Although the existing home market has been rebounding in recent months with sales running ahead of last year’s pace, the new-home market remains in the doldrums.

One national builder has called the third quarter “one of the most difficult in homebuilding history.”

When Congress and the Bush administration enacted a housing stimulus bill in July, many expected the bill’s main provision, a temporary $7,500 tax credit for first-time homebuyers, would help the industry.

That hasn’t been the case, especially in Las Vegas where new-home sales in July (731) and August (792) were the weakest of the year. September is likely to be even worse because of the meltdown on Wall Street and tight lending standards hampering the ability of many potential buyers to obtain mortgages.

Builders are facing continued competition from foreclosed homes, which is bringing down the price of existing homes to $200,000. New-home prices fell below $260,000 in April, but have steadied since, landing at $253,000 at the end of August. That gap between new and existing homes had been as little as $28,000 in April.

Through the end of August, new-home closings were down 49 percent compared with the first eight months of 2007. In contrast, existing home closings were up 5 percent, according to SalesTraq.

“All you have to do is look at the numbers, and you can see the (stimulus) has not helped the housing market,” said Steve Bottfeld, executive vice president of Marketing Solutions. “It didn’t have a huge impact.”

Without the Wall Street meltdown, Bottfeld says it could have made a difference, but the dynamics of the market have changed.

“The tax credit can’t get you a mortgage, and that is the key issue on whether you can buy a home,” Bottfeld says.

Bottfeld, one of the biggest cheerleaders for the housing market, says he remains concerned about where the market is heading because he thought prices would start rising by the fourth quarter and first quarter of 2009.

A Wall Street bailout package will help the housing market because it should give buyers access to loans. It will slow down foreclosures because owners will be able to refinance, Bottfeld says. More important, it begins to restore confidence because people will realize prices are bottoming out, he says.

“Until prices go up, we are still going to be in a recession,” Bottfeld says.

What the bailout won’t do, however, is address the long-term concerns of what triggered the need for the bailout in the first place, Bottfeld says. Housing needs to go back to being treated as shelter rather than a commodity, he says.

“This bill is not doing that,” Bottfeld says. “I love investors to death. They were 20 percent of the Las Vegas market up through the boom, but speculators are deadly because they don’t give a damn about the neighborhood. All they care about is turning a profit fast.”

Las Vegas construction permits

The value of building permits issued by Las Vegas has dropped 27 percent through the first three quarters of 2008 compared with the same period in 2007.

Through Sept. 30, $588 million in permits were issued, down from $809 million a year earlier. The biggest decline has been in new-home permits, whose numbers declined from 1,941 last year to 939 this year. The value dropped from $230 million to $103 million. New-commercial construction fell sharply from $344 million to $120 million. The category showing the most improvement was the construction of apartment complexes with $134 million in permits issued compared with none a year ago.

In September, the value of permits fell 20 percent to $34 million, down from $43 million a year ago. There were $11.3 million in new-home permits compared with $10.8 million a year ago and new-commercial construction was $9.2 million, up from $7.6 million a year ago. The category that recorded a decline was duplex construction, which fell from $9.2 million a year ago to zero.

In other real estate news:

# Las Vegas had one of the biggest declines when it comes to metropolitan areas creating and sustaining jobs and creating economic growth, according to the Milken Institute. Las Vegas ranked 75 in 2008 after a ranking of nine in 2007, a drop of 66 spots. Reno was ranked 133, a decline of 107 positions from a year ago. The Utah cities of Provo and Salt Lake City were ranked first and third, respectively.

# Gemstone Development announced that Camco Pacific Construction has been hired to complete the first phase of Manhattan West. Camco replaces APCO Construction. Gemstone Chief Executive Alex Edelstein says the contractor was replaced because the project was not being kept on schedule or meeting other expectations. APCO officials did not return phone calls to comment. Manhattan West is on track to complete mid-rise residential buildings by the end of the year and a nine-story tower by January, Edelstein says. It is a $350 million mixed-use development near Interstate 215 and Russell Road.

# Prudential Americana Group, a Las Vegas real estate brokerage, has formed a partnership with Shelter Mortgage to provide residential mortgages. Shelter is a subsidiary of Guaranty Bank, a family-owned bank with branches in Wisconsin, Illinois, Michigan, Minnesota and Georgia. This is the company’s first partnership in Las Vegas, and it has more than 40 nationwide. “At a time when many other real estate lenders are shutting down altogether, it was important for us to work with a reputable mortgage provider,” said Mark Stark, chief executive of Prudential Americana Group.

