Nevada real estate agents expecting home prices to continue falling
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Real estate professionals in Nevada are more pessimistic about the future of the home prices in the in the coming months, expecting them to continue to decline, according to a survey conducted by HomeGain, a California research and marketing company.
Friday
22 July 2011
12:58 p.m.
Sun Coverage
Nevada real estate agents are growing more pessimistic about the market.
Eighty-two percent of Nevada real estate professionals said home prices would decline over the next six months, according to a survey conducted by California research and marketing company HomeGain. The survey found that real estate professionals in Nevada are more pessimistic about prices than in the second quarter of 2010, when 42 percent thought prices would rise and 29 percent thought they would decline.
During the first quarter, 71 percent said prices would decrease over the next six months. None said prices would increase.
Nationally, 50 percent of agents said they expect home price decreases over the next six months, and 12 percent expect increases.
The same survey of Nevada homeowners found 63 percent said prices would fall during the next six months, and just 3 percent expected an increase.
Real estate professionals said homeowners with homes on the market are becoming more realistic about what they are worth.
During the first quarter of 2011, 58 percent said they thought their homes were worth 10 percent to 20 percent more. That number fell to 28 percent in the second quarter.
Some 37 percent of buyer clients said they thought homes were fairly priced compared with 13 percent in the first quarter.
Nevada real estate agents were critical of the performance of President Barack Obama. Just 18 percent approved of his performance, down from 44 percent in the first quarter. Of the 82 percent who were critical, 55 percent said their disapproval was strong.
Among Nevada homeowners surveyed, 60 percent disapproved, including 43 percent who did so strongly.
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Just had an appraisal and found that my home has lost 70% of its value in 5 years. That's an average of 14% per year. Thank you, Chris Dodd & Barney Frank. Those guys make Bernie Maddoff look like a piker when it comes to Ponzi schemes!
@Jerry perhaps you should thank republicans like John Ensign, Jim Gibbons, Brian Sandoval and their ilk. Or just thank Bush. He spent trillions of dollars on a phony war over phony WMDs and let the economy implode.
Of course they will decline. There is no reason why they wouldn't decline. First, unemployment is rampant in Nevada. Second, there is little to no help for homeowners. Third, even those homeowners who purchased properties in 2009/10 are underwater because of the continued spiral in home prices from people walking away. Then, add to that the threat by Republicans that they want to reduce homeowner assistance programs.
The result? Continued spiral. People will walk away. Just like banks, it makes no financial sense for a person to retain property that is so undervalued. Why keep a home with a mortgage of 300k when its current value is only 120k? It defies all reason.
For those who try to trash homeowners that walk away - please, get real. A moral obligation you say? What moral obligation. Banks/business don't recognize a moral obligation, why should you?
The only way this spiral will stop is until prices hit their real value and there are no more owners who have properties underwater by more than 15%.
Otherwise, Congress needs to provide homeowner assistance, just like they assisted the negligent banks, or banks need to start reducing to principal.
Otherwise, the losses will continue.
Scott I don't like u to wake u up but wasn't it Bill Clinton (impeached Pres) who put pressure on banks to make loans to people who didn't qualify.? We have a huge problem but put the blame where it started. Bush just continued the policy.
lvfacts101 (Jerry Fink). Jerry, I hate to break the news to you my friend. But, your house wasnt worth what you thought it was to begin with based upon the churn and burn real estate appreciation from 2002 thru 2006. In those years values were artifically "pumped" in some yrs 30% to 40% year over year! Totally unrealistic and frankly criminal. Yest we all, yes I include myself, were "happy as a clam" (Opps were is my Lake Las Vegas Friend Boulivier?) So now we all must face up to the facts that appreciation must return to the historic level of 3 to 4 % a year after the bubble burst brought real estate back to 2002 levels. It will be a decade before we return to 2006-2007 levels. If you want a good predictor for where we are now and the future, take a look at the Case Schiller Index ( Google it) for it has been both a honest predictor of this crisis and a good indicator of the future. Sorry, but both Political paries are to blame for this mess, along with "We the People" for electing such corrupt, ineffeectual officals in the first place!
Why are we all so concerned about paper?
"The only way this spiral will stop is until prices hit their real value and there are no more owners who have properties underwater by more than 15%."
Most properties are already selling well below their real value! Try building any of these properties, even if the land was free, you couldn't build at the price you can now buy them at!
Right now you can get a 12% cash or cash return on rental income, it doesn't get much better these days, and as more walk, rents will go up and the return will increase! And, when the economy recovers in 5-10 years prices will go up and you will get an extra bonus on your investment. I'm a buyer at these levels!
Values will continue to drop until jobs are created at a pretty good clip every month. There is NOTHING on the visible horizon that indicates things are going to get better. Without job growth nothing else will improve....just a slow decline year after year.
