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Has The Housing Market Picked Up?
Has The Housing Market Picked Up?

AIR DATE: April 12, 2013

John Restrepo, Principal, RCG Economics
Dave Tina, President, Greater Las Vegas Association of Realtors

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.”






    comments powered by Disqus
    John Restrepo, as he usually does, made a very important clarifying comment about credit and lending going forward. John suggested its not about just credit score or any single's about looking at the entire composition of the borrower--the nature of the employment, and other factors than just a credit score or a down payment percentage. You have to look at the entire "story", and not just one measurement. Good advice going forward.
    Rick MyersApr 4, 2013 10:23:02 AM
    Recently purchased a home. Credit scores above 800, 20% down,30 years with same employer. Wells Fargo still took over 70 days to close. Almost lost the house to cash buyer...only due to the goodwill of the seller did we manage to close and get the property. The amount of detail needed by the bank was amazing. I even had to provide a letter of explanation for why I donate $50 each month to united way.
    Brian CarlsonApr 4, 2013 10:01:58 AM
    What about te recent article in RJ discussing huge number of homeowners who have not paid mortgage and are therefore putting their mortgage dollars back into economy as consumer spending? Doesn't this make Vegas seem like it is a stronger economy than it really is?
    Sarah Apr 4, 2013 09:53:55 AM
    We just closed on our home yesterday. Three things about the local market that were frustrating. 1. Inventory. Despite the websites making it look like there was a fair amount to choose from, almost all of the listings are in some state of contingency. 2. Price. It seems at the first sign of an uptick (and likely a combination of #1), sellers decided to start listing houses with arbitrary listing prices $20-$40,000 above market value. This made it tough for people like us with an FHA loan who were unable to get lending over appraisal. 3. Cash buyers. Nearly half of all Las Vegas home sells are cash investors. This bottlenecks average families fighting over the remaining homes. Fortunately, we were able to reach out to the couple whom we've been renting a house from for the last 18 months and agreed on a deal without the house ever getting listed. We have no doubt that had the house been put on the market for even an hour, we'd be packing boxes instead of pulling paint swatches. We have a couple of friends who had to move in with family because they sold their houses faster without realizing how hard it is to buy right now.
    Tim RicksApr 4, 2013 08:55:18 AM
    Very recently I've seen that the Feds want to adjust underwriting criteria for Fanny and Freddie so that smaller down payments and lower incomes are sufficient to buy a house. Of course, that will cause prices to rise as (artificial) demand increases, but the rest of that story is that a few years of such policies will just set us up for another bubble/crash. Personally, I'd prefer the type of stability that comes with a 100% privately funded mortgage market.
    Tom HurstApr 3, 2013 20:14:52 PM
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