Do you own an investment property in Las Vegas, Nevada?

[Kevin Geary]

Hey BP family. I just wanted to give my two cents on the knock on effects of this very unique public health crisis on my local economy. 

I am a residential realtor here in Las Vegas & I have had multiple cancellations in the past few weeks. Cancellations across the valley have skyrocketed recently mostly due to the mass layoffs on the strip. MGM is our largest employer. The Las Vegas strip is home to 7 of the 10 largest employers in Nevada.

Economic Policy Institute projects Las Vegas will be the #1 hardest hit by this crisis. Although a large amount of these layoffs should be temporary this doesn't matter to a loan underwriter. I have buyers with amazing credit, great DTI, & cash in the bank...all of that doesn't matter to a lender if the buyer has no job.

What does this mean for the short-mid term prospects of the las vegas housing market? Inventories will rise for 2 reasons. 1. the cancellations means a bunch of homes will be back on the market, expect these cancellations to continue for a few months. 2. Even if the supply wasn't rising we should see less buyers in the market, which will increase the monthly inventory supply as time goes on.

Supply up and demand down implies that the median home price will drop and should continue to drop for a good amount of time.

I absolutely do not recommend panic selling, especially if the subject property is your primary residence. I will, however, say it might be a good idea to risk assess. Just like people are reallocating other financial assets such as stocks, you might consider limiting your exposure by selling your investment property sooner than later. 

What are your experiences recently? Thoughts?

[Bill B.]

I don’t think anyone who doesn’t have to sell will sell for the next few months at least. The two properties I know of that fell through both went back off the market. I know if you offered them 10% less than asking (2019 prices) in cash they’d tell you to get lost. Any primary seller has to find a new place to live, so you’ll get a few new landlords that bought high trying to sell low. 

But honestly you could make a case for any result you want and back it up with logic and math. People just aren’t that logical. They’ve been told their house is worth x and that’s what they’re going to want for it unless they have to sell. And if 1/2 the rumors about mortgage deferral are true nobody has to sell. 

I’ve made a few offers of full asking price if they’ll carry the payments for 10 years. But the reasonably priced homes for sale in my neighborhoods aren’t motivated sellers.