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June 4, 2012

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REAL ESTATE:

Foreclosure sales rule market, key to recovery

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Tiffany Brown

A Las Vegas home is shown for sale on July 27. Southern Nevada has seen a recent influx of investors seeking existing homes.

By Buck Wargo

Fri, Sep 4, 2009 (3 a.m.)

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Investors and first-time buyers dominate home purchases in Las Vegas, and their investments will be key to burning foreclosure inventory, a research company reported.

Almost 70 percent of the area homes and condos sold in July were foreclosure sales, meaning those homes had been foreclosed in the past 12 months, said Andrew LePage, a spokesman for MDA DataQuick, a San Diego research firm.

July’s percentage of foreclosure sales was the same as June, but up from 62.5 percent in July 2008, LePage said. The peak was 73.7 percent in April.

July marked the 16th consecutive month in which sales of existing homes rose on a year-over-year basis, he said. The 3,925 single-family homes sold in July were the highest for any July since 4,555 were sold in 2005, LePage said.

In addition, condo resales have increased for 13 consecutive months over the previous year and in July were the highest since 2005, he said. There were 956 sales in July compared with 1,073 in July 2005.

In July government-insured Federal Housing Administration loans, a popular form of financing for first-time buyers, accounted for 58.4 percent of the purchases, up from 51.8 percent in June, LePage said. Investors and previous homebuyers bought 39.1 percent of new and existing homes last month — the highest since 39.3 percent in November 2005, he said.

Forty-three percent of buyers are using cash to buy homes, LePage said. Cash deals have become popular in areas where prices have dropped sharply, and sellers prefer the speed and certainty of those transactions, he said.

Foreclosures will keep downward pressure on prices and lure investors and first-time buyers, LePage said. In July, 863 homes and condos were lost to foreclosure in Clark County, up 1.7 percent over June and up 26 percent over July 2008. It was the second highest monthly total behind February’s 3,718 foreclosures.

The use of adjustable-rate mortgages to buy homes is near record lows, representing 1.1 percent of all purchases in July, LePage said. That’s the same as June, but down from 5.2 percent a year ago and down from a monthly average of 32 percent this decade, he said. The lowest was 0.6 percent in March.

The median price paid for all homes and condos in July in Las Vegas dropped to $130,000, down 3.7 percent from June and down 41.4 percent from July 2008, he said.

When combining new and existing homes in Southern Nevada, prices have fallen for 27 consecutive months and in July was 58.3 percent below the peak of $312,000 in November 2006, LePage said.

The median price for existing homes fell in July to $135,100 after holding steady at $140,000 in May and June, LePage said. July’s median price for existing homes was the lowest since June 2000’s $135,000 and was 56.7 percent below the $312,250 peak in June 2006.

Another price gauge fell in July after flattening in May and June, LePage said. The median price per square foot for used single-family homes fell to $75 in July, down from $77 the previous two months. July’s figure was 60.6 percent lower than the $190 peak in June 2006, he said.

MDA DataQuick’s second-quarter data for Southern Nevada shows 19 ZIP codes had price declines of 50 percent or more since the second quarter of 2008.

Twelve ZIP codes had declines of 60 percent or more: 89101, 89102, 89103, 89104, 89105, 89106, 89107, 89109, 89110, 89118, 89146 and 89030.

ZIP code 89103 had the biggest decline — 86 percent — with homes selling for $67 per square foot. The area is west of Interstate 15, south of Spring Valley Road, north of Tropicana Avenue and east of Rainbow Boulevard.

The Clark County assessor’s office reported that from July 1 through Aug. 19, seven ZIP codes surrounding downtown Las Vegas and North Las Vegas had median sales prices per square foot of $50 and lower. They include 89115, 89030, 89106, 89107, 89101, 89104 and 89121.

According to MDA DataQuick, Henderson fared the best with only one ZIP code exceeding a 36 percent decline: 89011’s 47.5 percent drop.

Only two ZIP codes in Southern Nevada had an increase in the median price of a home: 89034 in Mesquite, where prices rose 1 percent and 89124 in the sparsely developed southwest valley, where prices rose 2.3 percent.

ZIP codes with the lowest median prices were $47,000 in 89101 near downtown Las Vegas and $40,000 in 89030 near downtown North Las Vegas. There were 14 ZIP codes with median prices below $90,000: 89030, 89101, 89103, 89104, 89106, 89107, 89108, 89110, 89115, 89118, 89119, 89121, 89156 and 89169.

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