Nevada Real Estate >> Las Vegas Real Estate Specialist: September 2007

With the Las Vegas NV Real Estate economic conditions getting ripe for investors, I am going to publish a little "do and don't" list right here for you to reference!

What type of house is favored by renters right now?

• One that is highly upgraded. Base will cut it but the highly upgraded homes will be chosen first which will result in less days on market and a lower vacancy rate provided the price is right.
• Pool homes. Pool homes are highly desired by renters and it is best to put them on the market in March/April when people are searching for them. Make sure they obtain an insurance liability rider for that pool prior to signing the lease agreement. See your favorite insurance agent for details. Pools in "median priced" rentals will command an extra 300-500 dollars a month. When you purchase a resale home with a pool in this same price range: they are only an extra 10000-12000 dollars, whereas installing one post purchase can run an extra 20000-30000 dollars. A decent ROI when one is purchased with the home!
• Homes with laminate or durable flooring. Right now this is the cat's meow! Renters ooo and ahhh when you open the door and they are greeted with laminate flooring as if it were the owner itself inviting them personally to "rent this house". It is inexpensive to install (especially if you are DIY) and durable so your investment should last rehab after rehab. Tile or travertine is also a good durable alternative. I have never understood why rental homes have carpeting in the main living areas!
• Communities with mucho amenities. Renters are in love with communities that gated or guard gated. They also love communities with pools, playgrounds, basketball courts, bbq areas, lakes etc. Always make sure you check the bylaws in the certificate of resale to ensure there are no restrictions against renters using these amenities.
• Single family homes!!! Last month there were many multi-unit permits pulled. There will always be people who love to have their own space and do not want to share walls as in condo and townhome attached housing developments. In the next 2-5 years there will be a glut of multi-family dwellings. I do believe that demand will be there but you want a special property, not one that everyone else has!

How will you choose (interview) your Real Estate Professional Team?

Choose a Realtor(R) who understands each of the markets. This type of Realtor(R) understands what is going on in the rental, new construction and resale fields. They will give you area comparables and they will not hesitate to use area new construction comparables to support a low (yet reasonable) offer. They will give you a detailed rental comparative market analysis for each house you looked at. They will deliver (in a timely manner) the governing HOA's CCR's after the offer is accepted so you will know if there are any rental restrictions. They will also have connections with permitted property management brokers if they do not have a property management permit themselves.

Choose a Mortgage Professional who knows their products. It is now more important than ever to choose the right mortgage professional who understands the investor's want to get into a property for as little down and a low interest rate. This is a very big challenge!

Choose an Insurance Provider who specializes in rental properties and the liabilities that goes with that.

Choose an Attorney who can structure LLC's for each individual property you purchase.

Choose a CPA who understands 1031 exchanges and investment properties.

This Rhodes Ranch Area market report was generated on September 23, 2007:

• Active Listings: 475
• Under Contract: 51
• Sold 8/15-9/15/2007: 35
• Months Inventory:  13.6
  

Rental Market Report generated on September 23, 2007:

• Active Listings: 96
  
• Under Contract: 18
• Leased 8/15-9/15/2007:  53
• Months Inventory:  1.8

Median List Price for an area rental:$1275/month, Low:  $750, High:  $5000

Information from GLVAR is deemed reliable but not guaranteed.

Last Market Report Generated September 5, 2007

Click here to view current residential rental listings, resale listings, pendings and sold information in the Rhodes Ranch area. 

 Includes: Apache Hills, Apache Springs (The Falls), Astoria Homes at Rhodes Ranch
(Independence), Canyon Trail, Huntington, Liberty @ Warm Springs, Maplewood, Rhodes
Ranch, Richmond@ Rhodes Ranch, Sierra Madre, Venezia, Vistana.

www.LivingAtRhodesRanch.com

Renee Burrows
Realtor®

Nevada Realty Solutions - Your Dream, Your Investment, You\'re Home!
8942 Spanish Ridge Avenue
Las Vegas, NV 89148
direct: 702-580-1783
fax: 702-995-8237
Renee@ReneeBurrows.com
http://www.ReneeBurrows.com

I don't normally include multi-family unit permits in my economic conditions reports but this is VERY interesting!

It is absolutely no surprise to me as I actively work the rental market as a referring Realtor(R), I do not have a property management permit. Inventory has been flying off the shelves like hotcakes. Other Realtors (R) who are actively working the rental market and were around for the resale boom in 2004 are comparing the rental market to that.

There were 1594 multi family units permitted for the month of August 2007. Only 74 were permitted in July 2007 and 760 in August 2006. I find this interesting as the apartment vacancy rate is up 38.4% from a year ago at 7.01% while apartment rental rates are up 2.8% for the year with a 2nd quarter rate of 7.01%.

