Monday, September 01, 2008

Las Vegas homes for $60 a Square Foot?

Since the beginning of the Las Vegas housing downturn back in 2006, I've told folks to expect Las Vegas home prices to revert back to 1999-2000 levels - an average of ~ $60-$65 a square foot. Early on, many laughed and thought it impossible. These days however, though we're not quite there yet, many are alarmed at how quickly my outlook is panning out to be future economic reality.


Allow me to share with you a few examples of what I'm talking about:


The first property I'd like to show you is:

Realtor.com listing Detail 9565 GONDOLIER ST, LAS VEGAS, NV 89178

Located in Mountains Edge, a Master-Planned Subdivision on the South side of town, this home offers a new buyer 5 Beds, 3 baths and 4,449 Sf of luxury for $379,900 - approx $85 a square foot.

Note: This home is currently bank owned - they swallowed $763,636 in unpaid debt on 7/15/2008. Thus, you can get this home for 51% off what the bank actually owes






The second property is:

Realtor.com listing Detail 6224 FOXHUNT ST, Las Vegas, NV 89130

Located in the "New-North" side of town (off No. I-215 and I95), this home offers 5 beds, 3 baths, and 4331 Sq Foot on .52 acres of land for $335,900- approx $77.5 a square foot.

Note: This home is also bank owned and they assumed $695,628 in unpaid debt on 1/28/2008. So, this home is being offered for 52% off what the bank assumed



The third property is:

Realtor.com listing Detail 9022 GREEK PALACE AV, LAS VEGAS, NV 89178

Once again located on the south side of town - in the Mountains Edge, Master Planned Community - this 5 bed 3 bath home of 4,264 Square Foot is being offered at $325K - $76 a Square foot

Note: This home is privately owned - the individual paid $640,717 to Ryland Homes back in March 2007. So, this home is actually being offered at a 49% discount from the 2007 purchase price.



The last property is:

Realtor.com listing Detail 9308 HARROW ROCK ST, LAS VEGAS, NV 89143

Located in the far North West side of the Valley, this home offers 9 Bedrooms, 4 baths and 6,087 Square foot of living space, situated on .21 acres - for $388,550 - $63 a Square Foot

Note: Once again, this home is bank owned and they assumed $641,860 of unpaid debt on 3/20/2008. Current price is 40% off what the bank assumed.





Closing:

Though the examples above are the exception and not the rule (yet), prices here are falling fast and I don't think it will be long before my ultimate price outlook comes to fruition.

Note: For personal integrity sake, and ease of sorting through thousands of listings, I chose newer, larger homes in desirable locations for my examples and could have showed better overall deals per SF, but due to bad locations and/or home conditions, that would not have honestly served my readers.

Feel free to look for yourself: Link to homes in Las Vegas > 4,000 SF (If you look at the link, note the first listing comes to $58 a SF, but it's in a crappy area; listing #3 is a great deal, but the home was built in 1984, etc)

Currently, there are over 28,000 for sale in the Valley and the median price is down > 30% YoY(thus far).

With foreclosures increasing by the day (I have them on both sides of my beautiful Toll Brothers rental property w/pool - and there are many more throughout this gated neighborhood) - I figure we're around 50-60% of the way to the ultimate bottom for Las Vegas house prices.

Bottom Line: $60-$65 SF median prices are nearly here...


BTW:

If/when any of my readers are interested in buying here in the Valley, I would highly recommend a fantastic realtor friend - a hard working man of integrity, who has more than gone out of his way in the past to help out my family when faced with a difficult housing predicament. I've used many realtors throughout the years and can unequivocally state "he's the best"

Give him a call - you won't be disappointed.

Gary Wittman
Realty One Group and a member of Foreclosure Express
Office: 702-743-5172
E-mail: wittmangary@yahoo.com



Best regards

Randy

Economicrot.blogspot.com

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22 Comments:

At 9/02/2008 1:16 PM, Blogger Cynical Observer said...

Randy, I share your view about where prices are going for used houses in Las Vegas.

The only disagreement I have with you on where prices are now relates to houses for sale in the $250,000 and below category. In good neighborhoods like Summerlin, Southern Highlands, Anthem, Seven Hills, Coronado Ranch, Nevada Trails, and Rhodes Ranch, civilian buyers and investors are having to fight with lender/sellers to get them to accept purchase offers at $95 to $100...even though there are a reasonable number of closed sales at that price. There are usually multiple offers on these "low priced houses in good neighborhoods". In addition, lender/sellers are lowball pricing those houses in the hopes of generating multiple offers. Then, when they only get one offer at their listing price, they delay accepting it hoping a better offer will come along.

