Once decimated by high foreclosure rates, the Las Vegas housing market is now the focal point of a pivotal housing boom. Due in large part to the onslaught of investors that have flooded the desert city, property values have been bolstered and now sit comfortably at 32.8 percent higher than this time last year. A distinct lack of housing inventory has contributed to the recent trend.
However, the housing market remains so constricted that Realtors are persuading people to sell their homes. While agents are known for their aggressiveness, the recent Las Vegas real estate market adds a whole new dimension.
“Right now, on average, an average listing we have we can say there’s no less than 15 offers on a property that we have,” says Noah Herrera, vice president of the Greater Las Vegas Association of Realtors.
According to Herrera, the typical duration for Las Vegas’ housing inventory is approximately six months. However, the pace of the Las Vegas market has shortened their available housing supply to nearly five weeks. One reason, he says, is an influx of big-money investors from Wall Street and subsequent hedge funds that are known for their bulk purchases.
“We have institutional investors that are coming in and taking all of our inventory — overbidding, paying cash,” Herrera says.
In addition to interested investors, federal law has served to stabilize the once desolate city. As a result of the recent bubble crisis, federal regulations made it increasingly more difficult for banks to foreclose on delinquent homes. In doing so, mortgage and foreclosure practices became more transparent while predatory lending became nonexistent.
“Well, it is a bill that’s meant to protect homeowners,” says Luis Lopez, an analyst at the Lied Institute for Real Estate Studies in the Las Vegas housing market. “To me it makes sense that banks have to show the homeowner that they have the authority to foreclose. It just seems something very basic.”
The presence of investors, in association with new federal regulations, served to reduce the rate in which foreclosures were occurring.
By comparison, there were approximately 4,000 homes in Nevada that had defaulted on their loan by September 2011. Immediately after the bill was passed, the following month, there were 80 notices of default. The dramatic decrease in foreclosures prevented more houses from reaching the market. Limited inventory then persisted to increase prices in the area.
“Because the values have gone up so much, it’s now causing normal people that were underwater to be able to sell their houses,” says Herrera.
The drastic rise in property value translated into fewer underwater mortgages. As a result of the increase, underwater mortgages went from 70 percent in 2010 to less than 50 percent today.