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Paul Bell is the new 2011 president of the Greater Las Vegas Association of Realtors. In his interview he addresses his expectations of the coming year, the rumors of the "shadow inventory" and the state of the Las Vegas market. Some great information that I just had to share. Enjoy!

Excerpts from Q&A with Paul Bell interview from Las Vegas Sun

Do you trust what the numbers are saying for inventory?

We feel like we have a pretty good handle on the available inventory right now, and our discussions with the Department of Housing and Urban Development, the current inventory of 16,500 units (without any offers) includes 500 new home products. That’s a pretty good supply for a population of about 1.9 million people.

What about the discussion of shadow inventory?

Reports from escrow companies are telling me 20 percent of the monthly foreclosures are purchased by parties other than the foreclosing lender. I’d say you have 2,000 to 3,000 units a month that are trying to come to market as foreclosures. There’s another caveat in that there are a number of investors who are buying these foreclosures at the courthouse, and they’ve restored the houses for rent. We’re finding out that you probably have 300 to 400 units that investors bought at the courthouse and are renting them right now. We’re trying to develop a system to track down that number.

What about claims that banks are holding back 10,000 to 20,000 in foreclosure homes from the market?

That’s completely bogus. The banking regulators require (that when) a residential property is foreclosed upon, it’s got to get on the market within 30 days. The only reasons for a delay have been title problems and lawsuits.

What about what the analysts say?

If you look at our short-sale inventory, the amount of property that’s available and in contract and add maybe 25 percent on top of it, those are tomorrow’s potential foreclosures. Two years ago, we were told there would be a mass increase of 40,000 to 50,000 units into our Multiple Listing Service. Guess what? They were already on the MLS as available short sales or ones under contract. Up until last year, 95 percent of those properties were reclassified as foreclosures in the Multiple Listing Service. The banks were saying here is what we’re rejecting, but we don’t have title to these properties. That’s what the shadow inventory really meant.

What are you expecting from foreclosures?

In talking to a real estate attorney, Southern Nevada appears to have gotten through the worst of the subprime loan cycle that was the beginning of the foreclosure crisis here. Those loans ceased to be underwritten in 2007, and we pretty much went through those in 2009. There’s a concern going into 2011 and 2012 about resetting loans, but they are mostly prime loans, according to some lenders, and will be resetting at a lower rate.

What else?

In November, 48 percent of the buyers were all-cash deals. We are attracting investors globally and domestically right now. There’s quite of bit Chinese investment coming here.


But the market has fallen off. Aren’t you concerned?

We started January 2009 with 24,000 listings, which is about 6,000 too many. By June 2009, that inventory dropped to 11,500 units and stayed that way until this past June. During January 2009, not only did we have the first-time homebuyers, but retirees moving here paying cash and (we had) investors. We had more than 47,000 closings on the MLS in 2009. This year (2010), we are projected to go to 43,000. I think to have 43,000, considering that we started with less than half of the inventory of 2009, really shows a very active market here. Since January 2008 when we started seeing the rebound in the number of units closing, about 20 percent of the overall inventory in the region has changed ownership. If we go over 25 percent change of ownership during 2011, I think we are going to start seeing continued overall appreciation, but much more noticeably in master-planned communities where homes have traditionally been better maintained.

So it is more about supply?

I think it’s more of the inventory.

What about 2011 with sales trending down and prices falling and the jobless rate over 14 percent?

We have the first major wave of Baby Boomers retiring. Southern Nevada is one of their top choices because there’s no state income tax here, there’s quite of bit of recreation and no longer will they have to shovel snow.

What is your prediction for 2011?

I think if we can have 36,000 to 40,000 closings, that would be a very good year. It may be down but we might start seeing a rebound in prices in certain areas — master-planned communities like Summerlin and Green Valley. They have been very good in their pricing the past two years, but have had little new construction starts. We have seen values in those areas start to rebound.

What about prices?

If you can take out the properties under $100,000 in poor condition, you will see higher median prices. Job growth is going to be key to more appreciation in this market.

Are we in a double-dip housing recession?

Probably in other parts of the country, but for Southern Nevada there’s too much demand for housing here to have a double-dip recession. There’s so much cash buying right now — 45 percent of the transactions year-to-date (2010) are cash. It is an unheard of number elsewhere in the country. Ten percent is your maximum normal purchase of homes with cash.

What’s your expectations for foreclosures in 2011?

We still think there will be a steady stream, but at a lower pace because of the increased number of transactions getting approved as short sales. There’s quite of bit of incentives for lenders to do short sales rather than foreclose.

Why? And is that good?

The lending institutions have been much better at setting up their systems and communicating with agents. It’s good because they sell for higher prices than foreclosures, and it saves on the cost of foreclosures.

I hope you found this excerpt as inspiring and informative as I have. What did you think of what Paul Bell had to say?