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? 

I will give you all the market numbers here, but the real Million Dollar question is who will be Mesquite’s future housing target market and how much are they going to be willing and able to spend on their housing needs? If the numbers from 2010 are any indication, then $200,000 is the magic number for single-family home sales. Sound low? Consider this, Mesquite Nevada, may be at a crossroad.

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 developing this image, but times are changing and the market has changed. The higher end home market in Mesquite has not yet seen the worst of this market.

For those claiming the credit for Mesquite’s booming past, the truth is, Mesquite’s growth had a great deal to do with market timing, funny money, and the Palm Springs hype. At the same time, many builders took advantage and cut corners, in many cases, they were just too busy to pay attention to the details, in other cases just greedy or both, but the consumers and the market allowed this.

The high-end housing market is a very competitive and 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. The City of Mesquite talks about economic development, but talk is cheap, and in my opinion, their efforts at economic development are stagnant at best and maybe taking the city backwards. More baseball fields will not restart the real estate engine that has driven Mesquite’s economy for many years.

“Will I Have Enough Money in Retirement?”  Very few baby boomers have not given this question considerable thought.

Even a free and clear home is not free to live in, homeowner association costs, taxes, insurance, maintenance, and utility costs all go on forever and will keep going up.

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 cost conscious retirees are Mesquite’s future target market.

Besides recent asset value losses and reduced personal net worth, they are concerned, if not living in fear about future health care costs, pension stability, social security, debt, inflation, and their future cost of living. If they are smart, they are deleveraging for retirement, not taking on more debt.

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 baby 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 is fundamentally changing. 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. Basically, gambling with borrowed money. The days of flipping homes are gone, and affordability is now and will be in the future their focus. They have become far more cautious and conservative.

Finances in most cases will dictate their lifestyle choices, including where they will live.

Mesquite MLS showed 285 single family homes sold and closed with a median price of $184,900 for 1732 square feet or about $106 per square foot of heated space in 2010. Mesquite MLS as of mid January 2011 shows 355 active listed residential properties plus the unlisted new home supply, and Las Vegas MLS listed foreclosures, short sales, etc. There are likely well over 500 properties for sale today in Mesquite. 

Clark County records show 73 total sales at Sun City for 2010; this includes resales and new home Pulte Sun City sales. The most recent 2011-email marketing from Sun City shows 24 Spec homes in their current standing inventory, these have come down in price to an average of around $150 per square foot asking price. There are also currently per Mesquite MLS 29 listed resale homes at Sun City, with a median asking price of $254,900 or $147 per square foot. Pulte Del Webb expected to sell 50 homes per month when they opened the project 43 months ago; it looks like that projection is off by about 70%.

On the residential vacant land side, five distressed subdivisions sold, all up in the newer Mesquite Heights/ Canyon Crest area. They consisted of 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. Infrastructure and grading costs could bring this cost basis up to $30,000 per lot. The lower cost basis in the land should allow for very affordable homes to be built, that is a Heads Up! This could also be why only three single-family resale lots sold with a median price of $71,000, in 2010 per Mesquite MLS. As if 10,000 to 12,000 vacant lots are not enough, the vacant land market just got much larger as the Mesquite City Council approved annexing around 5000 acres in Lincoln County into Mesquite’s City limits for future development.

The condominium market closed 142 units at a median price of $79,900 for 1130 square feet or $73 per square foot, per Mesquite MLS.

The town home market closed 126 units at a median price of $115,000 for 1360 square feet or $92 per square foot, per Mesquite MLS.

The City of Mesquite issued 201 new home building permits in 2010, which is nearly double the 105 issued in 2009.

The Clark County records full transfer and bank sold residential properties for 89027 and 89034, Mesquite and Sun City respectively showed combined 514 transactions in 2009 and 721 transactions in 2010. November 2010 there were 13 pages of Notice of Defaults filed in Mesquite or 37 housing units in one month. Also in November 2010, there were 39 residential units on the Notice of Sale report. The NOD and NOS numbers are tomorrow’s foreclosures and then future inventory. Based on this one month, there are well over twelve months supply in distress and likely headed to the market. This is shadow inventory!

