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BY IAN MYLCHREEST -- The news is mostly positive for the housing market, Las Vegas real estate experts told Nevada Public Radio. John Restrepo of RCG Economics notes that new home sales and sales of existing homes are both up by double digits. The real concern is that while prices are up, income in Southern Nevada is not and sustained growth in incomes is what will ultimately sustain the housing market over the long term.
Like others in the business community, Restrepo argues that AB284 – the Nevada law that restricts robo-signing by banks – kept the supply of houses artificially low and so drove up prices. If the current session of the legislature enacts the fix the real estate and mortgage industries want, then many more foreclosed homes could be hitting the market.
Dave Tina, president of the Greater Las Vegas Association of Realtors, said the rising prices have been driven by the realization that the market has bottomed out. Buyers were waiting for the bottom to be reached but waited too long.
“And we went very low and the bottom came and went and now they see we’re appreciating and all our buyers out there … now that they’ve seen the bottom has come and gone, are buying in a frenzy with the interest rates at three or three and a half percent and the prices still 50 percent down from 2004 and 2005. They know if they have any interest at all in owning a home they know that this is the time,” he added.
Even though investors might be pushing some first-time home buyers out of the market, both Tina and Restrepo said that the investors in the market now are very different from seven or eight years ago. They were “buying with almost zero money down because of the kind of mortgages they were able to achieve. Investors buying today are buying all cash, so we’re not going to have that walk away, foreclosure or short sale because you can’t foreclose or short sale an all-cash property,” Tina said.
Summerlin and Green Valley are the hottest areas of the valley right now, according to Tina. He points out that while the percentage numbers might be higher in other neighborhoods like North Las Vegas, they were tend to be the areas where home prices sank lowest during the recession. “The steady and stable appreciation is in Green Valley,” he added.
Realtor Tina noted that the robo-signing law has held up inventory but even without that law, banks would not release 30,000 or 40,000 additional houses to depress prices for houses they are selling.
Tina explained that cash investors will not pay above the appraised value and buyers looking for a home to live in should expect to pay $10,000 to $20,000 above appraised value for good homes in good neighborhoods. And they are willing to pay that, he added.
Buyers can speed up their transaction if they use a mortgage broker by a month or more because brokers require much less documentation than banks, said Tina. On the other hand, bank mortgages usually have lower closing costs and interest rates.
It would be a mistake to loosen lending standards to boost the housing market, said Restrepo. “The banks are doing the best they can and they don’t want to open up the spigots again on unqualified buyers and all that sort of stuff so they’re being very careful in how they lend.”