Las Vegas Marketing Report
MARKET CONDITION REPORT
LAS VEGAS VALLEY
December 2007
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.
SELLER CONTRIBUTION:
The measure returns the propensity of
the buyer to request—and the seller to provide—buyer points to expedite
transaction closing. The propensity for sellers to provide buyer support
declined from November to December—but only slightly. The average
contribution declined for both SFR and CONDO. This decline may have been
caused by faulty data which has since been corrected.
As a generalization, and on
the average, a good estimate of the seller’s expected contribution is
between 2.8 to 3.5% of the transaction value.
THIS YEAR LAST YEAR
Relative to last year in
terms of transactions, the market is
-38.9%
behind the previous year.
Given the market has entered the winter/holiday cycle, it would be
reasonable to assume the market will finish the year about
-38% to -42%
in back of 2006. The November result was -38.6%
which implies the
slowdown in the current market may be at or near bottom in terms of demand
(sales per month). This logic, however, should not be extended to price.
Prices will continue to weaken in the short term.
MARKET OVERVIEW—CHANGE FROM PREVIOUS MONTH
Based on the changes from the previous
month, the market should be judged as continuing to move toward the buyer.
Both PERCENT SELLING (market efficiency) and ABSORB RATE
(market speed) are still declining from month to month signaling market
slowing. However, the
rate of decline has slowed implying the market is at or near the bottom in
terms of demand.
Supply (listed), which has been climbing at
a steady and consistent pace, has peaked and is now in a moderate decline.
Market peak, in terms of supply, peaked at about 29,300 units on or
about September 14, 2007. The current rate of decline in listing inventory
is about 30 per day.
The reader should expect a continuation of
the negative price trend with SFR moving slowly toward 270K (closing).
Expect CONDO to demonstrate more price stability and resiliency although
fluctuations will occur on a month to month basis. About 10% of properties
in escrow are now short sale.
The strongest sub-market is South SFR. The
weakest is Central/Boulder City SFR. As a general rule, the relative
strength of markets can be deduced by the 60 DAY ABSORBS RATE.
All markets in the Las
Vegas area are now exceptionally weak in terms of demand.
MCR TIP
PERCENT SELLING
looks at the last 60 days and counts the number of solds (success) and the
number of expired, cancels and withdrawals (failures), and adds them
together. These are the total number of clear market resolutions that
occurred during the period (current listings are unresolved). This result
is then divided into solds (success) to create the percentage of property
that attempted to sell and was successful.
This number is a leading indicator in the
sense that if this measure rises over time more listings are converting to
sales (not failing). PERCENT SELLING the Las Vegas area peaked at
about 75-85% in 2004-2005. Note in the current report PERCENT SELLING
is about 19% for SFR. In the previous report, percent selling was 20%.
This implies the market is inefficient in converting listings to sales and
is becoming less efficient in the short term. This is a negative indicator
and implies that from the perspective of the seller, the market is less
favorable and becoming more so.
WORDS OF
WISDOM
We all have big changes in our lives that
are more or less a second chance. Harrison
Ford
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