Only 8 residential units were foreclosed on in November, these show up as sales in these full transfer and bank numbers and everyone was purchased by Fannie, Freddie, a holding company, or a bank. On these sales, they generally pay the amount of the outstanding loan, which is not current market value, and these sales can be used to manipulate the price numbers. Buyer beware of numbers, you had better understand what you are looking at.

These numbers also prove the continued reluctance on the part of the Banks, Holding companies, Fannie, Freddie, and FDIC to actually confront and deal with reality and this can only prolong the mess. I believe in fact, it is prolonging it and making it worse. Expect more short sales, strategic defaults, and foreclosures. This continued high level of market distress and the upcoming inventory/supply combined with the new home building supply will continue to put downward pressure on residential prices in 2011. I would guess for some years to come.

The current Obama administrations efforts at saving homeowners and preserving values, is a total failure and huge waste of tax dollars. They do appear to be making the Big Banks wealthy again.

No commercial buildings or land closed through Mesquite MLS in 2010. Yet 13 commercial building permits were issued in 2009 and another 9 in 2010. There is a huge amount of empty commercial space, office, retail, light industrial, and a huge amount of vacant commercial land in nearly all zoning categories. This market segment is still in for a serious reality check.

The Mesquite Market appears to be getting worse from a supply and demand point of view.

If you are considering shopping the Mesquite real estate market without the benefit of a buyer’s agent representing you and your best interests, you could be placing yourself at risk of making a serious financial mistake.

For more on agency and representation read     www.MesquiteMarket.com 

Home Buyers sitting on the Fence Should Know This

Currently FHA has been playing a large role in home mortgage lending. The relatively easy to qualify for and low down payment requirements have made FHA loans attractive to many of today’s home buyers, FHA Does not actually Loan money to home buyers, but insures lenders against default on loans that meet FHA criteria.

Some rules changes are on the way to FHA guidelines. They will include higher upfront insurance premium, current buyers pay 1.75% of the loan amount that will go to 2.25%, that will be the second increase in two years.

The current value of the FHA’s reserves to cover losses has fallen to $3.6 billion, less than.05% of the roughly $680 billion in loans outstanding, down from 3% a year earlier.

In addition the agency may ask for buyers to pay annual premiums. FHA runs a risk of coming up short and may be forced to go to congress to ask for a bail out of its own for the first time in history.

Today only a 3.5% down payment is required on FHA loans. There has been much criticism, that FHA is only prolonging the current crisis, and even creating a new bubble of buyers unable to afford the home they are buying.

There is speculation FHA will increase the required down payment to ten percent, this idea is supported by many housing analysts. As well reducing the amount sellers can contribute to the costs of sale for the buyer from 6% to 3%.

That seller’s contribution has undoubtedly lead to inflated pricing to give the seller the funds to pay the buyers costs. This artificial inflating of prices to allow people to buy homes by paying their down payments and closing costs sounds the reverse of what the market needs right now.

For now Mesquite Nevada real estate home buyers still have USDA financing available, a low down payment program. It could be gone with the 2010 census if we have grown above the 20,000 population mark.

Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
Chris W. Miller

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

A lender recently told me, 80% of the buyers he is pre-qualifying can not get a loan.

I have a nagging fear that our real estate markets as we have known them throughout the last 70 years will not be restored until the Federation gets back to its foundation. The nation was built on principles of individual liberty, individual responsibility, and free enterprise. As a democracy we elect officials to represent us, uphold the Constitution, and follow the laws, today they appear to be doing few of these things.

The majority of the money currently being loaned as mortgages is government backed, through FHA, HUD, USDA, VA and in the secondary markets of Fannie Mae, Freddie Mac, Ginnie Mae. Yes a conventional bank or mortgage broker may take your loan application but virtually all the loans are being sold into these government agencies. The private secondary mortgage market has become nearly non existent at current rates. Fannie and Freddie were not designed to be slush funds for bad decisions or funded long term by tax dollars. In order for the Mortgage companies to continue to lend at current rates the US government may have to EXPLICITLY guarantee these agency (MBS) Mortgage backed securities cash flow investments.

