Mesquite Market

“Will I Have Enough Money in Retirement?”

Very few baby boomers have not given this question considerable thought.

Mesquite can continue down the path set some years back as a high end, wealthy, golf, and gaming lifestyle community with great weather. Mesquite did a good job of this, but times are changing. The market has changed. For those claiming credit for Mesquite’s booming past, the truth is it had a great deal to do with market timing, funny money, and the Palm Springs hype.

The high-end housing market is a very competitive and a shrinking market. New homes being built today continue to get smaller nationally. While Mesquite has focused on expensive HOA’s, gated neighborhoods, streetscapes, and image our competition is focusing on future cost saving efficiency and sustainable living.

Even a free and clear home is not free to live in, homeowner association costs, taxes, insurance, maintenance, and utilities all go on forever.

The boomers are just starting to retire this year and will be retiring at a pace of 8000 to 10,000 per day for the next nineteen years. These retirees are Mesquite’s future target market.

Besides their recent asset value losses and reduced personal net worth, they are concerned about future health care costs, pension stability, social security, debt, inflation, and their future cost of living. There is 2.5 Trillion in pension funding owed today, who will pay this, Bankrupt States, Municipalities, Unions, the Federal Government? Are you willing to gamble your future on the stability of this debt? Or is your future already depending on it? Will our legacy for our children and generations beyond be that they will live with a lower standard of living, and we were a generation of extravagant, wasteful, fools?

For most, they grew up thinking real estate had little or no risk. The reality that there is downside risk in real estate has hit them, as a generation, hard.

We all know a huge percentage of the Boomer generation has not saved enough money.

Looking forward, some of the most relevant results of the recent past will be the way they view their money. Their attitude about debt. Their attitude about investing in residential real estate has fundamentally changed. It is no longer viewed as a quick way to wealth; rather it is where they live. They have also realized that leverage or debt has plenty in common with a margin account used for trading stocks. Gambling with borrowed money. They have become far more cautious and conservative. Finances in most cases will dictate their lifestyle choices, including where they will live.

Objections, obstacles, and adversities create opportunities. They are nothing more than problems to be solved. Remember IBM thought the Personal Computer was a Stupid Idea! They ignored the future at their own peril. 

Yet not a single home builder in Mesquite offers a solar application of any kind in a standard package. They do not talk much about orientation to the sun or solar applications. Mesquite homebuilders took out 201 new home building permits in 2010. How many do you think are properly solar oriented?

Innovation and technology like shared geothermal systems for heating and cooling entire neighborhoods and solar energy are the future. Do you think electricity costs are going down? Have you heard about cap and trade? 

The level of consumer awareness about home energy consumption costs will continue to rise. It will become a higher priority for many future home buyers. Solar orientation has as much to do with cooling in the summer as it does with warming in winter months. Your home’s energy efficiency will eventually affect your homes value.

Undeveloped subdivisions platted and being re-platted and approved by The City of Mesquite meet many requirements, but no consideration is given to home site solar orientation. This will not happen without The City of Mesquite’s support. The City of Mesquite will need to take the lead and be committed. The home builders will not just do this, land use density or maximizing the number of homes they can build on a parcel of land will prevent them from laying out lots for maximum solar exposure.

Overton Power offers a Power Purchase Agreement to individuals. While this is becoming more common, it is not available in all markets.

This is not about “Green Thinking” rather smart financial planning for the future and marketing.

Solar applications such as home orientation, glass exposure, and overhang design do not necessarily increase cost to build. Yet they save money each month forever.

The systems to generate electricity and heat water add to initial cost, but right now, there may be numerous incentive and rebate programs, stimulus money!

Today for the most part, Mesquite looks like an example of how to best not utilize the sun’s power at all! 

Are there any new solar oriented homes in Mesquite’s future? 

Would people visit Mesquite just to see a solar home neighborhood?

Could Mesquite become a shinning example, attracting national attention?

Would affordable solar homes in Mesquite stimulate economic development? 

Are there solar oriented subdivisions in Mesquite’s future?

Ignoring the concepts of affordable self-sustaining housing as Mesquite grows is like ignoring the fact that the Baby Boom Generation are really retiring. Proper solar orientation keeps homes cooler during the hot summer, permanently reducing the need for expensive air conditioning.

As I see this, we can either lead or follow. It is a conscious choice that the people of Mesquite should discuss and provide feedback to The City of Mesquite. To be “solar certified” would require changes to existing building codes, and powerful tract home builders and developers will likely oppose any changes. Is Mesquite economic development moving in the direction you would like it to be?

The truth is home building technology has not changed much in fifty years. If not properly oriented an energy star rated home can still cost plenty to heat and cool. The sun can help change this.

Vacant land cost basis, five subdivisions sold, all up in the newer Mesquite Heights/ Canyon Crest area. They were a total of 223 acres and sold combined for $2,650,000 or $12,000 per acre. If the builder puts six homes per acre, that is an average cost basis of $2,000 per lot. This is deleveraging in action, lowering cost basis. Infrastructure and grading costs could bring this cost basis up to $30,000 per lot. This could be why only three single-family resale lots sold in 2010 with a median price of $71,000, per Mesquite MLS.

