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:
- 343 Listed 11/20/2007
- 15 Under Contract 11/20/2007
- 29 Leased 10/18-11/18/2007
- 8.7 Months Inventory
- Monthly Rates: Low: $695; Median: $2800; High: $11000
Resales:
- 844 Listed 11/20/2007
- 74 Under Contract 11/20/2007
- 14 Closed 10/18-11/18/2007
- 60.2 Months Inventory
Resale inventory is down from 72 months inventory one month ago. Sales have not risen dramatically, only two more units than last month. Inventory has just reduced slightly. The rental inventory of 8.7 months is staggering 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?
Renee,
Beautiful report and beautiful place! It's a beautiful thing. Google juice baby!
Neal: chug a lug :)
Sharon: Nope, you aren't the only place! I am hoping that this unique market can recover quickly. Appears many are fishing for a renter or buyer ~ whatever comes first.
Renee,
5 years inventory?! That is alot to get rid of. These are nice looking buildings too. Once these inventory are sold and gone, the market would eventually pick up again. Because LV is a great tourist destination, the market may not down for long...possibly..
Have a great Thanksgiving! Gobble google!
Dave
I love how the press is moving this "years of inventory" and "absorption rate" using average buyers and average market conditions
then why are all the numbers analyzed given as averages?
probably because economists are less likely to get involved and break down micro and macro markets...
for instance - there may be a small inventory of workforce housing that will only last 5 months... and a huge inventory of condo hotels that will last 15 years!
it is all how the individual micro markets break down that tells the real story
the average realtor isn't selling EVERY property type in every burrough, county, city or state!
they're niched... so how is your niche doing?
Michael: That is the only way to win in this particular micro market.
Marlene: Inventory is sliding slightly due to many reasons. I don't think high rise inventory is being taken off the market for the holidays. Most is vacant. I would say many are going to the rental pool as I am betting most did not anticipate a long term hold.
Dave: It sure is a lot of inventory! Take care and have a fabulous turkey day!
Chris: I have another downer coming out and then an upper!
David: Mine is doing very well. I have been working rentals and selling new construction.
Ken: Your words are marked and you know I am in close to 100% agreement with you!
Michael: thanks for stopping by!!!
Rey: Thanks for the compliment! I would say the best way to market to foreign investors is to go the syndication route. Got another investment post on Reuters yesterday!