“If the current real estate cycle were a baseball game, Las Vegas would be in the fifth or sixth inning, a panel of analysts said Thursday evening at Spanish Trail Country Club.”
— Las Vegas Review Journal
Investors purchasing real estate with 100% cash is at a record high. “According to the National Association of Realtors, buyers paid cash for 23 percent of all homes bought in January, the highest share since NAR started measuring cash versus credit sales in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.” Cash sales in Las Vegas alone comprised of 54.5% of sales. (upi.com).
Foreign and out-of-state buyers are accounting for a significant portion of cash buying because of bargain prices and Las Vegas’s warm climate. Cash transactions get investors better deals and close escrow faster. This is putting a floor on prices and stabilizing the market. Prices are generally still dropping but are forming a bottom.
Retail space remains distressed in Las Vegas. Vacancies are very high with many businesses relocating to find cheaper retail space. This will keep pressure on low retail rents for the foreseeable future. Retail businesses will use this to their advantage to re-negotiate their leases with their landlords. Landlords are likely to give tenants some slack to keep them from leaving.
Investors are Needed to Turn the Market Around
“We can’t expect every one of these homes to be purchased by an owner (occupant) because we don’t have lenders available to make them a mortgage loan,” says Housing analyst Dennis Smith of Home Builders Research. “If they’ve been evicted or left on their own choosing, chances are their credit’s been trashed anyway. We have to have investors. It’s a necessary part of the recovery.” (lvrj.com).
Being able to get financing is difficult for many. Many residents in the distressed areas have been unemployed, had a foreclosure, bad credit, or don’t have a down payment. Lending has slowed down considerably and the standards that banks require are higher.
Unemployment is down in Nevada, much of which is due to unemployed people leaving the state. This will keep prices low in Nevada for awhile. In February, prices in southern Nevada fell again slightly. However, Las Vegas will be attractive to investors for at least several years and will provide a rich lifestyle for retirees from regions where the cost of living is very expensive.