We have seen the Las Vegas, NV high rise real estate market have a phenomenal (and scary) jump in inventory in the last several months. For several reasons:
- Too many speculators in that market. They want to close n flip. They are not interested in holding, renting or living in them. Each time a building closes, we see an increase of inventory.
- Mortgage market madness has reduced the amount of loan products available to jumbo, second, vacation or investor type property owners. The ones who have very little money down and marginal credit, that is. So the buyer pool for both resales and new went kaput. Loud and hard too.
Here are the high rise stats:
Rentals:
- 328 Listed 3/1/2008
- 18 Under Contract 3/1/2008
- 40 Leased 12/21-2/21/2008
- 8.2 Months Inventory
Resales:
- 796 Listed 3//2008
- 77 Under Contract 3/1/2008
- 13 Closed 1/21-2/21/2008
- 61.2 Months Inventory (=5.1 years)
Resale inventory is up from 56 months inventory last month. The rental inventory is at 8.2 months. When you compare it to the entire market of rentals that hovers around 3 months of inventory.
I think it is apparent that many purchases are completely speculative = not enough demand for living in. Some rent prices just barely cover the owner's HOA.
Since July speculators have been bailing from their new construction high rise escrows because of lack of mortgage products for funding. They are also leaving their steep deposits at the builder and not looking back.
Unless demand for high rise LIVING increases over speculation, we will be seeing a major correction in this part of our market. We have a little over 14000 units under construction with another 50000+ more on the drawing board. Every time a building closes, we see 20-50% of that building go on the market.
The beautiful part about this is that when you put the pen to the paper for land and development costs, it costs about $1800/square foot. You can buy right now with the median price being in the mid 500's for a square foot. Will deflated dollar against foreign currency be able to bail us out? Is Las Vegas unique enough to attract those foreign investors?
There has been a noticed rise in foreclosures & bank owned listings at Manhattan South. List prices for those are about 50-65% of what the original owners paid for them! Manhattan South is located on Las Vegas Blvd South across the street from South Point Hotel & Casino but off strip and is a mid rise community. We are also seeing a noticeable rise in foreclosures in Soho as adjustable loans adjust. Soho is located in the Arts district between the strip and downtown.
© 2010 Renee Burrows Las Vegas Real Estate Market Report Blog
