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>>DALE: Good afternoon. A question I've been getting a lot lately, are we in a housing
bubble? Today's topic of discussion, I'm going to be going over 3 Key Points that indicate
me to believe that we are not currently in a housing bubble.
This is Dale Snyder with The Snyder Group at Keller Williams Realty, here in Las Vegas
Nevada.
[Music]
Let's get started, so point 1, the pricing makes sense. So if it makes sense, therefore,
to me it should be sustainable. Let me explain a little more. Prices have come up about 35%
in the last year so that in itself makes people believe "wow! it's a bubble," right? Because
how can prices come up so much in one year's time?
Well, remember, we dropped 70% off the peak, that is a huge drop. So if you look at the
trend line, the 40-year historical trend line, we're still below the price point of where
we should be on the housing market here in Las Vegas.
Also important to note, you know looking at the affordability of homes in Las Vegas makes
sense right now. Even if interest rates were to go up a couple of points, right now, we're
at about 4%, we're in the low 3s. You get a home in a $150,000, $200,00, $300,000 and
have dual income or a single mom with a couple of kids, can afford a home in Las Vegas. It
makes sense.
So the prices all make sense, right now. And also look at the lender restrictions. It is
so difficult to get a loan right now. They're making sure that you can afford this property.
And then over 50%, as many as 60% of our buyers are paying cash.
This is just isn't investors. You know, we sell a lot of homes every month and a good
percentage of those are owner-occupied cash buyers. So we're in a very strong market,
in the sense that the buyers are buying. None of these "no doc loans" anymore like we used
to see where anybody can get a loan without disclosing any documentation.
Number 2, which is a big one, is the shadow inventory. I'm sure you've had conversations
about it a dozen times, this year alone, about the shadow inventory and what's going on with
it, right?
We'll there's projected 40,000-50,000 homes left to go through some sort of foreclosure,
loan modification short sale in the Valley. Let me explain something to you here, as far
as a healthy market. A 5-6 month's supply of inventory is a healthy market. Right now,
we have a 1 to 1.4 months supply of inventory.
In Las Vegas, that means about 20,000 homes in the market is about a healthy market based
on historical data. If the banks were to bring on 10,000-15,000 homes to our market, that
would put us into a healthy market.
They're not going to do that, of course, they're going to slowly trickle them out. But we have
a very low supply of inventory right now. A lot of that is due to AB 284, and then the
revision that's come, the AB 300, which I'm not going to go into detail. But if you'd
like more information about that and do not understand those laws make sure to watch this
video and at the end there will be a link to those videos so you can better understand
them.
Another important note on the absorption of the shadow inventory, we could sell about
15%-20% more homes than we currently are selling. We just don't have the inventory. So if the
banks would bring more on we will absorb them. We're about 20% below what our current sales
are.
And another important note, investors are not the only ones in our marketplace. For
every home that we sell, especially in that lower to middle price range, a lot of times
the investors are getting them because they're paying cash, right? But that leaves several
conventional owner-occupied buyers without a home.
So we believe that as these investors dissipate out of the market they're going to be backfilled
by the millennial buyers, and the move-up buyers to help absorb this supply of distressed
homes that are left in the marketplace.
Number 3, is going to be the momentum. We have massive momentum locally, nationally,
and globally right now in the economy. And the reason I say globally is that Vegas is
so tied globally as an economy to help drive our market.
So let me quickly touch on some local data. We're the 6th fast growing Metropolitan area
in the nation, right now, which is pretty astonishing considering our unemployment rate
is still 2% higher than the national average. We still are one of the fastest growing Metropolitan
areas.
And our unemployment has gone down by 4.4% so we're slowly inching down on our unemployment
rate. And if you look at all the growth we're seeing here in the city. You know, Echelon
was just purchased by a Malaysian investor. $7 billion dollars are going to be invested
in the Echelon project.
We've got Dynasty, we've got Resort World, I mean right now, there's $2 billion in construction
taking place right now on the Strip. Now if you drive around the Valley, you're going
to see a lot of commercial projects being built right now. You know Zappos, the billionaire
owner Zappos, is investing heavily on the downtown project.
We've got 2 water parks that opened, the Red Rock area, the casino, the outdoor center
that we've been waiting on. You know, Macy signed on as an anchor tenant, that's moving
forward. A lot of major metropolitan areas nationally are thriving again. And that drives
people back to the Las Vegas market -- for the entertainment.
Travel and tourism is doing well again. So there are a lot of indicators that the momentum
is so strong right now that it's not going to be reversed.
So in summary, if you're considering selling, it's obviously going to depend on the price
point location and your personal needs. I'd suggest you reach out to me and have an educated,
informative conversation about what we feel will be the best strategic placement for you
in the market.
If you're a buyer, I wouldn't be concerned about the bubble. You know as the data indicates
and as my gut on it is telling me, we are not in a bubble. You know, it's a very sustainable
market that we're in.
So in closing, many people projected that the hardest hit markets in the country were
going to snap back the strongest, right? Well, if you look at Arizona and Nevada, two of
the hardest hit markets, they have snapped back the strongest, which makes sense, right?
Because we dropped the most so we should snap back sooner.
I hope this information was of value to you. This is Dale Snyder with The Snyder Group
at Keller Williams Realty. Feel free to reach out to me and have an educated conversation
on the Las Vegas real estate market.
Have a fantastic day.