Mesquite Market

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

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

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

Mesquite Nevada home building permits issued are still up. This should not be a surprise with Pulte/Del Webb’s Sun City Mesquite, now one year old. Most of the 209 YTD new construction permits went to Sun City. MLS verses Clark County records show buyers with agents paid slightly less per square foot, $157 on 62 sales from county records, $155 from MLS records on 23 sales. If nothing else, buyers who come out and register with an agent have the advantage of keeping Sun City on their toes; the agent can take the buyer to see the competition. You need to bring your agent (Please keep me in mind, I would like to apply for this JOB!) to Sun City on your Initial visit, or wait six months to go back, then bring me back with you to get re-registered.

The Mesquite Nevada land market is changing forever. In the past, all the land north of I-15 was controlled by just a few people. Today, with whole subdivisions going into foreclosure, the monopoly is shattered. This is very positive for the future competitive building market. You will be able to buy a lot, pick a builder, and shop the whole process. Good news for consumers. Estimates range from 10,000 to 14,000 vacant lots sitting out there in varying stages of development. Those numbers do not include the 13,300 acres (40,000 home sites estimated) with a six and a half mile border with Mesquite to the north in Lincoln County. This land is burning interest money at a scary pace, and will be brought to the market as soon as the people involved can get some things in order, like a water supply.

The re-sale home, condo, and town home markets are suffering from competition from every direction, new construction, foreclosures, old inventory of new construction that has never been sold or lived in, and desperate sellers.

You can clearly see it in the existing single family homes closed numbers, April had 29 closings at $168 per foot, May had 25 closings at $167 per foot, and JUNE had 30 closings at $140 per foot. The notice of defaults, there appears to be a wave of these coming, more foreclosures coming on the market, and the banks, well the banks are beginning to act scared. They are beginning to clear inventory at prices more like you would expect. We may not be seeing the bottom but there are some numbers coming through that make a whole lot more sense.

The highlight of the Mesquite, Nevada commercial real estate market can be summed up in a word, VACANCY. This excess inventory is going to take some time to clear. The City of Mesquite spent $80,000 on the Buxton study to promote business development in Mesquite. They have issued 56 commercial new construction permits over the last 30 months, so the builders and speculators bought into the boom anyway.

No single family lots closed. “The Chalet” sold for $550,000, and a commercial lot, actually it was a small house zoned commercial closed this quarter. No other commercial property closed through MLS.

Sun City Mesquite just announced they are building 41 spec homes; move in ready standing inventory, this is not good news for existing home sellers.

Depending on which side of the fence you are on, this market correction could be the greatest thing you have ever seen or possibly the worst.

The future for Mesquite Nevada Real Estate Market is BRIGHTER!

For your complete daily market update,  Mesquitemarket.com or tune into Radiomesquite.com for “Talking Real Estate” Saturdays at 3pm pacific time. Please feel free to contact me.

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

As the market continues to slow….
Since 2005 when we closed 41 total residential units in the local Mesquite MLS, January closings have gone to 38 in 2006, 28 in 2007 and now 26 in 2008.  Inventory, specifically property being listed, grew 7.2 new listings to each 1 that went into pending status in January 2008. 

While the total number of properties for sale only increased about 3%, the other properties went out as failed listings, either expired or withdrawn. The number of vacant properties remains very high and most of what has been rented is running large negative cash flows. Some of those failed listings will be tomorrow’s foreclosures and short sales. Many people must sell.
 

The speculative buying fad of the recent past, that pushed builders to capacity, caused lenders to become shady street venders hocking stolen goods in dark alleys and led normally smart buyers into mindless bidding wars, now looks like an $8 cup of cold Starbucks coffee. 

If you are wondering where they got the stolen goods, take a look at the consumers faced with payments they can’t afford combined with negative equity positions. Take a look around the world at the values of the CDO’s held by every type of investor, from institutions to pensions to 401K plans and individual investors. It is the stuff you hear on the nightly news; those write downs that they now say exceed 260 billion and are likely on their way to half a trillion. Greed at every level seems to have gotten the best of them all. 

At January’s closed numbers there is a 16 month supply actively listed today. There are at least 50% more out there that need to sell, that’s a 24 month supply, without any new starts until 2010. The builders will keep building because they have to. They speculated on the land and lots of it! 

Mortgage interest rates are extremely attractive. Qualifying for a mortgage has gone back to: Can the borrower actually afford to make the payments? Key word being afford, and that of course relates directly to prices, as well as rates.

The principles of, supply and demand, price competition, and affordability will be setting the rules for 2008 and beyond. Stimulus plan or not.

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

New home building permits issued by the City of Mesquite went up; 114 issued in 2007 Q4 compared to 42 in 2006 Q4. For the year permits increased from 262 in 06 to 463 in 07 or 76% more. This increase is compounding the market slow down and pushing prices down across the board. Listed “for sale” inventory grew faster than 4 to 1 compared to “sold and closed” units.  Based on December closings as an absorption rate there is a 30 month supply sitting out there, many are vacant. 

Today the average asking price for a listed home stands at $197 per square foot. October sales prices were at $169 with 15 sales, November was at $159 with 22 sales, and December was at $150 per square foot with 11 sales. There were only 17 resale homes closed during the Q4 of 2007 with an average sold price of  $170 per foot. There were 33 new home closings with an average price of $157 per foot, including 17 at Sun City which averaged $147 per foot! 

Town home/condo market did not fare any better, with only 18 closings for the last quarter 2007. The average sold price dropped to $146 per foot from the low 160’s earlier in the year. For the year builders pulled less multi family building permits, 55 in 2006 vs. 16 in 2007. 

The Mesquite MLS Market Comparison of Residential Properties Statistical Report, December to December shows depreciation in prices from 19.81% to 30.01%. 

No commercial land or building sales transactions took place during Q4 2007. Yet commercial building permits issued tripled for 2007 over 2006, from 11 in 2006 to 35 for 2007.  Commercial vacancy rates were high starting out 2007, they will go higher. 

No single family residential land sales closed during Q4 2007. Lots “for sale” increased 10 fold during 2007, from very few to over 50 active today. Add this fact to the new developments around town which include as many as 14,000 vacant home sites and you get some very nervous land speculators. 

The number of bank owned foreclosure properties and short sale properties being offered is climbing. Most, just like existing home sellers, are not quickly embracing the falling prices and these homes are sitting out there vacant. 

While rates have come down during this past quarter, qualifying has become much more challenging if not impossible for many buyers. This fact eliminates some buyers and reduces the demand side of the equation. 

Rental rates on residential properties have come down some and vacancy rates remain high. Commercial space asking prices have not come down much yet, but that looks likely to change. 

Mesquite, Nevada remains a wonderful place to live. Sun City/ Pulte Del Webb continues to shine a huge spot light on Mesquite, and many new visitors arrive daily. Sun City sales representatives tell me they wrote over 300 new home purchase contracts since the grand opening in June 2007. Mesquite will continue to be one of the top choice areas for the graying baby boomers to consider. From the looks of the current market it will be less expensive and more affordable than it was, at least for some time to come. The market is creating some great buying opportunities for 2008. 

Weekly Mesquite market reports available on pod cast at www.radiomesquite.com

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