Economic Conditions for September 2007

Las Vegas Rental Homes: Quite Possibly on Track for Another Record Breaking Month

Economic Conditions for the Las Vegas Valley August 2007

Housing Conditions:

• Foreclosure/Short Sale Listings (9/23/2007): Total Listings 27,404; Foreclosures Commenced: 1093, 4% of all listings; Short Sales: 2710, 10% of all listings; Both Foreclosures Commenced AND Short Sales: 504, 1.8% of all listings.
• New Home Sales (August 2007, units sold): 1376 Year Change -49.7% (excl condo conversions, highrises)
• New Home Sales (August 2007, median price): $308,161 Year Change -10.1% (excl condo conversions, highrises)
• Existing Home Sales (August 2007, units sold): 2062 Year Change -43.4%
• Existing Home Sales (August 2007, median price): $275,000 Year Change: -4.8%
• Single Family Residential Building Permits (August 2007): 794 Year Change -49.2%
• Rental Rate (MLS Monthly Average May 2007): $1578/month Year Change +$303/month

My analysis: The rental market has been consistently rising since November 2006.  Fire sale prices remain attractive to long term investors.  Mortgage meltdown has caused many new construction units fall out of escrow.  Much standing inventory available and builders are slashing prices to reduce inventory.  Look for foreclosure list prices to follow suit in October/November as banks will try to reduce inventory by year end.  Rents may rise dramatically next several months.

New Residents/Employment Conditions:

• New Residents (August 2007): 7615, Year Change -1.2%
• Total Employment (July 2007): 932,500, Year Change +1.9%
• Unemployment Rate (July 2007) 5.1%, Year Change +13.3%

My analysis: The rising unemployment rate concerns me.  Availability of jobs will not keep new residents streaming in to town.  Could be tied to convention business dropping and lack of home equity money for home improvement services?

Tourism/Gaming Conditions:

• McCarran Airport Total Passengers (July 2007): 4,279,655 Year Change +4.7%
• Gaming Revenue (July 2007): $964,724,623, Year Change +13.4%
• Visitor Volume (July 2007): 3,791,218, Year Change +0%
• Convention Attendance (July 2007): 262,560, Year Change -33.1%
• Hotel/Motel Occupancy (July 2007): 92% Year Change +1%

My analysis: Gaming revenue up overall but a taking a look into gaming statistics, local oriented casinos are down in general.  Declining Convention attendance should be a concern.

Sources: Salestraq, Home Builder's Research, Greater Las Vegas Association of Realtors, Nevada State Gaming Control Board, Nevada Department of Motor Vehicles, McCarran International Airport, Las Vegas Convention & Visitor's Authority, Nevada Department of Employment, Training and Rehabilitation

Renee Burrows
Realtor®

Nevada Realty Solutions - Your Dream, Your Investment, You\'re Home!
8942 Spanish Ridge Avenue
Las Vegas, NV 89148
direct: 702-580-1783
fax: 702-995-8237
Renee@ReneeBurrows.com
http://www.ReneeBurrows.com

It appears that Las Vegas, NV valley is headed for another record breaking month on rental units leased in the MLS. Even if we don't break last month's record of 1735 units leased, the amount of units leased will be higher than the average 30% September decline from August.

So far in September 962 units have been leased with 494 units under contract. We are in the end of the month sprint so I wouldn't be surprised to be close to the same 1735 unit leased number as August.

Update for 9/26/2007:  Just a mere four days after this was written we have a total of 1130 leased and 520 under contract.  I am also working with a handful of under pressure clients who need something yesterday!  Cannot wait to see the end of month numbers! 

Update for 9/28/2007:  We have a total of 1218 leased now and 526 under contract.  So far we are standing above the traditional 30% September dip in leased homes (seasonal adjustment).  Three full days in the month, this is written in the early morning.  Inventory is slightly rising as investment property owners seem to be figuring this trend out.

This is exceptional news for long term investment property owners in the valley! There is still only two months inventory on the rental market which could push rental prices even higher.

Rising rents coupled with excellent deals on the new construction standing inventory market and foreclosure resales are creating interest for long term investment holds and first time/entry level buyers. The under $250K market is incredibly juicy right now.

Nevada Power raised electricity rates by 11.6% prior to the beginning of summer 2007.

I have had many phone calls for listings because people can no longer afford their home because their interest rate went up and their electrical bill went up too.  I definitely feel their pain!  I think those that may have the luxury of living in a modest 2000+ square foot home with dual air conditioners and pools are experiencing closer to a 25-50% increase.  Which, by the way accounts for a good chunk of middle class homeowners.

While overall gaming revenue is UP, it is mostly for strip (tourist oriented) casinos.  Off strip casinos (local oriented) are feeling a crunch. 

I am sure there is a residual hurt with small businesses and this is also contributing to our already sickly residential real estate market. 

We are still paying dearly for the manipulated energy crisis of 2000/2001 and Nevada Power is striving to make us one of the top innovative green powered cities.  One concept bad, another not so bad.  

People then wonder why Las Vegas has gotten so expensive even though a large business customer electrical rate is only half of a residential customer.  (Not really complaining as large business carries our tax burden, yin and yang if you will.) 

