Economy & Real Estate Updates

The Las Vegas real estate market continues to be on fire amidst a pandemic. Buyers are willing to pay more for a home as inventory remains tight and interest rates low. The average sold price of a single family home during August 2020 was $335,000 while condo’s averaged $185,000, another new record for the Las Vegas area (source: Las Vegas Realtors)

Though unemployment remains high and the economy slow in recovering, with many directives in place to mitigate the spread of the coronavirus but restricting economic growth, demand from individuals with savings and stable employment is keeping the real estate market alive and thriving. This scenario also goes to show market stability. How long will this trend continue? That is difficult to predict, as many factors go into keeping real estate alive and healthy. However, economic recovery from pandemic restrictions will be key.

We hope to see the pandemic get under control soon and as a result, positive developments in the economic sector.

Its no secret – the complaints are out there! Both homeowners and tenants agree – HOA violations can be a hassle, especially when they seem to arrive consistently for an endless amount of reasons; trash cans left out, a weed in a yard, paint that is faded, items left outside and more! It can be exhausting and even nerve wrecking to see a letter in the mail from your homeowner’s association. You can sense it’s another violation. So, what should you know and what can you do?

Here’s what to know: When a neighborhood is first planned and developed, with the intention of having rules and regulations, documents are created to establish the community rules through the builder / developer. The builder will eventually relinquish control to the community itself. Elected board of directors are established (through a vote of homeowners) and a HOA management company is typically hired to enforce the rules and regulations. That’s how it all starts at the beginning.

So, the rules for the community are established well in advance. As a result, when you get an HOA violation for, as an example, weeds in your yard, this rule was most likely established by the builder! Now it is enforced by the HOA management company, who is hired for…rule and regulation enforcement. Of course, the diligence to enforce the rules by one HOA management company compared to another will vary some. While the board of directors can alter the rules or add new ones, most stay fairly intact.

As a homeowner, prior to purchasing a home, you are presented with the community rules and regulations during your due diligence period in order to review them to see if they are acceptable to you. If they are accepted, then the rules will pertain to you and your property.

If you begin to receive violations, there are a few things you can do – depending on the situation.

  • First, if the violation is for a basic infraction, it would be in your best interest to resolve it quickly. Unresolved HOA violations can lead to a second notice and fines! Respond back to the HOA that it was resolved and even present photo proof.
  • If the violation seems to be mistaken, be sure to respond to the HOA as well. Indicate your position to the HOA violation and even present a photo to show you are in compliance.
  • If the violation is for a costly improvement, such as faded exterior paint and repainting the home is the cure, communicate with the HOA if you need extra time or experiencing a financial difficulty. Communication is key to having a good working relationship.
  • Finally, if a matter is serious, you have the option of discussing it with the board of directors during one of their meetings. Be sure to communicate with the HOA management company in that regard.

While HOA violations can be perceived as a nuisance, they are designed to protect property values and maintain the appearance of a neighborhood. In the end, they were established beforehand and are now simply being enforced. Compliance as well as communication is key to developing and maintaining a positive working relationship.

Panorama view of Las Vegas at sunset in Nevada, United States of America

As the economy has slowly re-opened in Las Vegas, due to certain restrictions lifted, so has the interest of buyers in the local market. This was clearly evident in June, as the median price of a home sold through the MLS was $325,000, a year over year increase of about 7%. This was an increase of $6,000 from the prior median sold price in March of $319,000.

These figures go to show a couple of things. First, as people returned to work, this ignited a demand for housing. It really shows how crucial the local hospitality and service industry is to the housing market. Even though real estate prices did not see a noticeable decrease between March and June, the slow down in activity was a clear indicator.

Second, with real estate values holding during an economic shut down, it really showed the stability of the Las Vegas housing market to be able to absorb a significant event, such as this. With prices appreciating at a modest rate, this prevents a bubble from forming and significant fluctuations from occurring when an economy shifts. No doubt, current low interest rates also play a role in keeping prospective buyers motivated and ready to buy.

As the economy continues to recover, with more tourists coming for a visit, we can expect the real estate market to keep thriving.

Simplifying your life can give you more time for what you enjoy

Many people dream about the day they get out of debt. The day they pay off their credit cards. The day they pay off their car. The day they pay off their house. Financial self help books abound in advice on how to get rid of debt. Yet, the truth is, Americans are consistently in debt. Why the desire to be debt free?

Most realize that having no to little debt means they can semi or completely retire, reduce their work load and spend more time with their loved ones. However, it seems with each passing year, more and more Americans acquire more debt. They trade out their nearly paid off cars for new ones. They up-size to a newer and bigger home. They make large purchases on impulse, charging them to credit cards. Even when some have cash available, they end up spending it on comforts and luxuries. While each person can make their own decisions, if your goal is to simplify your life, work less and even retire early, getting out of debt is a key piece to the puzzle. How can you do that?

First, be reasonable with your purchases. Evaluate if you actually need something. Is it a necessity or a luxury? Don’t buy on impulse. Wait a few days after thinking about a purchase to see if you still feel the same way. You might be surprised.

Second, see if you can keep that car that you have nearly paid off. If your car is still running well and you’ve been maintaining it, be weary of clever marketing tactics! Remember, a new car loan is typically for 60 months or more – yes, that’s 5 years! Some even allow for 72 or 84 months – 6 or 7 years! These are significant debts to think about carefully!

Finally, a house payment is the biggest expense that someone can take on. If you have a house payment, you can do a few things. First, see if refinancing can save you money due to lower interest rates. Can you refinance with a 15 year loan? Can you make additional principle payments to help pay your house off faster?

