Las Vegas Inventory of Homes Going Down

First and foremost all of the details of 1st Quarter 2009 in Clark County Real Estate. This is GREAT stuff!! Our market is sure turning for the best and quickly at that.

After many conversations with REO listing brokers across the valley this past week everyone has the same story. "Our inventory is really low, the homes on the market have ALL got multiple offers on them."

Here is my quick opinion on just how awesome our market is turning and the reasoning behind my thoughts. We are entering into a HEALTHY MARKET once again here in Clark County. Let's look at a few things. I see more people buying now as Owner Occupied than we have seen in MANY years. These buyers are using FHA 30 year fixed loans to grab their piece of the American Dream. Many of these are even below 5% in interest. AND, what a concept, they had to actually qualify for the mortgage. The people that are buying investment properties are having to put up 20%+ down payment into the deal to get the home. What a concept there as well, huh? This means that they are actually investors and not Opportunistic Speculators. Note: The Encarta definition of Opportunistic is: Resourcefully taking advantage of all opportunities or situations. Especially in a devious, unscrupulous or unprincipled way" I think you get my point.........

Last but certainly not least is one of the most exciting things I have seen in awhile. I believe I have trained my brain back on the FHA 203K Purchase to almost perfection. Many years ago this one got you and I many deals that other agents/lenders just could not understand. The great thing for me is, other lenders STILL do not have a clue what the loan is or how it works. This loan ROCKS!! The average close time has been 42 days over the past 3 months. I think this could be really exciting to you. I am putting MY simplified explanation of the program below. Don't let it look complicated at all. It is SO easy!!

FHA 203K Highlights

FHA Streamline 203K: Limited repair program permits borrowers to finance up to an additional $35,000.00 into their mortgage to improve or upgrade their home. The program is designed to allow borrowers to quickly cover the expense or repairs and improvements as identified by the Home inspector, pest inspection, and needed items in the home (such as carpet, paint, appliances, etc.). No structural work can be done on a STREAMLINE 203K
FHA 203K (standard): Program allows borrowers to obtain one mortgage to finance or refinance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected (as-improved) value of the

property with the work completed, taking into account the cost of the work.
Features & Benefits:

Think of the 203K loan as a traditional FHA loan with a repair escrow.
Loan amount is based on “after improved value”.
Funds for rehab/repairs are financed and disbursed as work is completed.
Same low down payment and credit qualifying as with any FHA loan.
Up to 6 months payments can be financed if property is not habitable during rehab
Appliances, cosmetic, and landscape may be financed.
Seller can participate in buyers closing costs up to 6%.

EEM feature allows for expanded ratios.

Eligible Improvements: First items addressed are health, safety& weatherization.
Remainder can be applied to upgrades & remodeling.
Structural alterations and reconstruction.
Improved function & modernization.
Changes for aesthetic appeal.
Repair, or replace plumbing, heating, A/C, electrical systems.
Installation of well and/or septic.
Roofing, gutters, and downspouts.
Flooring, tiling, and carpeting & appliances.
Energy conservation improvements.
Major landscape work and site improvement.

Improvements for accessibility to the handicapped.
Call for other desired items, or improvements.
This is only a sample of the items that are eligible.

Minimum amount in repairs is: $5,000.00

Maximum amount in repairs: NO LIMIT.
Loan amount cannot exceed FHA county limit.(exception would be EEM).

Eligible Transactions:

Owner occupied Purchase, or rate & term refinance.

Eligible Property Types:

Single Family
Duplex
Tri-Plex
4 Plex
Condo (must be FHA approved) Maximum 4 units in each building.

Ineligible Improvements:

“Luxury items”.
BBQ pit
Bathhouse
Dumbwaiter
Exterior hot tub, sauna, spa and whirlpool bath
Outdoor fireplace or hearth
Photo mural
Installation of new swimming pool
Gazebo
Tennis court

Tree surgery
Items that will not become a permanent part of the property
Never completed homes

Contractor (Licensed) is required to complete work.

2 bids are required for any work $8,000.00 or above
Pest inspection & home inspection are given to appraiser
Work must begin within 30 days of COE
Work must be complete with 6 months of COE

EEM Feature:

Energy improvements must cost less than savings as determined by energy consultant.
Energy efficient items are added to the base loan amount, not to exceed $8,000.00

Purchase Contract:

COE: 60 day closing from date of seller acceptance.
Must state: “Buyers loan proceeds are coming from an FHA 203K rehab. loan”.
Seller can pay up to 6% of buyers closing costs (recurring & non-recurring).
Offer is made on what buyer wants to pay for the property in “as-is” condition.

Advantages & Sales Opportunities

Sell the property in “AS-IS” condition
Agent receives commission before any work is started
Target REO properties and Non REO properties

Think of a listing that is listed as cash only (due to needed repairs)
Buyer loves home, neighborhood, school district, etc. but dislikes kitchen, bathroom(s) flooring, paint, etc.
Home is older and needs new everything e.g. HVAC, roof, paint, flooring, kitchen/bathroom/bedroom remodel, etc.
Contractors are hungry for business, and will gladly partner with you
Proactively have contractor provide a bid for the property, and incorporate into your listing flyer to show the possibilities to the buyer

Some contractors have flyer software that will show the kitchen remodeled with selected cabinets, countertops, appliances, etc. (a picture is worth a thousand words)

FHA loan limit for Clark County is $400,000.00

Total Clark County Foreclosure Sales 1st Quarter 2009
Single Family Homes, Townhomes, and Condo’s

Property Type	1st Qtr 2009 Tot. / REO/ %
SFR	10,432 / 8,248 / 79%
Townhome	686 / 536 / 78%
Condo	1,492 / 1,278 / 86%
Total	12,610 / 10,062 / 80%

Analysis Narrative: Foreclosure sales continued to increase as a total of all Las Vegas MLS sales in the 1st quarter of 2009, jumping 6% from the 4th Quarter of 2008 to 80% overall. Total Sales for the 1st Quarter of 2009 vs. 1st Quarter 2008 increased 219%, with REO sales for that comparison jumping from 12% of total sales to 80%! There has been a dramatic jump in total sales in March and April up from the February total of 2,907 to 3,779 in April. This is a result of Buyer’s taking advantage of low interest rates, falling home prices, and Federal tax credits. Another trend that has continued from 4

th quarter of 2008, is the increase in Townhome and Condo sales overall, with foreclosure sales in these categories increasing an additional 4-6%. This can be attributed to falling prices in these categories; making them more affordable for the median income in the County and attracting investors.

As of May 4, 2009, there are 16,175 single family, condo and townhome listings on the Greater Las Vegas Association of Realtors MLS system. This is down 24% from early January 2009. Of this amount of current listings, 4,376 are foreclosures and 6,455 are short sales. This reduction in listings is a cause of increased sales and foreclosure inventory being held off the market by financial institutions. This hold back of foreclosure inventory is anticipated to be lifted soon.

Las Vegas home buyers should consider this as a clear sign to buy. Along with interest rates hitting 4 3/4% there is not a better time to buy. Las Vegas Homes Undervalued!!

Let FHA Loans Help You

If you are interested in relocating to Las Vegas or would like information on Las Vegas real estate, please email me, Bob Ratliff with RE/MAX CENTRAL LAS VEGAS, at rratliff@remax.net, or call me at 702-807-5528. I look forward to hearing from you!

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May 12, 2009