The government regulations have gone from “making homes affordable” think: Bush administration, ACORN, and the repeal of Glass-Steagall, although it goes back much further in history. To today’s consumer protection laws, making it much more difficult to get a loan. When the government exits the mortgage business, rates will go up.

The federal reserve has spent 1.122 trillion of the 1.25 trillion given it to buy (MBS), the program is scheduled to end March 2010, along with the “Home Buyers Tax Credits”. The federal reserve can keep rates low for the banks to make huge profits on short rates but it really has limited control of the ten year and longer end of the bond markets which effect mortgage rates more directly.

2.8 million Foreclosures hit the market in 2009. Fitch ratings have warned that in the next twenty four months another one half trillion dollars in prime, Alt-A, interest only, option arms, and sub prime mortgages will adjust or recast and many of these are middle and upper middle class families. Creating unsustainable payment shock for millions more Americans and millions more foreclosures. Distress in real estate tends to lead to more distress, and finding a bottom may involve unemployment numbers.

RealtyTrac says “No End in Sight”.

This is ALL about unsustainable debt, consumer debt, state level debt, federal level debt, and out of control spending.

Back to the start, the Federation is governed by laws; states are required to balance budgets, consumers are required to make mortgage payments or suffer the consequences. Our elected officials can not save home values, they can not keep people living in more home than they can afford, they can not put people in more home than they can afford and expect them to make it, and they can not modify people into a home they could never afford in the first place. They are throwing our good money after trillions in bad money. They, the elected officials, must be held accountable for bringing our children’s nation to the brink of bankruptcy.

When the dust finally settles and the unrealized losses are all on the books, the wealth effect in dollars lost will be staggering beyond any numbers currently being discussed, the effects will last generations. These losses will show up in places like pension funds of all kinds, 401k plans, other retirement accounts, sovereign wealth funds, and many of the world’s governments. States with budget deficits and falling tax revenues will be asked to cover more and more of the federal debt burden.

None of this is good for the current home price market today or tomorrow. The median price home sold in Mesquite during the forth quarter 2009 dropped to $192,063 or $118 per square foot. The median priced condo sold for $75,000 or $70 per square foot, and the median priced town home sold for $108,000 or $78 per square foot.

Ego, greed and monetary policy have taken us down the wrong path. Government intervention and efforts to manipulate the market created the environment for the crisis to occur; now it threatens to prolong and deepen the damage. We as a country must quit spending money we do not have, buying homes we can not afford, and curb government spending programs. And until we as a nation get back to a free and open market, principles of individual liberty, individual responsibility, and free enterprise, I believe recovery is unlikely.

Real recovery can only begin with honesty at every level, at home, in business, and most importantly at the government level. In my humble opinion we have little chance of any real sustainable financial recovery until we accept these facts and principles and then, act on them.

Expect real estate values to continue to drop more in 2010 due to the massive amount of distressed inventory of properties sitting out there and coming to the market.

Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
Chris W. Miller

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 May of 2007 we had no shadow inventory, virtually everything listed was sold including the few foreclosures and banks were not holding them back off the market at that time.

Many questions surround this so called shadow inventory supply of housing; some even dismiss the idea as a scare tactic and illusion. Market facts are as varied as there are markets; many markets that did not experience the extreme boom are relatively healthy while others continue to get sicker. This information is definitely market specific.

Mesquite Nevada real estate statistics since May of 2007 show a steady, dramatic, and continual climb in failed listings. These properties were active for sale and did not sell and are not actively for sale today. Yet the reasons for needing to sell and the needs of seller’s in most cases have not changed. In many cases the urgency to sell has only increased. How many people do you know who have put off putting their home on the market until the market improves and how long can they wait?

