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>>DALE: Good Afternoon. Today's topic of discussion is going to be the Las Vegas Real Estate Update
from an investor's standpoint, May 2013.
This is Dale Snyder with The Snyder Group at Keller Williams Realty. Today, I have Jeff
Barta with us.
Thanks for being here, Jeff.
>>JEFF: Thanks for the invite Dale.
>>DALE: Hey, you got it man.
So Jeff's a very seasoned agent on our team. He's been through the ups and down of the
market, worked with a lot of investors, you've done flips yourself, done some investments
-
And Jeff tracks the data, so this morning I started going through some of this market
data. And what caught my attention, as I was preparing for this video was, you know, I
looked at the data from April as you can see here, it says 37% of the sales were REOs for
April.
And that's what brought me over to where you were this morning, I said, "Jeff, this can't
be right, right?"
>>JEFF: Yeah, we knew that data wasn't true.
>>DALE: Exactly. So I look historically, I went back to December, January, February,
March, and we'll have this data linked in the video for you, so you can look at this
great data. But it's more like 10% right? Roughly?
>>JEFF: 10% right.
[music]
>>DALE: Let's just talk about what's going on in the market here. We're seeing inventory's
gone down a lot, right? So what have you seen? I know you got a lot of data, you've been
tracking for years, here.
>>JEFF: Well, in January 2012 we had about 10,400 properties, by the middle of 2012 in
May that inventory was cut in half. That's why prices rose 30% over the last 12 months.
So, we'll say about 4,000 to 5,000 properties on the market now for the last 12 months.
Currently, we hit a low in March of about 3,900 properties now in May we're at 4,300.
We've gone up just about 5% just in the last month, which is kind of a seasonal thing,
it's kind of normal.
>>DALE: Yeah, that's just what I was going to say, it's probably a normal, seasonal trend.
>>JEFF: Right, were still selling about 3,300 properties every 30 days. That means we only
have about 1.2 months worth of inventory in the market right now.
>>DALE: Okay.
>>JEFF: Things are moving quick.
>>DALE: Yeah, absolutely. So, what do we sell last year, like monthly average would you
sell, say we sold 4,000 properties - every 30 days.
>>JEFF: Every 30 days.
>>DALE: Okay, and the data here which you guys will be able to see from these great
reports, that Ticor sends to us, other than the last one that has the wrong data - they're
great.
You can see here, they're saying close 2,879 units for December, 2,200 January, 2,489 February,
2,800 March, and 3,000 in April.
So, what is that about a thousand units less for month, than what we're normally seeing?
>>JEFF: Correct, correct.
>>DALE: And why is that? What's changed things.
>>JEFF: Well, the banks are not releasing the amount of inventory that they have. We
know that they're filing more Notices of Defaults, so we know that's there's more inventory coming
that the banks will own.
We know that's coming but, our market now is really traditional sales. So we list a
lot of traditional sales on our team.
>>DALE: Yeah, absolutely a lot.
>>JEFF: And that's what most of our buyer's agents are selling.
>>DALE: Well, yeah, as the data shows here the resale markets around 40%-50% right now,
and the distress makes up about 40% - roughly.
>>JEFF: Correct.
>>DALE: So, get this data here. This one's kind of cool for you guys to check out, because
this ties into the "shadow inventory," right? That's what you might be thinking here. What's
going to be happening over the next 6 months or so, we've seen, as Jeff stated, you know
prices have gone up 30%-35% in the last year.
And we're projecting, what? 10%-15% more for this year already, that we'll see?
>>JEFF: Correct.
>>DALE: We'll go up about 45% from what appears to be the bottom, a year ago.
So how is that going to be impacted when we see these REOs are bank-owned properties on
the market.
So see here in March, according to these data we had about 1,500 Notice of Defaults file,
about 1,400-1,500 in February versus last year around the same time there were about
300-400.
So it's gone up, you know, drastically.
And its AB-284 right? I mean, that's the reason why the banks were foreclosing.
>>JEFF: But even when they do foreclose on these properties and put them on the market.
We believe there's a high demand and that these properties will absorb very quickly.
So I think there's going to affect prices, some people have asked if the banks list more
properties are prices going down?
And the answer to that I think is no. I think prices will stabilize, if anything.
>>DALE: Okay, so I'll run through this with my clients and investors, you know, what's
the worst case scenario?
So, let me back up a moment here? AB-284, if you'd like more information on that it's
going to be in the description below and basically bottleneck the foreclosure process.
I'm not going to go into more detail on that, there's also a couple of laws that are in
Congress right now. One is SB 321, which is basically the homeowners Bill of Rights, is
what it's referred to. It's AB-284 on steroids, basically.
It was passed in California, potentially could be passed here, SB 424, which is the first
right to refusal or the buyback. Those two videos are going to be in the description,
as well.
We had a seasoned attorney run us through what they are on how it could impact the market
but let's get back on point here with things.
So, worst case scenario, I lost my trail of thought for a second, so worst case scenario,
what are you seeing?
>>JEFF: Worst case scenario, prices could go down 5%-10%, but no more than that. You
know, its a function of what someone can buy a home for and make a mortgage payment versus
rent.