I do agree with you, completely, that there is a severe problem in sellers, whether lender/sellers or not, unloading 3000+ square foot houses. There simply aren't many buyers for them, even at $75 per square foot...which the delusional lender/sellers still don't want to accept.

My other thought about where prices are going relates to the actual cost of construction. In Houston, brand new houses with high quality construction (e.g. Perry Development and David Weekly) are selling for about $80 per square foot in reasonable quality neighborhoods. Brand new houses of KB Homes quality, in less desirable neighborhoods are selling for $50 per square foot. Here in Las Vegas realtors will tell you prices for new homes will never be that low again. I say they are wrong, wrong, wrong. There are thousands of subdivided lots which will end up in the hands of foreclosing A&D loan lenders in the next year or two. Those lenders are going to want to unload the lots, and the prices of those lots will be cut very substantially if they are sold to builders. Local government development related fees are about the same in Houston and Las Vegas. As a result of the lenders unloading those thousands of lots, I believe new home prices per square foot will fall to Houston levels, i.e. $50 psf for stripped houses and $75 psf for good quality construction. That will mean that even 18 to 30 months from now the new house inventory will be there to drive used house prices per square foot down...just like we saw in 1999-2002. A used little house in Green Valley for $65,000? Yes, I remember them from 1999-2000 and they will return.

 
At 9/02/2008 2:17 PM, Anonymous Anonymous said...

Yes, there are thousands of houses listed in the valley for a great price, but the banks will do anything to not sell for the listed price. For some reason the banks are trying to make it look like the houses are cheaper, but if they do sell they are 10's of thousands of dollars more than the list price?????? Something is going on behind the curtain?

 
At 9/02/2008 4:28 PM, Anonymous Comicpro said...

I like the shameless advertising for your friend at the end:)!

 
At 9/02/2008 7:37 PM, Blogger Randy said...

ComicPro,

This "shameless advertising for my friend" can be traced back to karma -- treat others well, and good fortune may come back to you; This plug was highly deserved.


Anon 2:17,

Yes, I've heard some of the same: Banks sitting on offers for long periods of time, but my point was: looking longer term (~ 2010-11), $60-65 a square foot will be the norm. I believe recent YoY price declines (with no slowdown in sight) are signaling as much.

We're currently experiencing the end results of too much subprime lending and much tighter credit conditions, but wait to see outcome from the end of seller-funded down payment assistance programs (which takes effect Oct. 1st) and Alt-A arm resets.

These two issues, when combined with increasing unemployment numbers ( Las Vegas: Gaming Revenue down > 16% ), will increase housing inventories, reduce buyer demand and cause prices to fall much further.


Cynical Observer,

Thanks for your excellent analysis - I believe you're spot-on with this comment.

Regards to all and thanks for posting up

Randy

 
At 9/03/2008 7:18 AM, Anonymous Dave said...

Ooh baby, 6,000 square feet for $63 a square foot! Unfortunately it's squeezed onto a 9,000 square foot lot! It is enticing though. I love space and never seem to have enough. (I really mean that.)

 
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At 9/26/2009 8:17 AM, Blogger Dale said...

Looks like your forecast of one year ago was accurate. In LV, some 3000 sqft homes are listed for $200k now.

The big question is: Have we hit bottom in LV for housing prices?

 
At 9/26/2009 9:18 AM, Blogger Randy said...

Dale,

See recent update:

LV Homes

Bottom Line: With unemployment increasing, tighter credit conditions, thousands of resetting loans, growing inventories, etc, prices are still going lower. Bottom won't be seen until 2011 or 12.

 
At 12/09/2009 3:17 AM, Blogger cristian said...

Real estate is weird; think of this matter: prices for real estate in the US have dropped a lot in recent times, but in India and Lebanon, prices have gone up, sky high:)) It seems that real estate is very complicated if you analyze and compare different geographical zones.
__________________________________
House Short Sale

 
At 3/19/2010 4:38 AM, Blogger AV said...

Great post ECONOMICROT! I used AV Planners before and they did a good job! Here you go - http://www.avplannersinc.com/nv-las-vegas

 
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