Buyer and agent frustration
May I just say that this is a very frustrating market, frustrating for agent such as myself as well as for my clients. On one hand prices are still very low compared to just a few years ago and interest rates are still close to all time lows. The problem is inventories and investors. Inventories are lower than they should be in a normal market. Much of this has to do with recent legislation restricting the ability of banks to foreclose. Low interest rates are a good thing, but low rates also are available to large institutional investors and they are buying up many homes in this area. They are paying cash and all other things being equal are driving out the normal buyer that needs a loan to consummate a purchase.
An additional restriction on inventories has to do with the very large number of homeowners that are upside down, owing more than their properties are worth. They are in effect frozen. If they want to move they a left with two very bad choices, in most cases, either doing a short sale or letting the bank foreclose.
Foreclosures
Foreclosures are making somewhat of a comeback. The number of foreclosures and homes purchased by 3rd parties making it to the marketplace are still very low. The good news is that notice of default filings are up, almost double from a year ago. That is good news because there are thousands of homes in this area that are in a sort of limbo. Homeowners have stopped making payments but no foreclosures have commenced. This is a very bad situation. The huge inventory of homes that are in this situation needs to be cleared before we can again have a stabilized market. The increase in foreclosure filings should start to address this problem. There is still a great lag time between when a foreclosure is commenced and when the property is actually sold again to an average buyer. Right now that lag time is around 18 months.
If you want to get “into the weeds” with local foreclosure information here it a link back to the recent Clark County data from Foreclosureradar.
http://www.foreclosureradar.com/nevada/clark-county-foreclosures
Advice and best guess
My best guess is that prices will continue to climb, but not at the rate of the last year. Even if say in 18 months there are an additional 500 properties a month coming on the market as a result of foreclosures, I believe the market will absorb them easily. Investors will soon likely be less aggressive in this market place and that will also have a dampening effect on prices.
My advice? Buy now if you can handle the hassles. You will need to be very aggressive and will need to operate with some conviction that as hard as it is now, prices are likely to be higher when this market stabilizes.
