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Las Vegas’ fast-paced housing market trails other cities

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In the Indianapolis suburbs, a home-hunting couple left some postcards on people’s doorsteps saying they loved the place – and asked the owners to call if they were interested in a sale.

In the Twin Cities, a couple looking to buy their first home made eight offers – about $ 30,000 above asking price on average – and they still couldn’t get a seat.

And in the Dallas area, a real estate company offered prepaid cruises to sellers to help them accept their offers.

Driven by cheap money, real estate markets across the country have accelerated with rapid sales and soaring prices. The Las Vegas market is moving at its fastest pace in years, but it does seem tame compared to other cities.

As seen in recent metropolitan comparison reports, soaring prices in southern Nevada are rising (10.6 percent year over year in March) at one of the slowest rates in the country. The proportion of homes in Las Vegas that found buyers within a week of listing (around 51 percent in April) is in the middle, and the proportion of homes that sold above asking price (15 percent in February) is at one of the smallest in the nation.

At the moment it’s not entirely clear why the Southern Nevada home rocket is lagging behind others. But buyers are setting the lowest mortgage rates in the country, stretching their budgets, and the fact that other cities are cluttered than Las Vegas shows just how frenzied housing construction has become.

“Everyone’s just inundated … this big wave,” Taylor Marr, chief economist at listing site Redfin, told me.

In southern Nevada, people shower homes with offers, often within days of listing them. Average resale prices hit new all-time highs practically every month, available inventory has dwindled, and overseas buyers, especially Californians, seem to be buying more homes than usual in cheaper Las Vegas as people work from home without commuting.

Meanwhile, builders have regularly raised prices and put buyers on waiting lists amid rising demand.

Nonetheless, property prices in the US are rising “pretty fast,” and overall, the trends in Las Vegas are “not unique,” said Danielle Hale, chief economist at listing site Realtor.com.

“Houses sell fast everywhere,” she said.

Las Vegas is still a top immigration destination, but people have packed and moved to other cities like Austin, Texas, as well during the pandemic. Denver; and Boise, Idaho, according to Redfins Marr.

In the Austin area, 4,535 homes were sold for $ 25,000 to nearly $ 100,000 above asking price this year through May 23, compared to 353 such sales in the same period last year, Redfin reported.

Plus, browsing news reports from around the country makes it easy to find stories of red-hot real estate markets, as shown by reports from Indiana, Minnesota, and Texas.

Of course, the housing market has gone crazy before. In the mid-2000s, Las Vegas real estate values ​​soared thanks to the torrent of easy money, people easily switched homes, and home builders filled the valley with far more residential areas than they do today.

After the bubble burst, southern Nevada was ground zero for the American real estate crash, which was marked by falling prices, abandoned construction sites, and tidal waves of foreclosures – a mess that took years to recover from.

Could the not-quite-insane market of Las Vegas today – at least when compared to other cities – leave it in a better position if housing construction eventually slows?

It is possible. As the cliché goes, what goes up has to come down – and the fall may hurt less when you’re closer to the ground.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

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Real Estate News

Get In On the Real Estate Market Now

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If you are a high net worth individual or are a high-income earner, you should consider real estate for these four reasons: tax benefits, passive income, long-term asset appreciation, and leverage. Real estate is currently on the forefront of everybody’s radar since the last the crash in 2008-2010. But has anyone ever explained why it is such a wealth building and income protecting investment vehicle?

No? Well, as an investor and an attorney I routinely advise clients on real estate issues and help them with their investments. In this article I will explain to you why real estate should be part of your investment portfolio and why you should get in now while the market is cooling.

REAL ESTATE AND TAXES

Real estate is one of the few asset classes with multiple tax benefits that are under appreciated by financial advisors. Why? It could be that financial advisors don’t make a commission on them or that you actually do not need a financial advisor to get into real estate. Not to diminish the role of your advisor but you do not need a financial advisor to understand these tax benefits of real estate.

  1. Real estate is valuable. Yes, you can depreciate residential real estate over 27.5 years and commercial real estate over 39 years. 26 USC Section 179 allows for the depreciation of real estate over the life of the asset class, and in the case of real estate, you can take a $500,000 residential property and depreciate it over 27.5 years. This means that you can deduct $18,181.81 each year in depreciation.
  2. Real Estate Capital Gains Can Be Deferred. Under Section 1031 of the Tax Code, if you hold a property for the requisite holding period, which is not defined in the Tax Code, you can sell that property via a like-kind-exchange using an intermediary to hold the funds while you identify a new property or properties within 45 days and close on those identified targets within 180 days. This allows you to defer capital gains taxation and forebear depreciation recapture while buying larger and, hopefully, better cash flowing real estate assets. Thus, this tax mechanism allows the investor to take their profits and leverage those into more assets thereby growing the real estate portfolio in a tax efficient manner.
  3. cost segregation. Depreciation of the real property can be accelerated by using cost segregation studies to break the assets into its various parts that fall under separate classes to allow the individual components to be depreciated over 5.7, or 15 years. This allows the property’s components to be utilized in a tax efficient manner instead of using the 27.5 or 39 year class life of the entire asset. A net result of a cost segregation study is to accelerate the depreciation to allow for more Section 179 depreciation to be taken earlier in the asset’s life.

