Mesquite Market

Mesquite Market Quarterly
First Quarter 2009
By Chris W. Miller ABR, CRS, GRI

New trends give a clear view of where the market is going.

Mesquite Nevada MLS recorded a total of 65 residential closings during the first quarter, 22 of these were bank owned or short sales 33.8%.  207 residential listings were submitted and 247 went out of the system as failed listings.

We closed a total of 41 single family homes and 13 of those were bank owned or short, the 13 distressed home sales averaged $111 per square foot. Of the 41 closed single family homes was 24 existing or resales at $122 per foot, 17 new homes at $162 per foot.

There are already 20 resale home listings available at Sun City Mesquite.  The Mesquite MLS only recorded a total of 7 closings during the first quarter at the new Pulte Del Webb project, that includes new and resale homes, those 7 sales averaged $159 per foot.

8 condominiums closed at an average of $99 per foot, 15 town homes closed at an average price of $118 per square foot, and 2 vacant residential building lots sold.   3 homes sold and closed in Bunkerville and they averaged $93 per square foot.

On March 31, 2009, at the end of this past quarter 44% of the pending transactions in the Mesquite MLS were listed as distressed properties, either REO or short.  Failed listings which are still out and most must be sold sooner or later exceeded pendings on a 5 to 1 basis this past quarter; many will turn to distressed properties.

Based on the past quarter sales and the current active listed properties there are 22 months of single family homes, 46 months of condos, 19 months of town homes, and years worth of building lots.  It looks like there is on average about a two year supply sitting on the market, plus another year’s worth of inactive and vacant.

At this time around 255 of the 430 active listings are listed as vacant, about 60% are sitting empty, no cash flow.

There are still many people living in homes they can not afford and they are under water. A wave of distressed properties, yet to come to the market.

While many agents, the government, and the media spread the rumor that the market is improving!   Buyer Beware has never rang louder.

There are 13 commercial buildings and 16 commercial land parcels actively listed for sale and many more available but not listed. No commercial buildings or land closed. While it is hard to measure, it looks like there is well over 300,000 square feet of vacant commercial office/retail/industrial space sitting vacant.

The City of Mesquite building department issued 6 permits for new commercial buildings and 19 permits for residential buildings during the first quarter 2009.

The typical buyer profile coming to Mesquite today is a far more cautious and conservative retiree.  They have been slapped hard with the reality that neither the stock market nor the real estate markets always go in one direction. Many have seen a huge chunk of their nest egg disappear in both markets.

The current environment has them in fear of their financial future, out living their savings. Uncertainty about government spending, bail outs, health care costs, rising cost of living (inflation), income stability and net worth are all potentially paralyzing for buyers.

There seems to be an uneasy sense with the retirees that the government is reaching too deeply into the pocket of our capitalist free enterprise system. There is little security anywhere. It is affecting consumer sentiment and confidence.

The market correction is far from over and for Mesquite it is a reality check. If we are to attract the greener more conservative baby boomers we will need to adapt.

Affordability, efficiency, and value will have to lead us out. What worked over the past ten years, business as usual will not cut it.   This is not unique to Mesquite, most every business model out there is changing the way they do business or like our auto industries they will be reorganized.

After the high flying years of loose money and bad decisions, deleveraging is taking place. Asset values are falling and this will continue until the market gets back to fundamentals that work.  Vacancy rates will not go down until business can afford the rents. Buyers will not buy homes they can not afford.

Debt to income ratios must get back to closer to 28% and 35%, or prices in the range of 2.5 to 3.5 times annual income. As we have seen, 5 times annual income as a purchase price generally does not work. Debt is strangling the entire economy.

This melt down of the financial system is all about excessive unmanageable debt, over leveraged, and wildly over valued assets.  Consumer sentiment or confidence is not the cause; it is the artificially inflated values. Lower prices and market stagnation are the results we are seeing.

Affordability is not a concept, it is reality.

Mesquite Nevada has a bright future and the current market is beginning to create opportunities for knowledgeable buyers.