My guess is 2-3% drop in value per year until the economy levels out and then prices will stabilize. As far as home prices increasing, that's anybody's guess.
In my opinion and putting my money where my mouth is, is buy! If you find a home that meets your needs and wants, and you plan on staying in Las Vegas, buy. Rates are really good right now and finding a home where you can afford to do a 15 year loan instead of a 30 makes a HUGE difference in paying it down. Stay away from HOA's as much as u can.
If you can truly afford the cost of the home and stay in Vegas 5-10 years, in my opinion you will be well off. Not to mention it's nice to own a home, makes you feel good. Just don't get in over your head and you'll be fine
@unlv
It's not people walking away....it's people walking away with not one iota of regret that they are walking out on a debt. Not one iota of shame. Not one iota of regret of hurting others home values. It's the attitude more than the action. People seem to think that because "others" did it, it's perfectly fine for them to do it.
Anyone buying now is a moron. Prices will continue to decline for at least 18 more months.
Kablooey,
If anything, you're too optimistic. There's nothing that's going to be that much better for the housing market only 18 months out. We have an oversupply of housing that might not ever see enough demand. I wonder if anybody really knows how many vacant homes are sitting out there. As more hangers-on give up and leave, the valley's population will shrink some more. And yet... there are STILL new developments just coming on line, around the valley.
@Kaloobe
"Anyone buying now is a moron. Prices will continue to decline for at least 18 more months."
Ok. Let's say prices decline 10% over the next 24 months but interest rates rise? When is a better time to buy? Even if prices decline over 2 years 10% then go back to normal appreciation. In 5 years time a person would be in a position to sell and walk away with money on with a 15 year note. In 10 years after paying on a 15 year loan, your golden.
A person still has to live somewhere, why rent when you buy for a lot less? That seems stupid to me
anthonyjoevegas,
With all due respect, what is "normal appreciation?" What we've had in this town has been distorted. And the supply side of the equation has been equally distorted. As I commented above, I don't see people filling the available homes at any time in the foreseeable future. People came to Vegas over the last 25 years because it was a "growth" story. That's gone. There will be even more of an exodus once the rest of the country does return to normalcy and people say "what the heck are we still doing in Vegas?"
Furthermore, the myth that it's always better to own than to rent has been punctured. Home ownership -- especially in a glutted market like this -- will be more expensive than renting. Congress is about to take away the tax incentive (which they should -- almost all Americans take the standard deduction and do NOT deduct mortgage interest; the interest deduction is only for the wealthy), and this will strip real estate agents of one of their biggest lies for talking people into buying ("you can write off your payments!").
To own a home in this town is to own a depreciating asset that severely inhibits your flexibility to move, should better conditions present themselves elsewhere. Buy if you know this will be your home for a long time. But forget about it being an "investment."
Buying a home right now couldn't be a more poor investment. Put your money in Apple stock. Start a business. Do anything other than buy a house here in Vegas.
Hate to say it, and hate to be negative, but we're a long way from the bottom. And if the GOP takes over in 2012, things are going to get a lot worse.
For those people who are not yet retired, to buy a home with the intent to stay in it for five or ten years is to assume employment (or income) stability over that amount of time. That is a major (and often mistaken) assumption.
Art is correct that The Case Shiller index is the best indicator of what is happening in the Real Estate Market. It does not predict the longer term future. Toll Brother shareholder calls are also insightful being given by the most reputable buider in the industry.
A Home Buyer should never exceed three time their annual income for the price of a house. If the cities average income and average house prices do not match - watch for a correction. I would not be concerned to purchase before interest rates rise. If they do then home prices will fall further to offset the loss in buying power. Real Estate of you primary home is a Liability - Not an Asset. An asset will put food in your mouth while a liability will take it away.
Rent - especially if you are not sure about your job, living in the area for more than 10 years, have obsolete skills or low service industry skills. If you do not have 18 months of savings after the home purchase to get you through a tight spot. There is no reason to believe the economy will dramatically change until Democrats have a Veto/Fillibuster Proof majority in the House and Senate. A massive infastructure program is needed to put over 20 million Americans back to work and paying taxes. Then and Only then, when Unemployment rates decline will there be any stabilization of the housing market. After American are back to work we do need to have a serious discussion on how to fix the budget that George Bush blew up.
This article should state "82% of Surveyed Nevada Real Estate Professionals by Homegain"...
Homegain never surveyed me... besides... Homegain is primarily made up of inexperienced real estate agents paying for business.
Regardless... prices may still fall but at this point, the Cash on Cash Returns for buying investment real estate are FAR superior then investing in Treasury Bonds or having the cash sit in the bank.
The same mistakes made in 2005 / 2006 are being made today. This time around though the mistake is not buying.
If you take the time to learn cash on cash returns... then you would be jumping in and buying with the rest of the savvy investors who really don't care if it MIGHT drop another couple of % points.