Real estate building and development can become the economic engine for Mesquite again. The target market may have changed, dictating innovation and product change. We must look forward and adjust to the new realities.

Old style conventional home builders in Mesquite have been too slow to embrace this land use and building concept. In my opinion, Mesquite’s future is far too important to leave it to builders and land developers to lead Mesquite into the future.

Is the type of Mesquite’s future land development, home building and growth an election issue? 

Is Las Vegas going to run out of water? Southern Nevada Water Authority’s Water Problem.

May 26, 2010
I attended the Southern Nevada (CCIM) Certified Commercial Investment Managers Chapter monthly meeting at the Rio in Las Vegas. I went for one reason, the title and speaker, “

How You May Be Impacted by Nevada’s Water Supply” presented by Pat Mulroy. Mrs. Mulroy is the general manager of Southern Nevada Water Authority.

As a long time real estate professional who specializes in agricultural land with water rights in Nevada, I talk with Nevada’s farmers and ranchers’ everyday; I was shocked by the introduction.

The lady introducing Mrs. Mulroy said about her, among other things, how wonderful she is, how hard she works, how powerful she is, and then she said, “and something I’ll bet none of you know about her, She HATES COWS”.

Mrs. Mulroy took the stage and went on to say “anything that dumb and big has to be dangerous” referring to cattle. The friendly crowd of men and women dressed in suits and ties laughed.

I on the other hand, immediately took umbrage, and thought to myself, I wonder if this lady realizes where the food in the grocery store comes from.

I took notes the whole time she talked.

Her presentation seemed to me to be based on the fear factor.

She talked about snow pack in Colorado this past winter being at 67% of normal. She talked about continuing drought conditions.

She explained that Lake Mead is running an annual deficit of approximately 2.7 million acre feet this year. There are 8.2 million acre feet coming in and 10.9 million acre feet going out.

Mrs. Mulroy explained the Lake Mead water level measurements  with future projections.

But first let me give you a little history, from 1939 to 2003 Lake Mead averaged 1173 foot elevation, the high water or maximum point for Lake Mead is 1229.

Today it stands at about 1094. Since the canyon narrows as it descends, the water level drops faster and faster as it is over drafted, so expect the drop to accelerate.

Mrs. Mulroy explained that at the 1088 foot elevation level they could lose the upper intake for the water supply to Boulder City and 40% of Las Vegas’s supply. 

She said, “At 1050 Hoover Dam stops generating power and that the dam supplies all of the electricity to Overton Power and Lincoln County Power.”

 At 1000 Vegas loses the lower intake that would literally cut off 90% of the water supply to Las Vegas and all of the water supply to Boulder City.

Work has begun on a so called third straw.  This so called third straw has been referred to as a bath tub drain.

Michael Johnson, Virgin Valley Water District hydrologist, told me years ago the aquifer that runs under our Mesquite Valley travels under Lake Mead, could they tap into it?

Pat Mulroy said, “SNWA will be utilizing all the water rights it owns or controls in the Virgin River, which runs through Mesquite/Bunkerville and the Muddy River in Moapa/Overton”.

She stated that, Southern Nevada Water Association uses approximately 9.5 million acre feet per year, (that sounds like ten times too much to me) and once Lake Mead goes below 1025 there are only 4 to 5 million acre feet of water left in the reservoir.

She said the Lincoln and White Pine Counties pipeline will start construction in 2012 if the lake goes below 1075, period!

Her facts can be verified at:  http://www.snwa.com/html/wr_resource_plan.html 

She said ”If I have to set up a cot in Harry Reid’s office, I will stay until I get a permanent chair”. I did not know Harry passed out water rights! That job belongs to the State Engineer.

She said “the hyperbole (hyper exaggerations) coming from rural Nevadan’s about their water table concerns was childish.” She went on to say “the rural Nevada farmers and ranchers are being Pig Headed.”

She referenced a recent USGS Basin and Range study  that she claims shows plenty of extra water. I have not yet located any completed study.

What makes you think they will stop in White Pine County?

When I asked, she said the reason for the huge draw down or overdraft, according to a recent NASA study in California’s Central Valley was the result of farmers irrigating and lack of government regulation. New space observations reveal that since October 2003, the aquifers for California’s primary agricultural region — the Central Valley — and its major mountain water source — the Sierra Nevada — have lost nearly enough water combined to fill Lake Mead, America’s largest reservoir.

Finally for the record, she said “there are plenty of un-appropriated water rights in Nevada and the Snake Basin is next in her sights.”

She appears to me to be dead set on tapping into and draining rural East Central and Northern Nevada, Western Utah and Southern Idaho’s aquifers to supply Las Vegas.

 They did it to Pahrump, Nevada

When I questioned her, she lashed out at me, “Do you have a better idea?”

She said to watch for a favorable Moodys Rating Agency report coming out that should help support project financing in Las Vegas. I wonder if Moodys knows any thing about water. Remember the rating agencies said the Mortgage Backed Securities were safe and secure too.

