Las Vegas Homes, Condos, Land and Commercial Real Estate Blog

Debunking the myth of 30,000-50,000 shadow inventory homes in the Las Vegas Valley

A competent Las Vegas real estate analyst should possess, categorize and know how to use the necessary data that I have discussed in the last 2.75 blog posts. I will not repeat them here but take a look at part 2.75 of the series.

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-2.75 of 3

 About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-2 of 3

About Las Vegas Trustee Sale Auction and Las Vegas shadow home inventory Part-1 of 3

So far I have discussed different types of foreclosed properties that sell through the Las Vegas Trustee Sale Foreclosure auction and explained that the Trustee Sale Auctions cover Clark County which includes Las Vegas, Henderson, and North Las Vegas.

I have also explained that the carryover of homes that are sold back to the bank in the Greater Las Vegas area are about 75% of the total foreclosed real estate that have sold in the Trustee Sale Auction. The total carryover of unsold bank owned or REO homes that carry over to the present day would be 2,000-8,000 homes since 1/1/2009.

Now, those national real estate experts who repeat 30,000-50,000 shadow inventory homes have to explain how they have calculated 22,000-42,000 homes that remain unsold by banks from late 2006 through the end of 2008 and they can’t.

Just take a look at the total number of bank owned homes that are listed in Las Vegas Valley MLS, it is about 1590. In the last 30 days, 61% of the bank owned homes that were listed in the Las Vegas MLS and were priced less than 250,000, closed escrow (sold) in less than 30 days and sold to mostly cash buyers. This number goes up to 76% for foreclosed homes that sold in less than 60 days and average sold price/ asking price is about 102%.

Even though Las Vegas residential real estate activity has come down appreciably, most of these foreclosed homes that are priced right get multiple offers in a couple of days. Three months ago, bank owned homes and condos would get 40 offers in a couple of days. Any bank repo home that hit the market sold.

I have written a blog post about the  effect of foreclosures (bank owned homes) on the Las Vegas homes market and have given days on market for listings by price range. We could use a couple of thousand more foreclosures and they would not have an appreciable effect on the real estate market.

So I ask again: Why banks would hold back homes for more than 1.5-3 years and risk further declining prices when all they had to do is to list the home in the Las Vegas MLS, and sell it automatically. Banks are not that stupid. It just takes a few months to prepare a home that has been just foreclosed for the retail market. Banks have to change the title of the foreclosed home, list it with a Las Vegas Realtor or real estate auction and in many cases do major repairs before listing it in the MLS and that is the reason we have probably about 8,000-10,000 unsold bank repo homes.

In the last 2.75 blog posts I have explained that given the right data, it is easy to calculate the number of Las Vegas shadow inventory homes and I have given the formula for it too. I am not a Las Vegas Real Estate Analyst, although more than half my time is spent researching Las Vegas real estate market.

A competent real estate analyst should keep track of what type of properties sell at the Trustee Sale Auction for example, homes, condominiums, land or commercial real estate and keep track of how many of these foreclosed properties are disposed of through Las Vegas MLS or real estate auctions from 2006-present Just like I have showed. And only then can they give a good estimate for the shadow home inventory in Las Vegas. If these real estate analysts have done their homework they can provide a good estimate with a margin of error of 1000.

If these national real estate analysts who drop doom and gloom about our real estate have not done their job, then any number about Las Vegas real estate that they give the public is baseless allegations.

The next time one of these guys give an interview and says we have 30,000 – 50,000 shadow home inventory in Greater Las Vegas, ask them to prove it, I can’t wait for them to do so.

I am writing this blog post while waiting in Nellis Air Force Base Hospital in North Las Vegas for my buddy Frank’s heart procedure. It is not dangerous and we will take him back home shortly. Even though I am allergic to hospitals because I have had 14 surgeries in them, this one seems to be nice and orderly.