For square footage numbers in specific neighborhoods, questions, or comments

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

In real estate when you hear the term “value” people generally assume that means the price. Price and value often are synonymous.

When it comes to luring the baby  boomers to make the commitment to settle down in a new home town and

change the direction of the rest of their life, value becomes far more complicated than just price.

Value has a number of definitions.

Fair price is one.  Value is also defined as; an estimation of the worth, merit or character of something, having admirable or

esteemed qualities or characteristics, highly regarded, worth in usefulness or importance to the possessor.

Some of these have nothing to do with price. Value takes on another dimension when it encompasses how people feel about personal security,

and feeling secure about their future. It is easy to make the case that value is tied to price when you consider retirement income and future financial security.

“Maybe it is time to consider living dangerously. Maybe it’s time to reject the commands of power, the dictates of society and public opinion,
and to stop worrying about what other people think about what you do. You have the power and ability to create your own reality — to change
what isn’t working and to manifest what you desire.”
— Dick Sutphen

Some people value this approach to life while others will dismiss it.

Perceived value depends on what really motivates the individual.

Greed drove the speculative booms, fear is motivating more people today. Fear subsides with security. For many of the currently retiring generation

a sense of security is trumping the “keeping up with the jones” syndrome. Some will cling to the snobby, false impression that dollars equal value,

but for most, the BMW’s and McMansions are less valuable for the sole purpose of impression, given the real cost.

It is a great illusion of value.

When the real price may actually be peace of mind and security.

Less stuff and a more conservative approach has more value if it equals peace of mind. Savings equal security.

The term deleveraging is about less debt. Less debt works. Less debt offers a sense of accomplishment, peace of mind and security.

Living on less than we have verses beyond our means, offers a high level of satisfaction and security.  Remember security equals less fear.

And what other people think becomes nearly meaningless in comparison.

So what does all this have to do with the price of real estate?  Perceived value includes lifestyle, location, security, and affordability.

Real security comes to those who don’t have a mortgage. Will this generation embrace this?

So what is the price when The Real Value may be; How Well You Sleep at Night.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Today in the Mesquite Nevada real estate foreclosure and short sale market, one in every eight active residential listings is either a foreclosure or a short sale. There are 387 active residential listings and 52 are listed as short sale or bank owned foreclosure.

On the pending side we are seeing a trend developing in Mesquite Nevada foreclosures, out of the 31 currently in pending or “under contract” status, 10 are shown as bank owned foreclosure or short sales, one out of three.

Month to date 8 out of 19 pending residential units in the Mesquite Nevada MLS are listed as short sale or bank owned foreclosure, nearly half.

Mesquite Nevada is primarily a retirement golf community.  There are seven golf courses and number eight is under construction, a number of casinos, no state income taxes, and excellent weather.  Mesquite Nevada is located 90 miles northeast of Las Vegas, right on the Arizona state line.  The Arizona strip as it is called is the north rim of the Grand Canyon.

The proximity to Vegas and all the factors that make Mesquite Nevada so appealing to the retiring baby boomer generation, also lead to a great deal of speculative investing in Mesquite real estate. 

192 of the 377 active residential listings today are listed as sitting vacant, that is over half!

Not candidates for the bail out money, those investor properties.  Which leads me to believe that we will see more Mesquite Nevada bank owned foreclosures and short sale properties before we work our way through this mess. 

This trend is creating a very unusual opportunity. You have high vacancy, high inventory, falling prices, great supply choices, in an area that is well positioned for extreme future demand because of the retiring boomer generation. 

This very unusual combination that we have today in Mesquite Nevada real estate will not last forever.

It seems everyday someone asks me are we at the bottom? Since I do own a crystal ball, I offer this; we will not know where the bottom was until we are past it and prices begin to rise. If you find a property today that meets your needs and is within your budget, waiting is a risk.

At some point in the not too distant future, I believe that risk will out weigh the potential benefits. Some of these sale prices today are near the bottom.

The upside potential future for Mesquite Nevada real estate is real, based on the projected retirees and what they want. Mesquite Nevada is well positioned for the future demand and growth.