We do enjoy low property taxes, no income tax but there are other things out there that will zap your wallet, even if you are diligent enough to keep your nose clean in Sin City.  Hopefully the green energy initiatives that Nevada Power is implementing will save us in the long run.   

With the recent subprime fallouts (one in February and one in July) there have been some incredible bargains with fallouts that are Las Vegas new construction standing inventory. Builders are offering LARGE incentives to get FHA buyers qualified including rate buydowns, sometimes the max that the lender will allow including closing costs!

These homes are generally loaded to the hilt with options and are ready to close YESTERDAY!

You can search on my website for new construction or use the contact form so I can make the phone calls. Most of these deals are not listed on my new construction tool (Salestraq).

If you are an investor, prepared for a long term hold, I will be happy to do a rental CMA for the areas/deals you are interested in!

If you are a first time buyer, it just makes sense to look at your options as rents are rising rapidly.

So Esko's post on the economy prompted me to pen this one really quick. I was confused about wanting to chuckle or cry when he talked about resales taking a "humorless dive" because the choice of verbiage is so true.

Everyone in the business is hurting right now, sellers are hurting, buyers who had mortgage products shut down are hurting, builders are hurting, banks holding real estate are hurting, RENTERS are hurting. Well maybe not everyone. Landlords have to be loving the frenzy going on in the rental market since November 2006.

New MLS rental listings are barely out pacing the number leased properties. The average Las Vegas Rental is now up to $1578/month (August 2007), up $32 for the month and up $283 since January. The median price is $1295/month, down $2 for the month and up $95 since January.  A record number of leased units flew off the MLS shelves last month at 1735 units.  There are either slightly more or slightly less than two months of inventory on the rental market (depending on what day you check it out!)

More units of single family new construction are being sold than permits being pulled (sometimes up to 30% a month.) We've got the jobs, we are making more jobs. After all, those 5000-6000 people a month who move here still need a place to live, right? Read my economic conditions reports.

While resale numbers are pathetic, our incoming residents number is still staggering. They gotta live somewhere, right? So while we watch rents rise & Las Vegas residential real estate prices fall, the eye of the storm (Tropical Storm Investor) will target the Las Vegas Valley. There will be an abundance of inventory to pick from ~ UNLESS ~ sellers learn to take their homes off of the residential resale market and throw it into the rental pool until more stable times come upon us. I have heard other agents who weathered the resale storm of 2004 and are currently working the rental market compare the rental market to the resale boom of 2004!

So using a basic Economics 101 principle of supply & demand, why aren't these sellers putting their home in the rental pool to help stablize a frenzied market and a declining market? Don't tell me almost 28K sellers MUST sell their home. Am I missing something here?  Perhaps sellers need to change the mindset of their home as an emotional attachment to an investment vehicle.  A few years of holding pain may be quite a bit of gain.

This Rhodes Ranch Area market report was generated on September 5, 2007:

• Active Listings: 461
• Under Contract: 56
• Sold 7/24-8/24/2007: 36

Rental Market Report generated on September 5, 2007:

• Active Listings:  110
• Under Contract:  9
• Leased 7/24-8/24/2007:  54
  

Last Market Report Generated August 5, 2007

Click here to view current residential rental listings, resale listings, pendings and sold information in the Rhodes Ranch area. 

 Includes: Apache Hills, Apache Springs (The Falls), Astoria Homes at Rhodes Ranch
(Independence), Canyon Trail, Huntington, Liberty @ Warm Springs, Maplewood, Rhodes
Ranch, Richmond@ Rhodes Ranch, Sierra Madre, Venezia, Vistana.

www.LivingAtRhodesRanch.com

Renee Burrows
Realtor®

Nevada Realty Solutions - Your Dream, Your Investment, You\'re Home!
8942 Spanish Ridge Avenue
Las Vegas, NV 89148
direct: 702-580-1783
fax: 702-995-8237
Renee@ReneeBurrows.com
http://www.ReneeBurrows.com

According to the Las Vegas Review Journal, the City Council has proposed a new ordinance that would: place a ban on "short-term vacation rentals" -- in this case, renting a residence for "dwelling, lodging or sleeping purposes" for fewer than 31 days -- in residential zones.

While none of us want to live near a "nuisance", I am conflicted on this. What about single family dwellings that have multiple families living in it and cause the same amount of "nuisance" as a "party" home? What about the laws already on the books? What if people have out of town guests frequently? (which I am sure many of us do!)

An editorial written in today's LVRJ suggests:

For that matter, it turns out short-term rentals are already banned under the Las Vegas city code -- along with excessive noise, disturbing the peace, prostitution and public drunkenness.

Many vacation rental landlords already side step the law by not operating without a business license, entering overlapping leases (so the property is leased to more than one person at a time), fail to collect lodging tax and their property is a commercial property zoned in a single family area.

Why not just enforce what is on the books? To me it seems easy but maybe I am not reading enough into it.

All the Best,