Notice of defaults, those falling at least ninety days behind on their mortgage payments has spiked to its highest level in the second half of 2009. Many of these will become short sales or foreclosed bank owned properties. They have to be sold and are not currently listed as active.

Foreclosures and bank owned vacant properties in Mesquite NV continue to climb and the banks are not listing them. They appear to be holding them waiting for either a dramatic market change or more likely a change in government regulations regarding asset values and bank solvency. Realized verses unrealized losses on the books of the banks. They may actually believe they can release these at a pace they can control prices, manipulate the market, I know they have not acted rationally but this would be off the scale of stupid.

Today there are around 400 active listings in the town with a population of 18,000 or so of primarily retirees, at 2 per household that’s around 9000 homes and condos. The shadow inventory is much harder to count. You have normal live changes that lead to people moving, health, death, jobs, family size changes, etc.

When you add in the mortgage loan resets, those arm loan adjustments where the payments increase, the walk a ways from the under water syndrome, moral or not, it is becoming far more common, and the very high unemployment. Mesquite NV real estate is unique in that most of the people living here purchased either at the beginning of the boom or during and so nearly all paid more than they can net from selling today. Under water whether by mortgage or just cash loss.

Based on vacancy rates, notices of defaults, Mesquite’s foreclosure filings, 400 active listings, builders inventories not listed, there may be as many 800 or 900 properties coming available. 2009 was a descent year for number of sales, MLS shows 365 closed as of December 31, 2009 for the year. It was not so good for prices the average sold price was $110 per square foot. That number dropped to $89 per foot in December 2009.

At the absorption rate of 365 per year, it could take until 2012 just to clear the inventory sitting out there today. This of course does not consider new builder competition, which with Sun City in town and plenty of new choices coming soon in Canyon Crest, is going to remain fierce. Supply and demand will dictate pricing.

I believe there is another possibly more important factor driving demand. During the boom years the emphases was “A Rich Rewarding Lifestyle”, “The Next Palm Springs” was often heard around the city halls. Many larger and expensive homes were built. The bulk of the market selling to today is the lower end smaller more efficient homes. Expensive gated HOAs and the higher end housing sector is really being hit hard on pricing. The 2009 Median price for all housing sold and closed in Mesquite, NV was $165,000. If you are builder there is a target number for you.

The retirees of tomorrow are focused on preservation of capital, conservation, comfort, and affordability. Few are going to extend themselves beyond their budgets, and most will try to stay in a comfort zone which will allow for more than living month to month just making house payments. The days of Baby Boomer’s spending like they are the wealthy class may be gone forever. Bankruptcies have shot through the roof and will continue to go up well into 2010.

Mesquite Nevada’s real estate challenge ahead will involve working our way out the hole we currently in, and that could take two to three years. Most importantly though Mesquite’s challenge will be to bring a product to the market in the future that will meet the needs of this retiring generation. Affordable housing must top the list of priorities (think $110 per square foot), solar orientation, efficiency, comfort and livability.

Some may say that Mesquite was built by the wealthy for the wealthy and must remain that way; I say if that be the case it is going to become a mighty lonely place around here.

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

There are currently only 12 active commercial buildings listed in the Mesquite MLS, and only 18 commercial land parcels listed active for sale in the Mesquite MLS. Commercial real estate is listed and generalized into these two categories in the Mesquite MLS. I have focused on the improvements, not the vacant land and attempted to break it down for you by highest and best use. There are some properties that do fall into more than one category.

After a careful physical review it appears that there are closer to 30 buildings available for sale or lease, and 45 commercial land parcels for sale or with an option to lease with build to suit in some cases.

Business closings have been dramatic over the past twenty four months, in the neighborhood of 30 have closed and are gone, including a large casino, numerous restaurants, retail shops, builders, associated contractors, suppliers, title companies, and various other small businesses.

In general, in retail space the vacancy rates range from 100% to as little as 20% per complex, virtually none are 100% occupied. The overall vacancy rate in Mesquite for retail space appears to be running between 40 to 50% of available space. There are between 50 and 70 vacant retail spaces, depending on space size. A vacant 8000 square foot building could count as one space or four units. I would guess there is between 100,000 and 120,000 square feet of idle retail space in the market.

