Las Vegas Marketing Report
MARKET CONDITION REPORT
LAS VEGAS VALLEY
March 2008
Welcome to the Las Vegas Area Market Condition Report (MCR) provided by
Equity Title.
We
appreciate and value your business.
These
comments and opinions are designed to accompany the Market Condition
Report attached to this document.
THIS YEAR
LAST YEAR (VISUALIZING THE MARKET)
In the last
report (February), the market lagged the previous year by
-38%.
The current result displays only a slight change of .3 of 1 percent. A
good way to visualize the current market versus past known results is to
convert total annual closings to rates per day as in the following graph.
CLOSINGS
PER DAY 2004-2008 RESALE MARKET ONLY—CLARK COUNTY
It is
obvious that today's market bears little resemblance to the 2004 market in
terms of the strength of demand. One can easily calculate the change in
current demand necessary to return to markets of previous time periods. As
an example, to return to the market of 2005, the current pace of closings
would need to accelerate to 122 closings per day average, an increase of
82 closings per day or 205%. The aware reader will note the rate of change
in closed transactions has slowed from -34 transactions from 2005 to 2006
to -14 from 2007 to 2008. The rate of closings per day for February 2008
is based on the first two months of market performance.
SELLER
CONTRIBUTION (INFORMATIONAL ONLY-NOT DISPLAYED ON REPORT)
February
2008 to March 2008
The
measure returns the propensity of the buyer to request—and the seller to
provide—buyer points to expedite transaction closing. The propensity for
SFR sellers to provide buyer support remained rather constant from
February to March with the propensity and size of the contribution
declining slightly.
As a
generalization, and on the average, a good estimate of the seller’s
expected contribution is between 2.8 and 3.5% of the transaction value.
Also, as the strength of demand increases relative to supply, the
propensity of sellers to contribute will decline, as will the size of the
contribution.
MARKET
OVERVIEW—CHANGE FROM PREVIOUS MONTH
PERCENT
SELLING (market efficiency) and ABSORB RATE (market speed)
demonstrated a slight increase after a long decline signaling market
bottom has been reached (in terms of demand). Positive changes in the
level of sale pendings indicate that both Percent Selling and the Absorb
Rate will be on the rise in the near future (slowly). However, prices have
not bottomed especially for SFR and will continue their current negative
trend led by distressed sale situations. Condo is less clear and appears
to be demonstrating more resiliency. Confirm this by reviewing (on the MCR)
that pending-contingent price for SFR lies below current closing price,
but not so for Condo.
Readers
should note the Distribution of Supply And Demand Table. See the ratio of
supply and demand is still quite high in all ranges but especially in the
upper ranges. Overall, there has been a continuation of tightening of the
market as sale pendings have increased and supply (listed) has declined.
This tightening is essential to gain price stability in the long run.
Transactions
are not distributed over market areas and price ranges in a uniform
manner. The market contracts and expands in cycles over time, and areas
contract and expand in concert with larger market dictates, but not
necessarily in a linear manner.
The market
is currently in a contraction cycle of unknown duration. Some areas are
“hotter” than others in terms of transactions. Some price ranges in hot
areas turn out to be cold. The above areas and price ranges are both hot
in terms of area and price range. A listing in the areas and price ranges
indicated will have greater expected value1 than those not in these areas
and price ranges (SFR ONLY).
WORDS
OF WISDOM
Everything
should be made as simple as possible, but not simpler. Albert Einstein
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