Housing analyst: Short sales hurting economic recovery

By Buck Wargo

Friday, Oct. 8, 2010 | 3 a.m.

Are short sales bad for the speedy recovery of the Las Vegas housing market?

That’s the concern of Las Vegas housing market analyst Dennis Smith, president of Home Builders Research.

Smith pointed out that of the 22,588 listings on the Multiple Listing Service in August, 8,859 were under contract and 80 percent of those were contingent on short-sale approval. Thirty-two percent of the single-family home closings on the list were short sales, Smith said.

“What I have said all along is short sales are like a weight hanging over our head, a cloud that is covering the sky, and we can’t get rid of it,” Smith said.

In essence, short sales are holding back the housing recovery, Smith said.

The reason is short sales are a time-consuming process that take several months to negotiate with banks, only many times to have the deals rejected, Smith said.

The idea was that banks would make more money by agreeing to a short sale rather than allow a home to go into foreclosure, Smith said.

But that is no longer the case, he said.

A year ago, the price differential between a short sale and foreclosure was $10,000. That spread is about $2,000 to $5,000 now, and in some instances short sales are fetching less than foreclosures, he said.

Some real estate brokers such as Frank Nasson of Residential Resources have suggested that more and more short-sale sellers are asking for higher purchase prices, but that won’t help the inventory disappear any quicker, Smith said.

“Buyers are not in the mood to fork over more cash or pay higher prices,” Smith said. “There’s too much competition from other properties. It is still a buyers’ market.”

The federal government tried to streamline the short-sale process, but it hasn’t helped much based on what real estate agents are saying, Smith said. The problem is there is nothing in mortgage agreements for dealing with such loans held by investors.

That means short sales are starting to act more like foreclosures, and it is just delaying what will inevitably happen, Smith said. He said he lives next to a home that has been in the short-sale process for two years.

“If there are going to be foreclosures, then why are they letting them lag for 12 months to only deny the short sale,” Smith said. “If we need to correct the system, why not take the hit and move on or do you want this housing recession for another five years or it to take three years.”

County to reach 3 million people by 2033

UNLV’s Center for Business and Economic Research projects the region’s population will grow at a rate of 1.7 percent through 2035, well below most of the past decade

The center is projecting growth in 2010 will be 1.6 percent or 32,653 people to 2,039,000. Last year, Clark County said its population rose by 20,201 people after falling by more than 10,000 in 2008. The county’s population grew by 96,954 people or 5.3 percent as recently as 2006.

In other news

• Marnell Properties has named Colliers International Las Vegas as its exclusive leasing agent for Marnell Airport Center and Marnell Air Cargo Center. Suzette LaGrange, senior vice president at Colliers, will lead the leasing efforts. The first of three 81,000-square-foot, three-story office buildings has been completed. The center will also have a 10,000-square-foot, single-story office building.

• Nordstrom announced plans to move its Nordstrom Rack from Silverado Ranch Plaza to the Stephanie Street Power Center in fall 2011. The Stephanie store will be slightly larger than the 35,000 square feet it has now. The new location is a half mile from the Galleria at Sunset mall. Nordstrom officials said the new store will have better access and more shopping choices in the surrounding area. It will be in the northern end of the center near Barnes & Noble. Nordstrom Rack is a unit of the company’s off-price retail division that carries merchandise from Nordstrom stores at 50 to 60 percent off original prices, officials said.

• Linda Rheinberger, broker/owner of One Source Realty and Management in Las Vegas, has been named the 2010 Realtor of the Year by the Nevada Association of Realtors. Rheinberger received the award Oct. 1 at Hyatt Incline Village. The award represents outstanding achievement serving the real estate profession. Rheinberger is the past president of the Greater Las Vegas Association of Realtors and current president of the Nevada Association of Realtors.