Light industrial space may be worse than retail space in terms of vacancy rates, at least nine buildings are 100% vacant with close to 125,000 square feet of idle space. Then there are another ten to twelve buildings with some vacancy. My best guess is these have another 30,000 to 50,000 feet of idle unoccupied space. There may be as much as 175,000 square feet of vacant light industrial space.

Falcon Mesa Business Park Complex, this complex is a combination of office and retail multi purpose use. Seven of 13 of the total buildings appear to be vacant. When a building was half occupied, I have counted that as half and included these buildings in the above mentioned vacant retail square footage.

The Town and Country Plaza on Pioneer Blvd. has seven tenants, all retail except AG Edwards which is the only office space leased. These early tenants are paying close to $1.50 per foot, but I believe that future new tenants may get a better rate. My best guess is that it is 20% retail and 5% office space occupied. The owner is motivated and very negotiable but will not commit to any numbers without a face to face meeting with the prospect.

The Oasis Professional Office Park at Pinnacle and Oasis Blvd has eleven buildings total and 6 appear to be vacant and for sale or lease. The Brickyard on Mesquite Blvd appears to have ten vacant spaces out of a total of approximately 30.

The 100% vacant buildings in Mesquite include, 175 and 195 Willis Carrier Canyon (40,000 Sq. Ft each), Capital Materials Building 6200 Sq. Ft on 2.58 acres with yard and pole barns, two buildings located in front of Capital Materials Buildings, Calais clubhouse building, office building located in front of Calais clubhouse, Cinco Office building at 4200 Sq. Ft., Harley’s Auto Repair shop on Mesquite Blvd, Rio Virgin Grill Restaurant, Credit Union building on Pioneer in front of Wal-Mart, Walgreen’s Building on corner of Falcon Ridge and Pioneer, Buffalos Restaurant, Wolf Creek Office Building, Convention Center Building, NAPA auto building on Mesquite Blvd, 6000 warehouse on Aztec, 4800 tilt up building at corner of Hardy Way and Bowler, a Building East of Sears. There are a few others but this gives you a sense of the magnitude.

There is vacancy in every commercial complex and as I talked to leasing agents and building owners there was one clear theme, they are begging for people who will pay $1 to $1.50 per foot. They all offer possible tenant improvements with two to five year leases. They hint at possible lower rates, but when pressed, the lowest offer I got was a possible .50 per foot from an agent who would have to ask and see. Many of these buildings have no tenant improvements and have been vacant for over two years.

If building owners are giving away expensive tenant improvements, free months rent, paying taxes, insurance, and CAM fees, then the net is far less than current asking rents.

We have not really seen price reductions in asking prices or lease rates. The owners continue to hire agents who are inexperienced with little or no commercial background who will tell the owners only what they want to hear. I would liken it to taking a dangerous river rafting trip with a guide who knows less about rafting, the river and current conditions than you do, risky at best. They list property with no facts to support prices and at reduced commission rates, most CCIM or experienced commercial agents basically refuse to waste their time with amateur agents and over priced properties.

Appraisers call me frequently looking for comps and since there are no comps in over two years I suggest they use a capitalization approach. Of course that leads to a fair market rents discussion. In my opinion, over the next few years until Mesquite grows into the supply .40 to .60 cents a foot will be the going rate. At an 8% cap rate and .50 cents a foot the average asking price is on average about twice the actual market value. Of course the owners and listing agents are sure this approach makes no sense at all.

There is much speculation in the market about the potential effects of the Desert Falls Sports Complex; it is being used by many as justification for future values. It remains to be seen if it will ever materialize. Until it does I would say “What you see is what you get”

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

Sales are up and prices are down and falling!

Beware of pending home sales numbers, the conversion rate from pending to actually closed transactions is falling daily as deals blow up. Pending short sales in general are not closing. When you hear pending home sales, it is a misleading indicator. 

