.NevadaRealEstateCenter.com

Now that Lenders and Banks have taken their knocks with losses on adjustable rate mortgages, 100% stated loans, and other risky programs, they’ve learned their lessons, yes? No. You would think that banks would do everything in their power to prevent further losses. But this doesn’t seem to be the case with “Short Sales.”

For those that aren’t familiar, a Short Sale is simply when a property is sold (or attempted to be sold), for less than is owed on the loan(s) with the agreement of the note holder. This type of sale method can be utilized to avoid a foreclosure or when the seller must sell for some other hardship reason but the property is worth less than what is owed on it. In Southern Nevada alone, there are about 3,800 homes currently on the market advertised as short sales as of today.

 I have a listing where we were employing a Short Sale to protect the sellers from eminent foreclosure. The lender agreed that the seller was under a hardship that would qualify them to participate in a Short Sale under their guidelines. This lender is one of the most well-known and largest residential lenders in the US. I know that they are stuck with a lot of foreclosures (Repo’s) and sellers desiring a short-sale.

Well, we got a very fair offer on this particular property. We immediately sent over the offer and related paperwork to the lender as instructed. They said it would take about two weeks for a “negotiator” to call us back with an answer. Unfortunately these “negotiators” purposely do not give out any contact info, even to real estate sales professionals, “Don’t call us, we’ll call you.” Now it is 32 days later and no answer, no call, no contact. I have called the loss mitigation department several times, and they can’t even reach the assigned negotiator or his assistant. I did find out that they haven’t even ordered an appraisal or BPO (less formal appraisal) yet–something they must do to make a sound decision.

So what are they waiting for? For the buyer to give up and cancel the sale? For the home to decrease in value further? For the Seller to get further in debt? Some of you may think that they want to foreclose and that is why they are postponing but believe me that isn’t their intention and perhaps I’ll tell you why in another blog entry. But they certainly could end up owning this home if the buyer drops out. The longer the bank waits, the more money they will loose–the seller isn’t making their payments and if the buyer drops out, the next offer we receive will probably be lower. This isn’t rocket science: Review the offer, order an appraisal or BPO to establish whether the offer is reasonable, and make a decision (or just see if the offer fits within pre-established short-sale guidelines). Let me repeat, this was a very reasonable offer on this property. They should have jumped on it. But after 30 days, it appears they have done nothing.

Poor seller, poor me, right? Nope, I’ve heard this same story over and over again from other agents. Incidentally, I was able to sell another listing as a short sale within 30 days with a different smaller lender–piece of cake. So now this large lender will continue to take losses, take back more properties that they will sell at a more substantial loss, and tie up their cash available for loans so that their main business is impacted even further. When will they learn? Pass the bullets, please.

Comments, questions, rants?

Dogs are people too. Well, to some folks they are. And to most people their pets are part of the family (just as my Yuki is). Today I want to talk about some considerations when buying or renting a home if pets are part of the family.

So, your real estate agent just found you the purrfect home. There is plenty of room for Johnny and Susan and a big backyard for Sweety the Pitbull, Dumbo the Bull Mastiff, Tiny the Yorkshire Terrier, and Morris the Persian Cat. You put in an offer and the seller accepts! There is lots of paperwork, voluminous HOA (Home-Owners Association) docs you barely skim over, and packing to get done. Phew.

You move into your new home and all is great. An envelope shows up in your mail that week and you open it: “Dear Homeowner, there have been complaints that your dogs bark all night long. We are fining you $100. Please take the necessary means to keep your dog quiet. Love, Heavenly Homeowners Association.” Excuse me?!?!?!?

Two days later: “Dear Homeowner, as you know the HOA rules allow a maximum of two domestic pets per household. You seem to have four. We are fining you $200. Please take the necessary means to get rid of two of your beloved pets immediately. Love, Heavenly Homeowners Association.” What?!?!?!?!?

Five days later: “Dear Homeowner, as you know the HOA rules do not allow dangerous dog breeds to be anywhere in the community including Pitbulls, Akitas, Staffordshire Terriers, and Chows. We are fining you $300. Please take the necessary means to get rid of your beloved Pitbull immediately. Love, Heavenly Homeowners Association.” My Pitbull is sweet, what the !?!K are they talking about?

Six days later: “Dear Homeowner, as you know the HOA rules do not allow any pets over 35lbs. Your Mastiff looks like a horse, what did you feed him, your Pitbull? We are fining you $200. Please take the necessary means to slim your 80lb Mastiff to 35lbs or get rid of your beloved Mastiff immediately. Love, Heavenly Homeowners Association.” HELP!!!!!!!

Okay, yes this may sound like an impossibility. But any or all of these situations could happen to you if you don’t read the HOA documents carefully. And yes, these scenarios do occur. Even in communities that don’t have a governing HOA, local laws and CCRs could still have the same effect especially if you have a neighbor or two that get annoyed.

HOAs do provide a valuable service for those that like an orderly community. And most communities with Associations are very livable and even desirable. In Las Vegas nearly all newer communities are governed by an HOA and many older ones as well. So, what should you do to help avoid fines or worse, having to get rid of your four-legged family members?

When Buying

1. Get the HOA documents (CC&Rs/Rules and Regulations/Latest Board Meeting Minutes if possible) as soon as possible after getting your offer accepted.

2. Read the documents thoroughly. If there is something in there about pets that you don’t understand, contact your Realtor or the Association directly and ask.

3. Check for: A. How many pets in total are allowed. B. Is there a weight limit. C. Are there restrictions on certain breeds. D. Barking/Nuisance rules and remedies.

4. If you are not familiar with the local laws, check those as well. Some states have already or attempting to ban the ownership of certain breeds all together!

For Renters:

1. Before signing the lease agreement, get a copy of the HOA documents too even though you don’t own the home. As a tenant you are responsible to follow the rules and regulations. Many leases will assign the responsibility of paying any fines onto you.

2. Most rentals won’t allow pets and those that do usually require an extra security deposit. Before even looking at a rental ask your agent or the property manager/landlord, what are the pet restrictions? Many will say “up to landlord’s discretion” on what pets they will accept. This means you provide details (and sometimes pictures) about your pets on the application. Then the landlord says yay or nay. By the way, most landlords won’t allow “dangerous” breeds to be in their properties even if there are no regulations against it. Also, many won’t allow aquariums either for fear of water damage should the aquarium break.

Questions, comments?

-John

Welcome to John Brassner’s and Yuki TheBlogDog’s Web Log! This blog will provide you with valuable information, tips, and general insight into the real estate market in Las Vegas. Commentary on Fixer-Uppers, Foreclosures, Selling Your Home, First-Time Buying, New Construction, Investment Properties, Commercial and Business.