Archive for July, 2007

SWIMMING UPSTREAM

Wednesday, July 25th, 2007

Sellers today are determined to go against the current market trends.  In many cases because of the fact that their cost basis in the property they wish to sell is above current market value.  Combine this with negative cash flow, increasing mortgage payments, vacancy rates and other unsecured consumer debt financed at extreme rates and it leaves many with no other options.

The problem is the buyers don’t care about any of those factors.  Buyers are looking at prices and comparing their own debt to income ratios, specifically housing cost debt. Today the buyers and loan underwriters are more aware of the term affordability in terms of housing and their own monthly budget. 

 

 

 

While sellers say they must get a certain price and in many cases they must get out now or at the very least get out in the near future.  For most buyers it is becoming very clear, buying more house than they can afford is a recipe for personal financial disaster. 


So we could blame this dilemma on the fact that jobs are being outsourced and incomes have not kept pace with housing appreciation, but the recent extreme run up in appreciation rates is the real culprit.  Whatever the reason the fact remains that affordability of housing cost is the issue for many buyers.  Since incomes are not likely to rise dramatically or quickly, home prices must get back in line with income levels.


So we could blame this dilemma on the fact that jobs are being outsourced and incomes have not kept pace with housing appreciation, but the recent extreme run up in appreciation rates is the real culprit.  Whatever the reason the fact remains that affordability of housing cost is the issue for many buyers.  Since incomes are not likely to rise dramatically or quickly, home prices must get back in line with income levels.
  

 


Housing units available today or the bulging inventory numbers, combined with sellers who are stretched to the breaking point through consumer debt, negative savings rates and housing costs are adding to the strength, speed, and depth of the current or in other words, market devaluation is gaining strength. 

 
Sellers who come to this conclusion now and deal with the current market on the markets terms will likely look back in short term, (next 18 to 36 months) and realize that they suffered less pain than if they had  continued to swim upstream against this current.

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

Nevada Farm and Ranch Land

Nevada Water Rights

Lincoln County Land Market

chris@mesquitemarket.com

 

 

 

 

 

 

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Mesquite Market Quarterly

Saturday, July 21st, 2007

Overall residential sales increased during the second Q compared to the same time period during 2006 by nearly 10%. While average prices dropped by 3% on a price per square foot basis and days on market grew by 20%. Pulte Del Webb opened the much acclaimed new Sun City Mesquite. The increase in sales could be attributed to the “Pulte Factor” they claimed to have over 13,000 interested potential buyers just prior to the Grand Opening. The average sales price fell from $291,379 to $249,659, inline with smaller average unit size which averaged 1646 square feet in the second Q 2006 and came down to 1447 square foot average this past quarter. Smaller units selling for less and taking longer to sell seem to be the current trend. 

New homes sales numbers are following the same trends, slightly higher number of sales with considerably smaller average size and lower prices. The average size went from 2173 square feet to 1834 and prices per foot fell from $194 to $184 comparing the same time period during 2006 to 2007, while days on market nearly doubled to over 100. Many real estate experts expect this trend of smaller square footage to continue as baby boomers retire, down size and migrate to the south west. Mesquite Nevada is squarely positioned to benefit from the expected demographic shift to the southwestern United States. 

  

 

The Sun City Mesquite reps say they have over 100 new home contracts, add those sales to the numbers and we are way up (300%) compared to last years second quarter for new home sales. The average price at Sun City right now is close to $160 per square foot, this is going to give local builders and the resale market a real run for the money. More New home building permits issued this year than last year so far, 186 during the first half of 2006 verses 189 this year. 

Town home/condo markets basically a ditto, smaller square footage average, lower prices and twice the marketing time. The average for this past quarter was $162 per square foot, with 1146 total feet and 141 days on the market. Inventory will remain the headline, buyers today have great choices. New multi-family building permits issued are down over 50% from the first half of 2006, from 34 to 14 year to date in 2007. 

Commercial sales and leasing activity of both vacant land and buildings has slowed considerably, from 22 transactions for first half of 2006 to 5 so far in 2007. While new commercial building permits have doubled, from 9 during the first half of 2006 to 18 permits year to date in 2007. There is a very high percentage of vacant space available and more coming online. Growing pains for those with the “where with all” to stay the course, potential disaster for some, and yet creating opportunities for others. 

The number of vacant residential lots for sale has gone from very few last year to dozens today; whole subdivisions are actively on the market. As is always the case, location and amenities along with supply and demand will dictate future prices. Today, for now many large speculators are up side down in these land deals. 

The market is going through what looks like a normal downward trend in the cycle, as inventory numbers continue to climb marketing time may get longer. Calling the bottom is nearly impossible, but from where I’m sitting it looks like we have a ways to go. 

 

Chris W. Miller

ERA Brokers Consolidated

Mesquite NV  89027

702- 346-7200

435-862-5951

Mesquite Market

Nevada Farm and Ranch Land

Nevada Water Rights

Lincoln County Land Market

chris@mesquitemarket.com

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