In Mesquite we actually closed:

                                  Median Price                $ Per Square foot

39 Resale Homes         $192,400                         $113

13 New Homes             $208,984                        $125

15  Condos                    $87,500                          $77

29 Town Homes           $130,000                         $88

Total 93 closed sales     $150,900                         $99

43 of the total 93 were distressed properties.

229 listings went out of the active inventory as failed. Active available listed residential property remained stable at around 400 with over 60% vacant.

221 new listings were added to active and 85 of those were distressed properties, either short sales or bank owned (REO) foreclosures. Notice of defaults continues to increase.

2 vacant lots sold in Calais and averaged $125,000.

No commercial transactions closed. Vacancy remains at historic high rate in all categories

The market is averaging around twenty active resale listings at Sun City, but you would never know it since they do not allow signs, period, even inside your own window.

Over 50% of the current pending transactions are distressed properties. The banks are holding more and more real estate as defaults rise and individuals realize they are stuck as well. Unrealized bank losses are mounting as wealth evaporates.

The amount of shadow inventory is impossible to calculate. Based on unlisted bank owned property, defaults and failed listings, the number is far larger than the 400 active listings, maybe double.

Given the future uncertainty in taxation, health care costs, income, asset value growth, cost of living inflation, and home values retiring buyers have become increasingly cautious. The market is mainly being supported by high loan to value government backed FHA loans, and interest rate risk appears far greater than home price increases. Prices continue to fall.

There are seemingly good values available…….Buyer Beware!

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

$4500 dollars in free money to anyone who will trade in a perfectly good car that gets less than 18 miles per gallon. Most of these new car buyers will borrow most of the additional money needed to purchase one of these new more efficient cars. So far so good, more efficient cleaner cars on the road, more auto sales have to be good for the car makers and therefore jobs and the banks get to make more loans.

Of course the $4500 isn’t exactly free, at least not to all of us as a collective group; we are the ones giving it away through our government.

Since when do I care about cars or government giveaways? I write about real estate.

New car loans will reduce the number of people we can sell homes to over the next few years. More consumer debt is and has been the problem.

Under the newer existing and newer yet to be completed financial consumer protection rules, underwriting standards for home mortgages are getting tighter.

Consumer debt to income ratios affect their ability to take out a new mortgage. Mortgage lenders will count the new car payment loan against the borrower. For some of the cash for clunkers buyers that will be taking on a new car payment, that additional debt will push their debt to income ratio too high to qualify for a new mortgage.

In order for the housing market to really open up, consumers must reduce debt, not increase it.

The $8,000 first time homebuyer’s tax credit and the cash for clunkers are two of the most direct to the consumer stimulus funding programs. Both will help get money moving again.

If you plan to use both programs, buy the house first. Let me repeat that, buy the house first. The auto lender will in general view home ownership as a positive thing. While the mortgage lender may use the new car loan as a reason to deny you a new mortgage.

Whether you qualify for the $8,000 first time home buyers credit or not, if you think you may want to jump into homeownership in the next couple of years. Take the time to talk to a mortgage lender about your debt to income ratio and what a new car payment will do to your ability to get a mortgage. Please do this before you run out and test drive that new car.

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

Affordable housing is about living life with financial options.

For some the home they live in is everything, it defines who they are and it is their primary investment. For others their home is a place to live. People have a diverse view on what the house they live in means to them, and people have different priorities.

We all have limited resources, from the federal government, to state budgets to Bill Gates and Warren Buffet. Typical retirees have fixed incomes and limited ability to increase net worth. Broad spectrums with one thing in common, limited resources.

It has been said “Money is good for the good it can do”. Money has time value, at 6% you pay $6000 per year to borrow it or get $6000 per year to lend it, time value.

Based on the fundamental principles of limited resources and time value of money, affordable housing is about personal priorities and the option of discretionary spending.

As an example using 6%, a good historical average $300,000 has a time value of $18,000 per year, while $100,000 has an annual time value of $6000 per year. Whether owned out right or mortgaged, you are either losing interest income or paying to borrow.

