More than half of existing-home sales in Las Vegas were purchased with cash in January, the first time that's happened here or perhaps anywhere else in the country, the president of Greater Las Vegas Association of Realtors said Tuesday.
The association reported that cash buyers accounted for 51 percent of January's resale activity, a percentage that has been steadily rising as Las Vegas emerged as one of the most affordable housing markets in the nation.
Most cash buyers are investors who renovate deteriorating homes and rent them out or sell them at a profit, said Paul Bell, president of the Realtors association.
While longtime homeowners in a neighborhood would prefer owner-occupants over renters, it's better than having the homes sit vacant, Bell said.
"I'd say we're fortunate to have these buyers in our community. These smart-money buyers are voting with their pocketbooks on the future of our local housing market," he said. "It shows domestic and worldwide interest in real estate here because we're seeing many international investors buying property here at an amazing rate."
Bell thinks investors will keep paying cash for homes as long as lending standards remain tight, prices remain at bargain levels and availability of lower-priced, bank-owned homes is plentiful.
Realtors sold 2,509 single-family homes and 705 condominiums and townhomes in January, compared with 2,608 homes and 658 condos in the same month a year ago.
The median price of a single-family home was $125,000, a decrease of 7.4 percent from a year ago. Condo and townhome prices fell 5.9 percent to $64,900.
The inventory of homes available for sale on the Multiple Listing Service increased to 22,010 in January, an 11.5 percent increase from 19,742 a year ago.
Donna Webster of Re/Max Central in Las Vegas said she has investor clients from the United States, Australia, Hong Kong and every province in Canada looking for a good rate of return in a buy-and-hold market.
"I think that investors are contributing in a large way to improve Las Vegas," she said. "They are buying homes that owners have trashed in anger and despair. The renovations and quality tenants are improving neighborhoods."
About 28 percent of home sales nationally were all-cash transactions last year, the National Association of Realtors reported. That's double the rate from October 2008, when the trade group began tracking the measure.
The percentage of cash buyers in Las Vegas has been higher than 40 percent for more than a year, the local Realtors association reported. The percentage is about the same in Phoenix.
Kent Clothier of Boca Raton, Fla.-based REI Marketing said he's found cash buyers for hundreds of investment homes over the last two years. Most of them are lawyers, doctors and other professionals who pulled their money from underperforming investment portfolios, sat on the sideline and are now putting it into real estate, he said.
"They're hearing that the market has bottomed out and this is the time to invest," Clothier said. "We found these people are pushing massive amounts of money into this market. It's a free-for-all right now, a very exciting time to be in real estate. Cash buyers are the key in this market, these circumstances, this system. It's never going to get any better."
While investors are being lured by bargain prices, they're not going to lead the way to recovery in the housing market, said Quinn Eddins, research director at New York-based Radar Logic.
That low home prices are fueling demand is only half the story, he said.
"The growth in cash purchases is also a function of the tight lending environment in which many buyers, even those with good credit and large down payments, are sometimes turned down for mortgage loans," Eddins said.
It's important to note that much of the low-priced housing inventory in markets such as Las Vegas, Phoenix and Miami is being sold by lenders, he said.
Bank-owned homes accounted for nearly 49 percent of all existing home sales in January, the Greater Las Vegas Association of Realtors reported. Another 26.6 percent were short sales, or lender-approved sales for less than the principal mortgage balance.
Investors are buying homes in Las Vegas that are deteriorating and not in good enough condition to be financed by lenders, Bell said. There were no safeguards against amateur investors during the boom when financing was easy.
"We just see a continued trend of investors buying houses in blighted areas and restoring them for lease or resale," he said. "We've seen many small single-family, one-story homes in North Las Vegas purchased for cash. It's one of the most active areas because a home can be purchased for less than the construction cost and the new veterans hospital is coming. We're going to see more military retirees."
The monthly Realtors' statistics are based on transactions tracked through the Multiple Listing Service and do not necessarily include sales by owner, newly constructed homes sold by builders and other transactions not involving a Realtor.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.