# Applied Analysis reported the number of resale homes on the Multiple Listing Service jumped by more than 359 units and was the largest weekly increase since May 2007. The number of vacant properties has also increased by nearly 400 during the past week. The number of owner-occupied homes declined by 50 to 7,568 and represents 34 percent of all homes listed for sale, the firm reports. Tenant-occupied units represent 9.5 percent of the total while vacant properties account for 57 percent. The inventory is down nearly 6,700 units or 23 percent from 2007.

Credits: In Business Las Vegas

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With the city’s housing market stumbling in 2008, you might expect local home builders to back off on extras such as ecofriendly construction methods and materials.

Annette Bubak certainly expected a little less interest in a green-building program she oversees.

Bubak is president of Nevada Energy Star Partners, a coalition of home builders, mortgage companies, utilities and construction suppliers dedicated to deploying the U.S. Environmental Protection Agency’s Energy Star program inside local new homes.

Bubak expected 12 local companies to sign up as partners in 2008. Instead, the program netted more than 30 partners by the time its 2008 campaign ended in September.

“Going into the year, we were a little concerned that builders wouldn’t have it in their budget (to contribute funds to the group’s media campaign),” Bubak said. “But we found instead that energy conservation is more important to consumers than it’s ever been, and builders are even more committed to finding progressive ways to increase the energy efficiency of new homes.”

Among Nevada Energy Star Partners’ key accomplishments this year: The group got the Las Vegas High-Rise Condominium Association on board in one of just three pilot programs nationwide to create the first Energy Star criteria for condo towers.

By spring, local builders specializing in mid- and high-rise condo communities will have federal EPA guidelines on insulation, duct work, appliances, lighting fixtures and windows federally certified as energy-saving measures.

The Energy Star designation will help condo developers market more effectively to buyers, Bubak said. The Boca Raton development at Las Vegas Boulevard South and Serene Avenue will serve as the pilot’s guinea pig.

Credit the sustained interest in sustainable design to two factors: Rising energy costs and consumers’ awareness of the carbon footprints their lifestyles leave, said Steve Bottfeld, executive vice president of local real estate research firm Marketing Solutions.

Home buyers want to save money on power bills, and they want to make a smaller impact on the environment. Builders have heeded those demands with Energy Star.

“If a builder adds a core value of energy conservation and climate savvy to their brand, it’s a big help to their future,” Bottfeld said.

“They’re investing in their future. People constantly underestimate builders’ appreciation for what’s going on in consumers’ heads. Builders aren’t stupid. They understand where consumers are going.”

Today, 67 percent of all new homes built in Las Vegas meet Energy Star standards. That’s far and away the top rate in the nation; No. 2 Phoenix lags way behind, in the 35 percent range.

And if Bubak has her way, Nevada Energy Star Partners will make even greater strides in 2009.

The group will partner in the next six months with the EPA on a new initiative called Home Performance with Energy Star.

That program will help owners of existing homes rate their houses for energy efficiency, and it will offer a menu of possibilities for boosting energy conservation in older homes.

In April, Nevada Energy Star Partners won the EPA’s Sustained Excellence honor — the sixth consecutive year the state program received the award. It’s a string of accolades no other Energy Star chapter in the nation has accomplished.

RESALE HOMES — The number of resale homes on the market in Las Vegas jumped by 359 units to 22,317 homes in the week between Sept. 22 and Sept. 29, a report from business consulting firm Applied Analysis shows. That’s the largest weekly gain in resale inventory since the last week of May 2007. The number of listed, vacant properties rose 399 units in the week.

PROPERTY SALES — CB Richard Ellis broker Jeremy Green represented Kirkorian Enterprises in the $1.9 million, 65-month lease of 25,308 square feet of industrial space to Atronic Americas. The property is at 955 Grier Drive. Randy Broadhead, also with CB Richard Ellis, represented Bormann Development Group in the $1.56 million, 66-month lease of 13,155 square feet of office space to The Powell Litigation Group. The space is inside the Nevada Benefits Building at 9525 Hillwood Drive.

Credits: Review Journal

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Buying and selling real estate in today’s tumultuous, highly demanding marketplace is not for the faint of heart.
“While tricks of the trade abound to give buyers and sellers a leg up on the competition, there are also a number of basic pitfalls buyers and sellers should be aware of lest they commence their real estate venture on shaky ground,” cautions real estate expert Robert Jenson, CEO of The Jenson Group of RE/MAX CENTRAL.