Sustainably Affordable housing offers the opportunity to those who chose to live in the $100,000 home to take the $12,000 per year difference and do as they wish in retirement. They may want the extra money to travel, spend on the grandchildren, or contribute to charities. The list is as diverse as people are.

There are those who would like to paint sustainably affordable housing into a “those people” class war. They like to use terms like workforce, subsidized, and low income, emotional charged stigmatized words.

Future retirees will come to view sustainably affordable housing as smart, prudent, comfortable, conservative, and emotionally satisfying. They will view their home as a place that meets their needs to live comfortably.

They will take the money they save and use it to enjoy life. As people grow to appreciate “house is a home” as a concept, rather than as an investment or measure of personal worth. Excess will be viewed as insecure arrogance, wasteful, and just plain stupid.

Government spending, industry bailouts, cap and trade, crumbling infrastructure, an aging population, escalating health and energy costs, and taxes, all point to one thing, we will contribute more and receive less, each and everyone of us, its guaranteed. 

Eventually proper solar exposure and appropriate overhangs will define modern homes like indoor plumbing and electricity once did. I know you laugh now, but when you go outside in July in Mesquite, do you seek the shade, or in winter a warm sunny wall, it is intuitive and it is the future of housing. Sustainable affordable housing is basically energy efficiency combined with proper solar orientation.

Sadly many Mesquite retirees did not have affordable housing as an option. They have bought large expensive homes and in the process given up many of those discretionary spending options. This of course is really what affordable housing is all about, personal financial options. The City of Mesquite has avoided any earnest discussion about affordable housing for years now.

Given a clear picture of retirement goals and options, many well healed retirees will chose sustainably affordable housing. Not because they can not afford to spend more but because they have other things in their lives that are far more important. Life is short and priorities are important. Status and image are fleeting and hollow at best.

Sustainably affordable housing has been given a bum rap, a bad image, although this has come mostly from those concerned with status and image.

Mesquite has an opportunity to shape the future; sustainably affordable housing is achievable here. It will require bold leadership with commitment and action today. The future will be here before we know it.

Many future retirees who can spend $300,000 will come to Mesquite to buy those $100,000 green sustainably affordable homes. The reason is simple, they want to spend that extra $12,000 a year having fun, rather than an extra 1000 square feet to heat and cool.

$1000 a month extra spending money for the average future retiree will change their lives dramatically. It would be very good for local businesses as well.

Interest rates have been historically and artificially low, this will not last forever. The average conservative retiree will not take out a mortgage more than about 2 to 2.5 times their annual gross income. This points to a greater urgency today to address tomorrow’s sustainably affordable retirement housing.

Mesquite’s future depends on decisions made today by the current leadership and administration. They need to hear your thoughts on affordable housing in Mesquite.

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 Mesquite Nevada real estate there are a record number of institution owned properties, a record number of notice of defaults being filed, and a record number of foreclosures taking place. This year has steadily recorded monthly records for failed listings, and the new record grows each month. All those failed listings are all still out there and will eventually need to be sold.

Never in the history of Mesquite real estate  has the market seen distressed numbers even close to what is taking place right now. Sales prices conitnue to drop.

The number of listed vacant properties is close to 60% of the total listings. Property management companies are reporting record vacancy rates for the properties they manage, and rents are dropping.

The institutions (BANKS) seem to be holding inventory back off the market. No one knows the motivation for hoarding vacant deteriorating real estate, but it sure looks like that is exactly what they are doing.

While some agents will spin the market and push the “buy now or risk missing out” pitch, the truth appears to be quite the contrary. No wonder consumers view our industry with distrust and contempt.

Now is a great time to buy if; it fits your needs, budget, time frame, and you have done your homework.

Tomorrow will also be a great time to buy. When the institutions do start dumping that inventory, it might even be a better time to buy. If you plan to buy but are not ready yet, relax.

Find yourself an agent that will talk to you about the market honestly, learn the market numbers yourself, paying particular attention to prices per square foot.

For the buyers the best is likely yet to come.

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