    While more tax nuances can be discussed, these are the tax benefits that high net worth individuals should look into. Additionally, by working with a sophisticated lawyer who understands the needs of the individual and their goals, tax losses can be carried forward to future years.

REAL ESTATE AND PASSIVE INCOME

Whether using long term residential real estate, commercial storage units, short term residential real estate or apartment syndication deals, real estate allows the owner and investor to take a passive role in the management of their real estate by utilizing property managers.

The use of property managers provides the investor with the peace of mind that their investment is in good hands for day-to-day matters such as maintenance, and that their tenants are safe in the knowledge that they have someone to turn to in the event a need arises. Moreover, for the cost of the monthly management fee, ranging from 3-40% of the monthly gross rents, higher percentages are usually found with short term rental management and lower fees with long term residential property management, there is no need to worry about Late night phone calls about a clogged toilet.

Property managers will also ensure the yard is maintained, the utilities are being paid, the tenants are of the caliber desired, and any marketing efforts to rent the properties are being undertaken to ensure maximum rental potential. At the end of each month, a revenue statement is generated by the property manager, and a check or direct deposit is provided into the bank account the investor designates. A true passive investment.

ASSET APPRECIATION AND LEVERAGE

While your tenant is paying the rent each month or in the case of short-term rentals, multiple tenants, the note held by the investor is being paid down. Historically, real estate appreciates in value so the asset is increasing in value. As the asset increases in value and the debt is being paid down, the investor is receiving the benefit of equity growth. It is with that equity growth that the value of real estate cannot be overstated.

By tapping into the equity growth through a refinance or an equity line of credit, the investor can leverage that internal equity to purchase additional real estate. The additional real estate purchases allow the investor to generate more cash flow, and more tax benefits. Regardless of the asset type, short term, long term or commercial real estate, the benefits to the investor are tangible in the form of tax deductions while maintaining monthly cash positive receipts.

While many investors are looking at the current real estate market, it would be well worth their long-term goals to consider real estate as a supplement to their financial portfolio. As iconic long-term investor Warren Buffet said, “Be fearful when others are greedy, and greedy when others are fearful.”

Written by Brian T. Boyd, Esq.
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Opinion: Here’s the latest data on what Realtors are witnessing in the housing market

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The real estate market has shifted, and we are in a new housing paradigm. Mortgage interest rates have risen quickly in the past few months further eroding affordability. However, there are a number of attention-grabbing headlines, which unfortunately only compare today’s housing market to the very recent history of the last two years. It is always good to know where we are with the real estate market, but it is essential to keep all data in historical perspective.

The monthly Realtors Confidence Index helps to dispel many of the myths and cut through the noise of what is currently happening in the market. the National Association of Realtors Research Group has produced the index since 2008, at a time of turmoil in the real estate market. It is a monthly pulse on what is happening in the market from the perspective of Realtors who are active in the field. Questions have evolved and shifted overtime, but it is a steady resource of what is happening on the ground.

As reported in the latest NAR Existing-Home Sales, inventory still remains in tight supply, which means homes are still moving at a fast past despite the recent rise in rates and home prices. The median days on market is just 16 days — a slight increase from the record low seen in the last two months of 14 days. In comparison, in 2011, homes took 96 days to sell.

Notably, the market has contracted as fewer buyers can afford to purchase in today’s market with the rise in interest rates and the continual rise in home prices. However, in many areas of the country it does remain a seller’s market. For every home that was listed, there were 2.5 offers. This is down from the frenzied market from April of this year when every home that was listed had 5.5 offers. Historically 2.5 offers represents a competitive housing market, edging towards a balanced market.

One way to understand the competitiveness of the market is to look at buyers who are waiving contingencies. While this data series is shorter, it does reflect a slight ease that mirrors the number of offers for every home. There had been nearly one-third of buyers who waived an inspection or appraisal contingency, but the last month it fell to just over 20% for both.