Jenson offers this advice for common, though avoidable, real estate buyer and seller blunders:

Buyer:

1. Not Getting Loan Pre-Approval — Don’t wait to find the “perfect” home before having your credit pulled, which can backfire when an offer is on the table and time is of the essence. Get loan pre-approval before you view your first home. Your credit report may contain inaccurate information that can be time consuming to rectify. Or, you may dislike the loan program you qualify for, or you may qualify for a better loan than you expected.
2. Having Unclear Goals — Create a realistic idea of the property you’d like to buy. Make two lists: one of features you can’t live without and one of those you would enjoy. Refine the lists as the house hunt progresses.
3. Forgoing Home Inspections — After your offer is accepted, set up a home inspection to uncover hidden problems, including roof deficiencies, leaky plumbing and electrical concerns. Hire a reputable inspector, and negotiate to get the most for your money once the report is final. Also ensure seller provides a home protection plans with the purchase.
4. Not Shopping Mortgages — A difference of even half a percentage point can mean a considerable savings over the life of a loan. Be a smart consumer and comparison shop for the most favorable mortgage rates and terms.
5. Not Using a Buyer’s Agent — Purchasing a home could be the most important and complex financial transaction you engage in, and going it alone is risky. A buyer’s agent can save you time, hassle and thousands of dollars.

Seller:

1. Overpricing — If a property is dismissed as being overpriced early on, it can result in later price reductions, which reflect poorly on the listing. Overpriced properties tend to sell at a lower price than they likely would have had they been priced properly at the start.
2. Limiting Showings — Have an open door policy and ensure the home is ready and able to be shown at the drop of a hat … even if you’re not there. Secure your valuables and provide an outdoor lockbox that real estate agents may access at their discretion.
3. Failing to Stage — First impressions are critical, so plant flowers, wash the windows and screens, put on a coat of new paint, lay new carpet, and eliminate clutter to the best of your ability. Clean out the closets so they look bigger.
4. Offering Repair Credits — Eliminate any need for repair credits. Hire professionals to inspect the roof, pool, and other structural elements, and for termites and other important buyer considerations. Make ALL repairs before you list the house on the market.
5. Being Ill-Informed — Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing any legally binding contract.

Credits: Market Watch

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The financial markets are shrouded in gloom, but R. Donohue Peebles is still bullish about real estate. Head of the Peebles Corporation, a Coral Gables, Fla.-based real estate investment and development firm with a $4 billion portfolio, he focuses on properties in Nevada, California, Florida and the Washington, D.C. metro area. His latest book is The Peebles Path to Real Estate Wealth: How to Make Money in Any Market (John Wiley & Sons:2008). Here’s what he had to say in an interview yesterday in Vienna, Va.:

Q: With all the financial upheavals of the past week, does it still make sense for the average investor to buy residential real estate?

A: It’s a tremendous buying opportunity. Unless you need liquidity, real estate is the best long-term investment. I like the great leverage it gives you. You can live in it. And at some price, you can always rent it out.

Q: Under the current scenario, should you liquidate stocks to invest in real estate?

A: I have no money in the stock market. It’s too volatile, and it hasn’t had a leveling. If you have patient money, real estate gives you the ability to ride out bad times.

Q: How long do you think the current downturn in real estate will last?

A: I think it will bottom out in 2009 or 2010. There will be more job losses and increased inventory that will further depress home prices. This means if you’re buying a house, you don’t have to rush.

Q: What’s the best way to negotiate a price?

A: Start out 10% to 15% below what you want to pay. That way, you’ll be able to negotiate for two or three rounds without going over your limit. Don’t let your emotions rule you. If you don’t have a deal, walk away.

Q: What’s the best way to ensure that you don’t overpay?

A: You’ve got to look at what’s selling, what other [properties] have listed for, who are the sellers. For instance, in Las Vegas, the sales volume is up, but they are short sales and foreclosures, so you know sellers will make a deal…[in general] if you can buy at what the price was in 2001 or 2002, that’s a safe place to be.

Q: What’s the best way to make money in foreclosures?

A: I don’t think you should buy, upgrade and flip. You need to buy, rent and hold.

Q: Should you look for foreclosure properties priced in the bottom, middle or top of the market?

A: Stay away from luxury properties, because they won’t command enough rent to cover your equity investment. And working-class neighborhoods will continue to have job losses–though small, easy-to-manage multifamily properties in close-in areas can be opportunities. I would buy mid-priced houses in areas with good schools, transportation and job growth. When the market improves, your tenants may want to buy the property.

Q: What’s the biggest mistake buyers can make in this market?

A: Becoming too focused on being victims, rather than being opportunistic. There will be a lot of people making a lot of money during this downturn. You need to think: Why not me?

Credits: WSJ

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