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Welcome!

My intent for this blog is to create a source for you to stay up to date with what's happening in Real Estate both on a national and local level. Feel free to comment, ask questions, or share with someone you know! I've included links to my personal website where you can find more information about me and my company, and what specifically I can do for you as your agent. In addition, I've posted important links where you can find pertinent information on foreclosures, short sales, and aids that will help you in your search of your next home/investment. Enjoy!

Monday, May 2, 2011

Foreclosure Sales: A First Step in Recovery?


A few years ago when the banks flooded the markets with foreclosures prices dropped fast. Ever since then homeowners have been fearful of another wave referred to as the "shadow" industry that would cause the home prices to go down even further. But economists and real estate agents across the country are noticing that the hardest hit cities are actually seeing the first steps in recovery because out of state and international buyers are scooping up these foreclosures.

The low prices are leading investors to snap up foreclosed homes in Detroit, Las Vegas, Miami, Phoenix and Tampa. The severely low priced homes are reducing prices in the short run, but they're also thinning the supply of homes -- clearing the way for higher prices in the future.
For some buyers, the deals are now too good to pass up. A highrise studio condo on the Las Vegas strip that cost $500,000 at the height of the housing boom is now selling for roughly one-third that price. Across the valley, we've seen an average drop of almost 60%.

News reports suggest that "such sales have helped shrink the combined supply of unsold homes in those five cities by 13 percent over the past year, according to an analysis of local listing data. Home prices in each of those markets are at or below 2002 levels, according to the latest reading of the Case Shiller index."

"If we were to see several consecutive months of supply getting smaller, it would point to an improving housing market," said Celia Chen, senior director at Moody's Analytics. "Even if it is investors buying them, they are renting them out in hopes that prices in the next several years will rise." As of today there are only 14,015 homes currently available here in Las Vegas, which is about a 4 month supply- a great sign we are on our way to a recovery. There are 12,787 homes that currently have offers on them (a bulk of these are short sales waiting on bank approval), and 14,232 homes that have sold year to date.

It's important to get rid of foreclosures and other risky properties so the market can turn around. When foreclosures and distressed properties are sold, home prices fall. But as the supply of cheap homes shrinks, prices stabilize. Homeowners who had put off moving because they didn't want to sell during the downturn grow confident that they can fetch a decent price. That prompts more buying and selling and thus forces home values to rise.

Most of the current foreclosure sales involve investors: Private equity firms; foreign and out-of-state buyers seeking vacation houses; individual investors hoping to rent out or quickly sell properties for a profit.
In March, 35 percent of previously occupied homes sold were bought entirely in cash, according to the National Association of Realtors. Here in Las Vegas it's actually about 50% of all sales.

Economists caution that a second wave of foreclosures could throw the housing market back into turmoil and few see home prices rebounding before the end of this year. However, with the current focus forcing banks to do more to help people stay in their homes, and create programs that shorten the short sale time frame, it's hard for me to believe this will occur again. If anything I think it may just become a small, but consistent, trickle.

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