We will turn a corner and for many they will have waited too long and missed this opportunity.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties   

For those who like to point to the Las Vegas market with “We hear sales are up”, the median resale single family home in Las Vegas sold for $162,999 or $96 per foot in December, according to Home Builders Research, Inc.

This number makes the 15 resale homes closed during the entire fourth quarter in Mesquite look pretty good at an average price of $248,027 or $143 per square foot. Unfortunately, this price is over 25 time’s fair market rent and over five times Mesquite median annual income, not good signs.

Realistically, the Vegas number is most likely a glimpse into the 2009 Mesquite Market numbers. The storm of foreclosures is on Mesquite’s horizon and moving in fast.

Mesquite MLS shows 25 new homes closed during this past quarter with an average price of $293,151 or $158 per square foot.

Sun City Mesquite had only 10 closings reported through the Mesquite MLS for the entire fourth quarter, and without adjusting for incentives the price averaged $145 per square foot or $240,827.

We closed 14 town home units averaging $129 per square foot and none above $300,000.

With nearly 100 active condo units for sale, only 5 sold and closed in the last 90 days of 2008.

The term “sticky prices” is clearly in play, but the buyers are not buying it. In other words sellers have yet to really drop prices and buyers are waiting. 

No commercial sites or commercial buildings closed during the fourth quarter 2008. By my estimate there may be as much as 300,000 square feet of vacant commercial/industrial space, yet 19 new commercial building permits were taken out during 2008. Many will require new permanent financing this year and it will be a real challenge for some given the current credit markets and vacancy rates.

The residential vacant land super pad or subdivision market has gone from bank foreclosures to FDIC owned through bank failure and seizure in some cases. Based on 378 new home building permits issued for the year of 2008, including Sun City there is over a 20 year supply of building lots. These values in some cases look like they may have fallen as much as 80% from 2005 prices.

All total including every residential category we closed 311 units during 2008 compared to 706 during 2005, that is 56% less sales. At the same time inventory of listed property for sale reached an all time high with over 400.

Another telling sign in the market is the failed listings during 2008, they reached 764. They went out of active inventory as expired, canceled, or withdrawn. The problem is that they are still out there and many are vacant or due to negative cash flow, must be sold.

2009 should be a year of opportunity and challenge.

Please remember if you are planning a visit and would like to discuss the Mesquite Market call ahead to let me know you are coming so we can schedule a few minutes.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

The foundation set in place in Mesquite is clear and solid for the growth and future demand. The features of the Mesquite lifestyle including the quality of living, weather, golf, gaming, taxes, the great outdoors and access to it, all rank high on the list of “must haves” for the retiring baby boomer generation.

This segment of the population is looking hard right now for balance and perspective between future lifestyle and budget, debt, future income and health care. They are re-evaluating each part of their lives and budgets to determine what is really important and what is not. For many it is a real soul-searching process. The perception changes taking place will drive the product development of the future.

Mesquite’s challenge will be to offer a product to the market that includes lifestyles at a price that is affordable.  At the same time Mesquite will likely continue to become more exclusive. The excess and particularly the waste of resources of the past will be less fashionable in the future, possibly even shunned.

The turn over in the real estate market taking place today is searching for that same balance. A new awareness seems to be developing among buyers, and lenders, that living beyond your means is not the road to happiness. This will continue to put greater emphasis on conservation and afford ability.

It also leads to a new demand for more efficient, self reliant, and self sustaining housing. Solar will play a huge part in new home design and construction one day soon, as will water conservation techniques. The lack of use of solar applications by the local builders of the past has put Mesquite behind. It is an opportunity today. Utilizing available renewable, free resources is not a fad, it is the future.

While the look of a neighborhood may take a little getting use to, proper home orientation to the sun, clear story windows and over hangs are simple, cheap, and effective. This has been completely ignored by the City of Mesquite and the builders of the past, that fact won’t be lost on the consumers of tomorrow.

