Las Vegas Home Sales Up in September From Year Ago

LAS VEGAS ( DQNews.com) -- Las Vegas-area September home sales dipped from August, as they normally do, but climbed above the year-ago level as this year's lower prices and ultra-low mortgage rates continued to attract a steady stream of investors and first-time buyers. The region's median sale price rose modestly from August but remained 11.5% lower than a year earlier and 63% below its late-2006 peak, a real estate information service reported.

In September, 4,690 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (Clark County). That was down 13.3% from August but up 9.7% from September 2010, according to San Diego-based DataQuick. The firm tracks real estate trends nationally via public property records.

A decline in sales from August to September is normal for the season, in part because many families try to close escrow and move before school starts in late summer. On average, the region's sales have fallen 7.7% between August and September since 1994, when DataQuick's complete Las Vegas region statistics begin. The larger-than-usual dip in sales between August and September this year largely reflects a relatively high number of business days -- 23 -- for transactions to close in August, compared with 21 in September.

The 9.7% sales gain last month compared with September 2010 marked the third consecutive month in which total Las Vegas-area sales have risen year-over-year.

Last month's sales total was 1.0% lower than the average number of homes sold in September since 1994. But total sales were only below average because new-home sales remained far below normal. Though last month's sales of newly built houses and condos combined rose 14.7% from a year ago, it was still the third-lowest new-home tally for a September since 1994 (only last year and 2009 were lower).

It was different in the resale market, where sales of houses and condos combined rose 36.1% above average for a September and were the highest for that month since 2009.

The median price paid for all new and resale houses and condos sold in the Las Vegas metro area last month was $115,000, up 2.2% from August but down 11.5% from $130,000 a year earlier. It was the 12th consecutive month in which the median fell year-over-year.

Last month's median fell 63.1% short of the peak $312,000 median in November 2006.

The median's recent decline to levels not seen since the mid 1990s can be attributed to several factors: home price depreciation; robust sales of low-cost foreclosures; robust sales to investors, who mainly target low-cost properties; extraordinarily low new-home sales (new homes tend to sell for more than resale homes); and higher-than-usual condo resales (condos tend to be the least expensive homes).

September new-home sales represented just 11.5% of all transactions, compared with a monthly average of 29.1% of all sales over the last decade. September's condo sales represented 19.4% of total Las Vegas sales, compared with a 10-year monthly average of 13.6%.

An alternative home-price gauge -- the median paid per square foot for resale single-family detached houses -- held at $67 last month, the same as in July and August but down 13.0% from a year earlier. The July, August and September level was the lowest since the median paid per square foot was also $67 back in February 1994, and it was 64.8% below the peak $190 paid per square foot in May and June of 2006.

In September, a form of low-down-payment financing that's popular with first-time home buyers -- government-insured FHA loans -- accounted for 43.2% of all home purchase loans. That was up from 40.6% in August but down from 48.9% a year earlier and a peak of 55.1% in September 2008.

Cash buyers purchased 51.2% of the Las Vegas-area homes that sold last month. That was down from 52.3% in August and up from 48.9% a year earlier. The record was 56.7% this February. Cash purchases are where there is no corresponding purchase mortgage in the public record.

Cash buyers in September paid a median $83,000 for a home in the Las Vegas area, down from $84,000 in August and $100,000 a year earlier.

Absentee buyers -- mainly investors and vacation-home buyers -- purchased 45.2% of all homes sold in September. That compares with 47.1% in August, 43.1% a year ago and a record 49.9% in March this year. Absentee buyers paid a median $90,000 last month, down from $92,000 in August and $110,000 a year earlier. Absentee buyers are those who indicated at the time of sale that the property tax bill will go to a different address.

The heavy presence of cash buyers and other investors, with their focus on lower-cost homes, helps explain why 41.4% of September sales were for less than $100,000. That's down slightly from 42.9% in August but up from 32.6% a year ago. Last month 66.9% of sales were below $150,000, compared with 58.4% a year earlier.

Many of last month's sub-$150,000 deals were distressed sales, which made up nearly 70.0% of all resale transactions last month.

Foreclosure resales -- homes that had been foreclosed on in the prior 12 months -- accounted for 56.3% of the Las Vegas resale market in September. That was down from 57.2% in August but up from 50.8% a year earlier. Foreclosure resales peaked at 73.7% of the resale market in April 2009.

Short sales -- transactions where the sale price fell short of what was owed on the property -- made up an estimated 13.3% of Las Vegas-area September resales. That compares with an estimated 12.8% in August, 16.6% a year ago, and 10.1% two years ago.

The number of notices of default ("NODs") filed in Clark County last month fell compared with August, when NODs spiked nearly 58% from July. Last month lenders filed 4,507 NODs, down 16.0% from August and down 34.5% from a year earlier. The notice of default is the first step in the formal foreclosure process.

Last month's NODs were the second-highest, behind August, for any month since March this year, when 4,738 were filed. The August spike in NOD filings stemmed in large part from a nearly 190% July-to-August increase in the number of NODs filed where Bank of America was the "beneficiary." That lender and others appear to be working through their backlogs of delinquent loans more aggressively than they had been in spring and early summer. It is unclear whether the higher levels of NODs seen in August and September are the beginning of a longer-term upward trend in default filings, which could mean far more distressed properties on the market and more downward pressure on home prices.

The number of homes foreclosed on in the Las Vegas region in September fell from both August and a year earlier. Lenders foreclosed on 2,027 single-family house and condo units last month, down 18.2% from September and down 24.6% from a year ago. The figures are based on the number of Trustees Deeds filed at the county recorder's office.

During the first nine months of this year, 27,125 house and condo units were foreclosed on in Clark County, up 22.9% from the same period last year.

The foreclosure totals can include units that the county assessor has designated condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of foreclosure filings has seesawed, and a single month's increase or decline doesn't necessarily indicate a new trend.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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