Remember, the more debt you have, the more you are subject to economic changes. Loss or reduction of income can seriously affect if you can meet your obligations. Additionally, if you plan on working less, retiring or simply having more time, getting out of debt is something to consider.

las vegas home rental

“A beautiful luxury home in a suburb of Las Vegas, Nevada.”

As the economy shut down in March, many feared what would happen to the real estate market. With each extension to keep the economy closed, many feared a complete economic collapse and drastic changes in resale and rental values.

Fortunately, the drastic changes many feared never came. Granted, the real estate and rental market did experience change. For example, tenant occupied properties cannot be readily shown due to government imposed restrictions to limit the spread of COVID-19. Additionally, with many being furloughed or laid off due to business closures, demand for real estate dropped off significantly, especially when it comes to home buying.

Even as home prices dipped slightly, they appear to be showing signs of appreciation again as the economy re-opens and people get back to work. Additionally, tourist activity in Las Vegas appears to be drumming up as more hotels and casinos have decided to open up to accommodate the demand. All of these are excellent signs. Real Estate rental values have remained relatively steady as well, with some fluctuation but overall consistent.

What will the future hold for Las Vegas real estate and rental values? For the remainder of this summer, it appears that values should hold stable, with relatively minor fluctuation. We can expect the market to attract more buyers but also more sellers. Of course, much will depend on the big picture. How will the economy throughout the country hold? How will the spread of COVID-19 affect business growth? At what rate will tourism increase to allow even more people to return to work? Fortunately, even after 2.5 months of closures and a high unemployment rate, Las Vegas continues to maintain its real estate value, a trend we look forward to seeing into the future.

Many rental property owners and those contemplating entering the rental market are now anxious about what will happen to the rental market – rent values, rent collection, etc. The truth is, the current COVID-19 pandemic is uncharted territory for most real estate professionals. We are constantly hearing about fluctuations in the stock market, unemployment reports and stimulus benefits. We are also learning that evictions are on hold and late fees can’t be charged (at least here in Nevada).

But what will this ultimately mean for the real estate market? Specifically the rental market?

The measures being taken by government officials to put evictions on hold and not charge late fees clearly indicates that the goal is to maintain relative stability for folks. To be able to get through this pandemic with as as little interruption as possible. On the flip side, many mortgage companies are offering relief to homeowners who can’t make their mortgage payments rather than charging them late fees and initiating foreclosure proceedings. Stimulus benefits and supplemental funding of unemployment benefits are intended to carry folks through this period of time as well. It appears that the plan and hope is that once the pandemic passes and things begin to resume to the way they were previously the economy can rebound without having the added stress of an untold number of evictions and foreclosures, which would be detrimental to the real estate and rental market.

In the end, it really depends on how long the shut down will go on for. That will indicate what we can expect with rental and sale values and demand; whether or not folks will be able to maintain relative stability during this time and once things pick back up again resume their lives without too much loss and have jobs to get back to. In that case, we hope that the market will prove overall stable. However, if we have long term closures, lack of benefits or other unforeseeable repercussions, we may have a different market to prepare for.

It does appear, though, that the ultimate and overall goal right now is to keep people status quo to prevent major shifts in the real estate market so that once an economic rebound occurs, the market can continue to grow and thrive.

How does this affect tenants?

There are provisions for tenants who land on hard times and only able to pay partial rent, such as waived late fees and postponement of evictions, which were authorized by government officials.  Additionally, many homeowners are willing to assist tenants during this time.  However, rent forgiveness is not obligatory.  Assistance may come in the form of rent postponement.  This means that eventually the postponed rent will still be due.  Thus, if a tenant can afford rent because their job has not been affected or has the means to pay rent, it would be in the tenants best interest to continue making their rent payment.  Many homeowners have mortgages on their rental properties and so, a lack of rent means that they may have to resort to other means for payment or qualify for assistance from their mortgage company.  Additionally, many homeowners may have also lost their jobs.

Ultimately, predicting what exactly will happen is dependent on many factors. Unfortunately, at this time, it is hard to say with any certainty what will happen.  We hope that this situation will be temporary and everyone can find financial stability sooner than later and we can get back to having a thriving real estate market.

In view of very recent developments nationally and internationally with COVID-19, it is safe to say that the world has turned upside down. Panic buying, social distancing and coronavirus have become everyday words. Beyond that, many businesses and government offices are closed for business. Talk of a recessive economy are gaining momentum.

As a result, the Fed has cut their interest rate even further in order to build confidence in society and as a result keep banks lending. However, the interest rate for home loans has actually ticked upward. In fact, just this month alone, interest rates went from an average of about 3.30% to nearly 3.75% (on a 30 year fixed loan). Many people are interested in a refinance or even purchase of a home because of how low interest rates are. So, why did rates go up?

Well, mortgage rates don’t necessarily follow the Feds interest rate always. They will adjust to a certain extent, however, they typically follow 10-year bond yields, such as the treasury note. The 10-year treasury note actually went up this month. This was due to the fact that a major stimulus package was approved in view of COVID-19, adding to the national debt and affecting the yield market.

However, rates will continue to fluctuate. Many people are applying for refinances right now or new loans and so banks and mortgage companies are back logged, affecting mortgage rates. The fed and other government agencies will most likely continue to implement new measures to help the economy, which will have an effect on this also.

While interest rates are still historically low, we can expect continued change due to market volatility. The quicker we see stability, the better the economy. The better the economy, the more confidence the consumer will have.

Contributed by Nicklin Property Management.