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