Tuesday, March 31, 2009 | 7:39 p.m.
Beyond the Sun
- Report: Homes lost nearly one-third of value in a year (3-31-2009)
- Government help can’t come too soon for 89131 families (3-26-2009)
- Housing help for Nevadans in budget bill (3-25-2009)
- Report: Las Vegas home values fall 28 percent in year (3-24-2009)
- Reid: Obama housing plan not enough (3-23-2009)
- Whether to walk away: Housing's moral minefield (3-22-2009)
- Professionals pessimistic about speedy economic recovery (3-20-2009)
- LV reclaims top foreclosure ranking in U.S. (3-20-2009)
- Reid, Goodman tour foreclosed homes, present remedy (10-22-2008)
Peggy Magee would like to retire to northwest Las Vegas to be close to family. On a fluke, her son placed her $100,000 house on the popular online classifieds site Craigslist.
In this tough market they didn't want a sell -- they wanted a swap.
It's not trading snacks on the playground, but the idea is generally the same. House swapping is a method for a homeowner to move without having to incur the costs of purchasing new.
"I think it could work if you could find the right person," said her son, Greg Magee. "(But) the house would have to be paid off."
And that's the problem.
Generally, one of the parties needs to own their home, which Peggy Magee does.
And in most cases, the other party would have to have substantial equity in their property. And that's hard to find in the valley.
That, and the Magees would have to find somebody aching to move to Michigan, which hasn't had the best employment news lately.
Several local experts say house swapping is a national trend that will mostly bypass Las Vegas.
"These days we don't see a lot of people with their homes paid off," said Brian Gordon of Applied Analysis, a consulting firm.
There are about 450,000 homeowners in the valley, and about half of them have negative equity in their homes, he said.
One cause of that is plummeting housing values. The median price of a single-family home sold last month was $142,500, down about 38 percent from the same time last year, according to SalesTraq.
With the steady escalation of housing values during the boom years, families traded up into bigger homes, or spent that money. They found themselves in trouble when the bubble burst.
"It's very hard to find people with enough equity to trade," said Leland Wong, a San Francisco consultant who wants a second home in a warmer climate.
So far, most of the Las Vegas property owners who've inquired about his spacious condo with hardwood floors and a green, manicured lawn don't have the equity to trade for his $1.2 million condo in the lower Pacific Heights neighborhood, he said. About 100 people have inquired, and maybe a dozen could work.
Wong said he's looking for someone with a good job and good credit.
He said even if the person owns his or her home, its value will still only cover a portion of his condo, in most cases. So the swapper would have to be in a position to pay a lot of cash, or take out a loan.
But there is anecdotal evidence that swapping has worked for those with money -- like celebrities.
Robyn Yates, broker/owner of Windermere Prestige Properties, has worked in real estate in the Las Vegas area for 14 years and has seen it work once, about two years ago.
"One party had a home that was valued at $500,000 and he owned it free and clear and he wanted to upgrade his home to something larger, more elaborate, because he was going to be living here full time," Yates said. She lowered the exact price of the estates to protect the confidentiality of her clients.
"So, we simply went shopping for a house and found the house he was interested in. Because he knew he wanted to sell the other home, I approached the seller as his agent to see if the seller would take the $500,000 home in exchange with boot (cash) to buy the more expensive $2 million home. He looked at the buyer's $500,000 home and saw the value and agreed to the deal. It was that simple. The seller needed a house for a family member, so it happened to fit the bill."
What's the benefit to the buyer? He sold his home without incurring certain costs, such as the commissions and costs of putting it on the market. But normal transfer rates did apply.
The Magees' story probably isn't going to end with a swap. Because of economic fortunes, Peggy Magee doesn't think she'll end up with a Las Vegas house at all.
She's lost so much of her 401k in the stock market (it dropped from $147,000 to $83,000), she's decided to just sit tight and visit her family here. Hopefully, she said, her fortune will change.