She may be powerful, but based on her comments, attitude and general demeanor; clearly she is not as sharp as you would expect!

That does not mean you should underestimate her ability or determination to get this done.

You can learn more about me by searching “Irrigated Nevada farm and ranch land with water rights for sale” on any search engine. 

Land in Nevada

Nevada Ranch Properties

Lincoln County Land Market

Nevada Water Rights

Mesquite Nevada Real Estate Market

Let’s start with the easy pieces, the edge pieces, the positive aspects of the current housing market.

Home sales are up in Mesquite, Nevada from 15 closings in January 2009 to 39 in January 2010, huge increase in closings. Price per square foot dropped from an average of $120 in January 2009 to $100 per square foot in January 2010. This was stimulated by Federal tax dollars in the form of tax buyer credits that would be your money!

Single family new home building permits are up in Mesquite from 1 in January 2009 to 22 in January 2010. That adds to the competitiveness of the market, the supply side.

Trying to keep it positive here, mortgage interest rates are still near historic lows.

The Home Builders Index of confidence rose 2 points to 17. A score of 50 or more on the index indicates that more builders view conditions as favorable rather than unfavorable.

Access Research & Consulting Inc. estimates that the number of mortgage brokerage firms is down from a peak of 53,000 in 2004 to less than 15,000; this may be a good thing.

Now we can start into the middle of the picture, the harder pieces of the puzzle.

Realty Trac reported January 2010 foreclosures were above 300,000 for the eleventh straight month, and up 15% from January last year. US Home ownership is back down to levels not seen since 2000.

Private mortgage insurance companies are dropping like moths flying into the flames of a blazing fire. Short sales and foreclosures are literally wiping them out.

Mortgage underwriting standards are getting tighter everyday, shrinking the pool of eligible qualified potential home buyers. Even FHA has made it tougher to qualify for a mortgage. This piece is part of the demand side.

By most industry estimates, there are eight million delinquent mortgages in the US today and only a very small percent of the mortgage modifications are actually working. The re-default rate continues to climb. Only 66,000 are considered permanent of 900,000 of those who are enrolled in trial modification programs.

3.4 million Homes in the Treasury Department’s Making Home Ownership Affordable (HAMP) are currently 60 days or more delinquent.

There are a half trillion dollars of mortgages still out there that will reset or adjust over the next twenty four months. Many of these homeowners are not prepared for the higher cost of housing headed their way.

The picture is coming together, but there are still some pieces missing.

The shadow inventory is out there in various forms, and the number of homes sitting vacant is at a historic high. Many are owned by institutions, others are owned by individuals, all are waiting for the market to improve. Then there are the sellers who would like to sell but can not or will not sell at current prices. At some point they will have to liquidate this inventory.

We should all hope Fannie Mae, Freddie Mac, and the others will slowly ease this inventory into the market. Some industry experts believe it could take as long as three years for the market to absorb this shadow inventory of homes.

If they dump a wave or waves of distressed property into the market, it will drive down prices further and create a huge opportunity for those in a position to capitalize on the low prices.

The Federal Reserve’s 1.25 trillion dollar fund set up to buy mortgage backed securities is nearly spent. Without the support of this emergency fund, the secondary mortgage money market is bound to drive rates higher for consumers.

The effect of higher interest rates is to make housing less affordable and reduce the buyer pool, again reducing the demand side.

What the real estate market needs is jobs and time. Jobs will help people stay in the homes they currently own. Jobs will slow foreclosures, help mortgage modifications work, and create new demand.

Time will heal credit, time will clear inventory, and in time the market will find balance again.

Now step back and look close, with all the pieces of the puzzle in place. Where do you think the market will go over the next six months, twelve months, and twenty four months?

Remember Mesquite, Nevada is a prime retirement community with a very bright future offering a low tax structure, excellent weather with nearly constant sunshine, premiere golf courses, excellent outdoor opportunities, gaming and all located within an hour’s drive of Las Vegas.

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 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

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   

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 

Ever notice how people brag about their children and grand children, it is because they are special to them, of course. Each of us is special and we all have something to offer the world. We value life and there is no way to measure that value, it is invaluable. 

Real estate value, on the other hand can be measured. Many owners feel and believe that their real estate is also special, they are emotionally involved. They treat estimating the value of their home very much the same way they talk about their families. 

Real estate values are determined by the principle of supply and demand and by comparing like kinds of property which have recently sold. Asking prices have little bearing on value. Last year’s market, purchase price, or how much you think you need to net, have no bearing on today’s values. 

That wonderful view, those tiles and high ceilings, the granite counters and large tub, all have value. Value comparable to other homes which are similar to it, and have recently sold. The idea that it is special and therefore worth more is often nothing more than, the owner looking at it through those emotional rose colored glasses. 

There are very few homes available today which we can not find good comparables for. Objectivity combined with reality and money can sometimes be very harsh on our emotions.

Fortunately we never have to place a value on our children or grandchildren, because if we did, we would all set the prices so high they would never sell!

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