Another measure of the housing market is whether a realtor had a client who had a distressed sale in the last month. Due to the consistent rise in home prices, homeowners typically do have equity in their home distressed sales are not common today. In 2008, 49% of Realtors had a client with a distressed sale, today it is only 1%. Another reason why distressed sales are likely low is that lending standards remain tight. It is difficult to obtain a mortgage today. A housing borrower must have a higher credit score, significant savings, and higher incomes to qualify for a mortgage and compete in today’s housing market.

Last month, we saw a shift in who is purchasing homes. There is a reduction in the share of all-cash buyers who may be waiving the home appraisal, and a reduction in vacation and investment purchases. All cash buyers now stand at 24%. The last high among all-cash buyers was seen at 35% in 2014.

The share of non-primary residence buyers is now at 16% from a high of 22% in January 2022. In January of 2022, there may have been buyers who were looking to purchase vacation homes as travel remained suppressed at that time. Investors may have been drawn to the market as they saw rents increase for tenants. Others may have viewed the property for both purposes: a vacation home that could be rented as a short-term vacation rental when not in personal use.

Unfortunately, the share of first-time buyers remains suppressed at just 29% last month. While it is not the high seen during the First-time Home Buyer Tax Credit in 2010, it is also not the historical norm of 40% seen in the annual Profile of Home Buyers and Sellers report. Notably, during the timeframe of the First-time Home Buyer Tax Credit, there was significantly more inventory than seen today.

To read more on the monthly Realtors Confidence Index, check out the full report the same day Existing-Home Sales is released.

Want to learn more about what to expect when it comes to the future of the housing market? This article offers a preview of our upcoming HousingWire Annual Housing Market Super Session that will feature an all-star panel of housing experts. Join us in Scottsdale, Arizona Oct. 3-5 to attend this super session that is designed to help attendees understand macroeconomic data and housing trends for the next year and beyond. To register for HW Annual, go here.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author responsible for this story:
Jessica Lautz at [email protected]

To contact the editor responsible for this story:
Brena Nath at [email protected]

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Real estate: 5 ways to invest

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For most people, the term real estate has a limited number of meanings. They tend to hear the words and think of either a private home or a piece of commercial property. But there’s much more to the concept than those two classic examples.

The computer age has given rise to an entirely new paradigm of real estate that includes an intangible asset known as digital properties. Other popular ways to invest in the broad real estate segment include income-producing rental homes, REITs (real estate investment trusts), fixer-uppers, and office condos.

The modern face of the market is both exciting and potentially lucrative for investors who prefer to park their capital in assets other than old-fashioned stocks and bonds. Here are the relevant details about the top five ways people will invest in real estate in the 2020s.

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Digitalproperties

Virtual property within the metaverse, the internet-based VR (virtual reality) world, is one of the newest assets. Those who scoff at digital real estate should regularly consider that many millions of dollars trade hands between sellers and buyers. In the real world, one principal Miami-based real estate broker offers all customers digital replicas of any tangible asset they purchase. For prospective investors, the profits are uncertain but potentially huge.

Consider that just a few years ago, digital properties sold for tiny sums but now go for several thousand dollars each. Several reputable real estate brokers and companies are exploring the digital real estate segment, and the concept is gaining wide social acceptance among serious investors. Anyone who owns real estate should look closer at adding one or more digital assets to their portfolios.

Vacation rental homes

Rental homes offer two benefits for the price of one. First, owners can purchase one in a distant city of their choosing, not to mention earn regular income. When they want to go on vacation, they can take the home off the rental market and stay in it for as long as they wish without paying for pricey hotels or someone else’s rental property. Other owners use holiday city rental houses as steady, long-term income streams to earn top dollar for peak seasons but then move into the homes after retiring.

REITs (Real Estate Investment Trusts)

Affordable shares of real estate assets are what REITs are all about. Not long ago, anyone who wanted to earn income from property ownership had to invest significant capital, deal with complicated legal documents, and take on outsized risks. With REITs, anyone can purchase tiny amounts of carefully vetted properties and avoid all the headaches of actual ownership, like landlord duties and hefty initial investments.

Fixer uppers

For at least 30 years, there’s been an active flipping market in the sector. It’s comprised of buyers who seek fixer-upper houses, renovate them, and quickly place them back on the open market for sale. Flippers operate on the principle of combining sweat equity with short-term speculation to earn a potentially positive return on every worthy fixer-upper they acquire. Initial expenses include the property itself, along with renovation work. Pursuing a side job as a house flipper can offer a steady, significant income for those with the money, time, and energy.

Office condos

Investing in office condos is a relatively easy way to get into the market as a financial backer. Some condos, most of which are located in strip malls and small commercial buildings, cost less than residential homes and require much less renovation. People who like working on the fringe of commercial real estate can begin by acquiring a single office condo, fixing it up, furnishing it, and then selling it to a willing buyer.

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