So right now, we're right about stabilizing because interest rates are so low.
>>DALE: Under 4%,
>>JEFF: Yeah, under 4% amazing. Historically incredible rates.
>>DALE: Absolutely, unbelievable.
>>JEFF: So that if continues, prices are either going to stabilize, but more likely they're
probably going to continue to go up, as we're seeing lately.
>>DALE: Yeah.
>>JEFF: Some of my investors are very excited, I have a gentleman who bought a home last
year in September for $90,000 from a short sale and sold it in March this year for $142,000.
That's huge.
>>DALE: It's a good return.
>>JEFF: Yeah.
[chuckle]
He's very happy.
>>DALE: I want to talk about the flip that you're doing in a moment, but I just want
to tie into a couple of things, for the investors here or consumers listening.
So my projection, I feel, is in alignment with yours, and I always consult with people
much smarter than me, and get their pulse on stuff and use that to come up with my professional
opinion with my pulse on the market, as well.
And I look at it, right now, prices make sense.
Yeah, we've gone up 30%-35% but this is reasonable pricing we're back to affordability.
Like an average casino worker can afford a home, and as we were talking earlier before
the video, what, they're mortgage payment might be a $100 bucks more or might be less
than what we're paying for rent but it makes sense, right? So this pricing makes sense.
>>JEFF: We're also seeing a lot of buyers come back in the market that did short sales
three years ago and four years ago. They're coming back in the market to be owner-occupants
again.
>>DALE: That's right, that's right. So, worst case scenario, if I'm not to put words in
your mouth here, but I think we're on the same page here.
So if we were to go up another 15% this year, say we're up 45%, worst case scenario these
NODs, and these REO's, these bank owned homes start coming back on the market and prices
could possibly go down maybe 10% or so, but we're at today seems reasonable.
It's logical to stay in this range.
>>JEFF: Yes.
>>DALE: Okay.
So, I want to transition, just saying this is a great conversation, especially for you
investors who have bought properties from us and you're considering flipping over, you're
considering getting into the market.
So just walk me through that a little bit. You just bought a property.
>>JEFF: Right, I closed on a property $120,000, I knew that was about at least $20,000 to
30,000 below the market but it was in terrible condition.
It needed a lot of work. And I found a crew to rehab it. I spent $13,000 on the rehab.
There was a recent sale in that neighborhood for $140,000 that was in similar condition,
but my home had a pool so if you take the one from 140 and about $20,000, with the upgrades,
and then you add a pool, you had about $170,000.
So I wanted to just see what I can get, I priced it at $179. I got multiple offers and
accepted an offer yesterday at $179.
>>DALE: Nice! Good work. That was awesome.
>>JEFF: Thank you. And it should close within the month.
>>DALE: So you paid 120, you put 13 in, so you're going to make what? After fees and
everything, you know $30,000-$40,000?
>>JEFF: Yeah, about $30,000-$35,000.
>>DALE: Awesome. That's fantastic.
So that's the reality of our market right now, we're seeing that all day long here.
You know I have investors that have bought last year and put their homes back in the
market.
So whether you're looking at - you know buying some investments and its your first time at
getting into the market, or you're a seasoned investor looking at the buy and hold strategy,
or you're looking at doing some flips, or possibly selling and getting out of the market
place.
You know there is a lot of opportunity.
You know it really depends on your situation. So I just encourage you to reach out to us,
we can have an informed, educated conversation with you about what's going on and see if
it even makes sense for you at this time.
But before we wrap this up, I do have another question I want to get your pulse on, so what's
the current cash-on-cash return that investors can expect in our resale market, not going
down to auction and buying it. Buying off the MLS.
>>JEFF: We're seeing people get anywhere from 3% to about 7%.
>>DALE: 3%-7%? Okay.
>>JEFF: Which for them is - makes sense versus having it sit in the bank and earning what?
Nothing? 0.5%?
>>DALE: Absolutely. Exactly.
Well, then you're hedging against inflation too, right? I mean because if inflation's
going to go stuff is going to go up. The cost of every single thing that goes into the home,
you know the wood, all the copper, you know everything is going to go up overtime, as
well. It just has too.
>>JEFF: So it makes sense to buy right now, for a lot of these people buy and hold, get
it rented, and just let get yourself get in return.
>>DALE: Yeah, yup. There's still a lot of opportunity.
You know, we're really not in a free market right now, right.
Controlled by the government, controlled by the banks. So all you can do, all we can do
as consumers, is capitalize on the controlled market because it's not free market.
There's definitely some opportunities you've just explained with the flip that you're doing.
Awesome.
So if any of the investors of consumers would like to get in touch with you, how would they
reach you?
>>JEFF: They can all me at 702-212-22-79, alright.
>>DALE: Awesome.
Well, we appreciate the opportunity for taking the time to listen to the video here.
If you found value in it, feel free to share it, you know make some comments below.
It's Dale Snyder and Jeff Barta with The Snyder Group at Keller Williams here in Las Vegas
Nevada.
Have an awesome day.