Why pay to keep a large tank full of water, hot 24 hours a day, when the sun will heat it for free? That same warm water can be circulated through pipes in the slab that will warm the floors during the winter.

Why pay to cool a home that has blazing hot sun streaming in during the summer months or heat a freezing house without the benefit of the warm winter sunshine?

Our sun shine opportunity can be maximized to create a whole new image, adding value, creating positive attention, demand and industry. Imagine how much money we could save if we turned off 8000 hot water heaters.

For those who scoff at the idea, consider this, mankind drilled the first oil well about 100 years ago and we are already talking about peak oil! You just happened to have lived your life while it was plentiful and seemed endless, which affected your perspective. What we have taken for granted will one day be viewed as wasteful and ignorant.

Builders and developers will follow the market. The common sense of the consumers and those new perceptions about what is really important to them will drive the market. Other markets are way ahead of Mesquite in green building technology, the slow down in the building market is an opportunity for Mesquite to change direction and catch up.

Mesquite’s bright future surely includes lots of that wonderful sunshine! 

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Mesquite NV real estate experienced the speculative frenzy and price run ups at close to its worst. High rates of false appreciation and flippers cashing big checks even before new homes were complete, causing market havoc. That market is gone. 

Today reality has set in and prices are falling, supply is at all time highs along with vacancy rates. Builders have walked away from whole neighborhoods and some look like gold rush ghost towns.

Land values, based on the supply of build-able residential and commercial sites available are headed south at unprecedented rates. The current supply will last for years.

Mesquite NV real estate fundamentals have not changed as far as desirability, weather, location, recreational amenities, taxes, etc. Retirees will continue to migrate to Mesquite, NV.

The Mesquite NV market does not hinge on the employment picture like many markets because most moving to Mesquite are not arriving looking for work. They arrive looking for the golf course and a nice place to go to dinner.

As 2009 unfolds Mesquite NV will continue the current trend to find balance between the extremes of the recent past and the budgets of tomorrows retirees. Land now owned by banks will come back into the market at a new more affordable cost basis.

Competition will continue to grow, Mesquite’s new home builders will continue to build and in some areas at even more affordable prices.

Smart buyers will find even better values as the market moves forward. The aging baby boomers are going to retire, guaranteeing Mesquite Nevada’s bright future.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

The twentieth century was one of the wettest going back several centuries.

University of Arizona scientist Connie Woodhouse said tree rings in the Colorado River basin indicate that the amount of moisture has fluctuated widely over hundreds of years, but has tended to be drier than was seen in the last 100 years.

California ranks No. 1 in population with 37 million people and No. 1 in agricultural output at $ 36.6 billion in 2007. At the present time there is not enough water to supply both those demands. California is facing the most significant water crisis in its history. June 2008, the governor declared a state wide drought.

A study released in February by the Scripps Institute of Oceanography in San Diego said there’s a 50 percent chance that Lake Mead could run dry by 2021. Several models by different scientist have made predictions about the future flow of the Colorado River, all of which forecast less water. The current usage is simply not sustainable said Tim Barnett, one of the Scripps study’s authors. “It’s a question of when,” he said. Lake Mead is the Las Vegas water supply.

If the drought continues until spring, California water officials there are planning to ration municipal water deliveries and dry up as much as 200,000 acres of farmland, according to AG Weekly 12/08/08. Without adequate water storage we are putting our food supply in jeopardy.

Land owners up and down the Virgin River Valley have either sold or leased nearly all the water rights in the Mesquite Valley to Southern Nevada Water Authority or Virgin Valley Water District. The fields will not be green next spring; there will be no hay to put up in Mesquite. The Virgin River feeds into Lake Mead.

Added value to land with water rights, and irrigated farm land in Nevada. Nevada state water laws date back 100 years and are very clear. Laws vary greatly from state to state, and the Colorado River serves seven states. The control, use and ownership of water rights will dictate future development.

Climate change is the wild card in all the predictions, the collision course between supply and demand is clear. Demand for food, and the future demographic population shifts are going to increase pressure. Increased storage capacity may be one of the answers for some areas. Limits on use and conservation will play increasingly bigger roles.

