Once again this very odd market defies the law of supply & demand. We have very low supply (homes for sale) on the market and we have been
that way for several years. We have a very high demand (buyers purchasing homes) and we have been that way for several years.
Of course the flood of REO (bank owned, foreclosure homes) coming on the market is never ending (so it seems.) ……..And we don’t lack the buyers (especially cash buyers) waiting to snatch them up when they hit the market.
So what exactly is CAUSING this anomaly? Here is my guess……..opinion……….whatever you wanna call it!
Cash buyers are purchasing homes for long term holds and they are renting these homes out. Since they have a long term strategy, they don’t care, they want these things rented so they have no problem undercutting investor a & investor b who just listed rentals in same subdivision. They don’t undercut by much – $25 here or there for your typical 3/2.5 tract home. They will get it rented quickly however investor a or investor b may feel pressured to get theirs rented so they lower the price to compete with investor c’s rental price. The vicious cycle begins for declining rents.
The declining rents then put pressure on resale prices since the ROI (return on investment) is now lower with the new lower rental prices.
Well priced Las Vegas resale homes for sale are STILL bringing in multiple offers. There is still a lot of competition coupled with low inventory YET prices are going down.
Welcome to the whacked world of Las Vegas Real Estate – where all economics laws don’t apply!
Hi Renee – I have friends here who are looking to buy a home in Las Vegas. I am going to send them the link to your site so they will be better informed. I'll also tell them to contact you!
My recent post How to Sell Your Home in Ten Days
Thanks Peggy!
Interesting turn of events if you will…Low supply and yet prices keep going down.