Perspective on Las Vegas Real Estate

We want to talk about interest rates and how they impact your ability to buy a Las Vegas Home - where they've been and where they are and what this means to you.

Mortgage Rates are Trending Down

The only thing we can tell you about mortgage rates (like life to a certain extent but that's another article) is that they are always dynamic. They are constantly moving in one direction or the other - they've been moving down much of the last 12 months and are close to historical lows now.

We are telling our clients that a one half of a percent increase in mortgage rates typically means that they may need to reduce their potential Las Vegas Home purchase price by 5% to achieve the same monthly mortgage payment. Doubling this to one percent increase means you must decrease your purchase price by 10%.

Easy Math for Calculating Foreclosure

Some easy math - if you are buying a Las Vegas home for say $250,000. your loan at 6.0% means your payments will be $1,498. (approx); at 6.50% payments would be $1,580. and at 7% your monthly payment would be $1,663.

Las Vegas Real Estate Perspective

Now let's talk about perspective (thank you Albert) - today's rates are historically low when you look back the last 20-30 years. If you are purchasing a Las Vegas home at 5% to 6% fixed rate you are getting a great deal on your mortgage.

To contrast, interest rates in the 80's were around 12.5%, which makes 5.14% look pretty good. And, rates were 8.35% in 2000 - a 5.14% rate today does not look bad in comparison and it's a lot better than 12.5%.

Las Vegas Real Estate Trends

We see a large number of trends that are shifting the perspective on Las Vegas Real Estate:

*Las Vegas has levels of affordability not seen in 3-5 years.

*Investors are starting to aggressively move into this market - they perceive the market as at a bottom or close to it, as do we.

*Mortgage rates are at historical lows and some of our clients are able to get rates at 5% or even lower, if they are associated with a top tier financial institution and have an excellent credit score.

*Las Vegas continues to grow - we saw an average of 5,000 people relocate to our city each month during 2008.

*Las Vegas Real estate is perceived as a great value by people from outside the US - the dollar's fall is helping to drive this.

*National media has been bashing Las Vegas for much of the last year but does not "get" our local market - our real estate is selling and things are much better than the media is portraying Las Vegas!

Where Is Las Vegas Market Going in 2009?

We are on the front lines of the Las Vegas real estate market and there is much more positive news for investors and homeowners than what the national media is conveying! We continue to believe that Las Vegas real estate has tremendous values that won't last much longer. Our reasoning:

Increase in Las Vegas Real Estate Sales

December generated a dramatic increase in Las Vegas home sales. We sold 2,498 homes, up approximately 184.2% from December a year ago, according to the Greater Las Vegas Association of Realtors. December is traditionally a slow time of year due to the holidays and winter weather, which underscores a more positive interpretation of these numbers.

Investors Snapping Up Good Deals

Investors are moving into our market in increasing numbers. Most do not care if the market has "bottomed" or not, as they are purchasing homes at below replacement costs, have positive cash flow and plan on holding them for 3-5 years to generate a significant return.

Mortgage Rates Historical Lows

Mortgage giants Fannie Mae and Freddie Mac have today announced an extended moratorium on foreclosure suspensions for at least another three weeks by telling mortgage servicers who work for them to postpone any foreclosure or eviction notices. This extension helps "at risk" people facing foreclosure to enroll in the company's Streamlined Modification Program.

House Financial Services Chairman Barney Frank today has promised to move quickly on a bill that promises $50 billion of foreclosure relief. We believe this Bill coupled with other stimulus packages the new administration is putting together will help to stabilize the Las Vegas Real Estate market.

Mortgage rates are at historical lows - the average interest rate on a 30-year fixed rate mortgage has dropped to 5.01%. And, even lower rates below 5.01% are available to some customers of large banking institutions. Mortgage rates have dropped 1.5% points since October, creating a savings of $185. per month on a $200K loan.

Banking Institutions Not Negotiating as Much

Banking institutions that have foreclosed homes in their inventory are not negotiating on price in most cases. Meaning, they believe our pricing levels have fundamentally reached bottom and they do not need to negotiate to sell their inventory of Las Vegas homes.

Las Vegas Real Estate Sales & Affordability

We have levels of affordability (price points) not seen in our market in the last 4-6 years and our home values are starting to bring investors back into the market and motivating families to purchase homes.

Builders Cannot Build New Las Vegas Homes

Our low price points are forcing many builders to sit on the sidelines in this marketplace, as they cannot afford to build a home for what a current home is selling for, depending on the price point they are targeting. This means that we have less new home inventory on and entering the market, which helps to support the sales of existing Las Vegas homes. We do not think this will change much as we move through calendar 2009.

Looking for a great deal? Then clickthrough into our Foreclosure Page and call us so we can talk "perspective" with you about a Las Vegas home.



John and Ruth Ahlbrand, Co-Founders of RE/MAX CENTRAL of Las Vegas

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