For information about land in Nevada currently available with water rights and irrigated farm land in Nevada. Call Chris

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties

Much of the Nevada land is yet undiscovered by retirees, that is changing. Life style along with affordability are the main reasons for the new interest. Domestic wells are allowed and for many new owners that is all the water they will ever need. Others wishing to actually do some farming will need to have water rights.

Nevada land with water rights is available, knowledgeable buyer representation is extremely important. So if you have always dreamed of living the slower lifestyle filled with the stuff of the old days, Nevada land my be for you. For help with finding your dream in Nevada’s land market call me.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties 

Banks like Citigroup plan to renegotiate loans for those not yet behind.

Countrywide said today wait to contact us until you are three months behind.

During my most recent conversation regarding a listed short sale Countrywide said “we don’t want any involvement until you have an offer” with no discussion of pricing the property.

The Tarp plan has changed directions and no one understands where it is going or who it will help. As the de-leveraging continues and prices fall, foreclosures and defaults increase and it remains impossible to know the full extent of the losses or how long this will continue. Unemployment is a looming nasty wildcard. Banks vow to help millions of families, but can they really make those high dollar mortgages affordable or will they just prolong the pain and postpone the inevitable? Renegotiating much of the secondary market paper will be impossible.

Some banks continue to take weeks to respond to offers, and list REO properties at above market value prices. No one knows for sure who is holding all the bad assets or how bad they will become. Some banks will just write off the losses while others plan to pursue collection efforts and default judgments after short sales and foreclosures. Many second position lenders and PMI companies are exposed to (100%) loses. Wall Street is clearly worried along with the economies around the entire world.

Prices are coming down dramatically on some properties, and yet some cash buyers continue to pay 2006 prices on other properties. It must be either; buyers who are completely uninformed about the market and unrepresented or else they found the only home that fits their exact needs and makes them feel the best. With such erratic prices dual agency for agents will become far more dangerous.

Many properties will have to be sold now to raise cash. All this uncertainty is paralyzing most buyers at a time when they should be laying out their plan to take advantage of the margin call properties going on sale.

The one thing that does make sense right now is that the lenders do have money to lend at very favorable rates for those with a down payment, good credit, and the ability to repay. 

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties 

39 total single family homes closed with an average sales price of $271,986 or $151 per square foot, 26 of these were existing homes at an average price of $263,968 or $153 per foot. The balance of 13 was listed as new homes and averaged $288,023 or $146 per foot. The builders have taken out 303 building permits year to date, while Mesquite MLS shows less than 150 homes sold and closed. Inventory of all property types remains at historic highs.

10 condominium units closed and 9 town home units closed during the quarter. No single family lots sold. No commercial lots sold. No vacant land parcels sold. One commercial building sold to the City of Mesquite. It appears there is roughly 200,000 square feet of vacant office/retail/light industrial warehouse type space available all over town as builders continue to add to the supply. The number of total pending units as listed in the Mesquite MLS was around 13 at the end of the third quarter; during 2005 and 2006 it was averaging around 100 at any given time.

58 Notice of defaults were filed with Clark County, representing every property type in the city, from small condo units to large luxury golf front homes and whole subdivisions. Banks are not putting this inventory into the market at any where near the pace they are getting it back, and asking prices do not reflect true write downs, yet! The rental market remains soft as vacancy rates remain high and rents come down on all property types.

Looking forward buyer sentiment will be the key; it is tough to put a value on personal financial security. Many retiring buyers are reluctant to make large financial commitments or mortgage their futures. While nationally the ratio of income to home price reached 3.6 times last year, Mesquite was 5 to 7 times local median income on the average home. I expect nationally this number will drop back below 3, as underwriting standards tighten and buyers realize they must live within their means. Every trend line points to lower future prices across the board.

Please remember to call me when planning a visit to Mesquite. I will give you a current market update and a tour, Thanks Chris

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

chris@mesquitemarket.com

Lincoln County Land Market

Nevada Ranch Properties