Housing wealth substantial, although largely overlooked

The media headlines have been relentless in sending the message that the residential real estate market in many areas is sinking fast. The glut of new and resale homes sitting for months without a viable buyer in sight is certainly worrisome, as is the trend of tightening underwriting guidelines in the mortgage sector. The market is undeniably trying to find its footing again, but is it really that ill in the big picture? In the broad sense of national economics?

The Federal Reserve, or the Fed, recently released its "flow of funds" statistics and they show that the equity homeowners had in mid-2007 amounted to a massive $10.9 trillion. It was arrived at by taking the market value of residential real estate, roughly $21 trillion, and deducting mortgage obligations of $10.1 trillion from it. This alone doesn't say much, only that it's a lot of money. To read the entire article, please click on the link in this paragraph.

Nevada tops preforeclosure list

Heading a ranking of this nature reflects accurately what happened here during the real estate boom days a few years ago. It was then when many homeowners and professional and weekend investors got carried away in the charged atmosphere of ever-rising home prices and failed to hold back in time when the market was about to plunge over the edge. Call it bad timing, poor judgment or greed, it doesn’t matter much which, but it’s still hurting equally bad those who were caught in its ugly repercussions.

On the per capita basis Nevada leads the national preforeclosure list with a rate of 4.05, followed by Florida at 2.86, Arizona at 2.05 and Colorado at 2.04, according to Foreclosures.com. These figures alone don’t tell much, except that who has the most, who is second and so on.

But when the data for Nevada is expanded to include the 30,276 preforeclosure filings through October and that amounts to a 106% hike from last year, now the picture becomes quickly much clearer, and more problematic. The situation has been steadily worsening over the last twelve months is the cold truth.

Clark County, home of Las Vegas, is in second place in per capita preforeclosures among counties nationwide, but curiously its numbers for the last few months are quite fluid. In August there were 3,590 filings, then a nice drop to 2,420 in September and an increase in October to 3,794. The see-saw action could signal that the curve is trying to break the upward movement and perhaps soon start drifting steadily lower.

It’s important to remember that these statistics are for preforeclosures, unlike the standard foreclosure when the bank takes possession of a home. Many homeowners will come up with a remedy to their dire situation before they have to turn in the keys. As urged by the Fed and other Washington agencies, lenders are now more willing than ever to do workouts to help borrowers keep their houses. In areas where prices have remained stable or are rising a refinance is an option. Some will work a second job for a while to bring in extra funds for mortgage payments. There are other creative ways.

Union Park back in the picture

It's easy to count out the fingers of one hand when you think of how many times Union Park has been in and out of the news over the past decade. It's a 61-acre parcel of land the city of Las Vegas owns west of downtown. City Hall has worked hard for years to find a reliable developer who can successfully complete its intended vision there but for one reason or another the plans always fell through. Frustration was understandably setting in.

Optimism, however, is rising again. It comes on the heels of a major strategic change on how to approach the entire project. The concept of one developer handling it all was scrapped and the site was broken into several pieces, each now having its own designated developer. It seems to have made the difference that at least for now is pushing the master plan forward.

Please click on the link in Union Park in the first paragraph to read the entire article.

Future Nevada homes powered by wind

Nevada has a lot of open spaces across its deserts and long mountain ranges where wind has the freedom to race and swirl as fast as it can. It sometimes blows into Las Vegas valley with such a fury that it knocks unsuspecting and tipsy visitors into resort pools. On those days you don't want to play golf either.

The idea to harness this natural resource has been slowly gaining traction here. Recently a major hurdle was overcome when Senator Reid convinced the Defense Department to drop its objections to the development of a wind farm in Wilson Creek Range in the eastern part of the state, about 180 miles from Las Vegas. It could become the site for a 450-megawatt project. Sierra Pacific Resources, the owner of the state's two largest utilities, has plans to build a 200-megawatt facility in northeastern Nevada. There clearly seems to be a healthy does of momentum toward harnessing this free and clean energy source. Click on the link in this paragraph to read the entire article.

New single-family homes again affordable

It was only a few years ago when affordable housing was one of the great draws in Southern Nevada. Despite the city growing at a breath-taking pace supply and demand stayed in sync and kept prices relatively low. And then the secret was out of the bag, sometime in 2003 and 2004, and speculators in particular moved in to ply their trade and began driving prices ever higher. The ensuing frenzy predictably ended in a bust that still prevails.

Those home builders who still are operating in the valley have drastically revised their business plans because they had to. Not too long ago median new home prices were heading well past the $300,000 mark, but in doing so slowly started to become unrealistic to many buyers. The market eventually tanked, as we well know, and values are now marching the other way. Going toward where the annual household incomes can afford them again.

Builders are adjusting to that reality. They are now offering some single-family homes even below $200,000. Typically these houses are small, the yards resemble postage stamps, streets in the communities are narrow and out of necessity they are two-story designs to allow more of them per acre. These neighborhoods are normally situated in the outlying suburbs.

But they make great starter homes and that is what the builders have in mind. Get the first-time buyer into the ownership cycle, generate equity and later on move up.

It's good news for the working-class buyer, but it's still a niche market as the median new home price in Las Vegas is $312,639. Builders are barely making a profit with this special product line because the costs of land and construction remain high. Getting as little as $110 per square foot is very close to a break-even point, so anything less than that would force them to wait for better times or leave the area.

Source: SalesTraq, Home Builders Research

Las Vegas housing market soft in October

Anyone who follows the residential real estate market here anticipated pretty much what the official figures from October are now telling us. It's soft out in the field and any sustainable improvement seems to be at least a few months away since we are now heading into the heart of the winter.

The Greater Las Vegas Association of Realtors, or GLVAR, informs us that existing home sales were still down about 40% in October from a year ago. That's about where it has been for the last several months. Besides that, the median house price declined 11.4% from last year to $274,725. The drop was expected and as long as the slide doesn't accelerate from there, it'll be manageable.

Keep in mind that if lenders begin listing their foreclosed homes for sale at the current market prices instead of what the mortgage balances on them are, that would put more downward pressure on median values. We'll see whether they'll do that or not.

And now to the upbeat news. The inventory of single-family homes in the MLS eased down 1.2%, to 23,917. That is the second month in a row when it has decreased some and should the slide continue, we just might start honestly climbing out of this mess sometime next year.

In closing, it's a genuine buyer's market out there in the valley, so take advantage of it.

Jumbo mortgages still in short supply

While the subprime sector has been everyone's punching bag for quite some time now, another sector has toiled with its own struggles largely unnoticed from the public eye. The jumbo loan mortgage market plays an important role in the wide mix of mortgage products, especially in the perennially high-cost areas like California. Loans over $417,000 are considered jumbo and nationwide their share last year of the total home loan pie was 16%.

What has happened is that borrowers even with stellar credit find it tough nowadays to locate jumbo money. And the reason is that investors who buy this grade mortgage-backed securities are shying away from them because this past summer the ones they had bought earlier started going bad. To read the entire article, please click on the link in this introduction.