Real Estate market seeks ‘happy medium’

Q: Regarding your May 18 column, “Low housing inventory frustrates homebuyers,” www.reviewjournal.com/real-estate/low-housing-inventory-frustrates-homebuyers: I enjoy reading your column and staying up to date on the market. However, I must disagree with your latest.

Delbert M., from Lake Havasu, seems to lack a basic understanding of capitalism. He is frustrated that owners are trying to get the best prices possible for their homes — after the biggest real estate recession in our lifetimes.

If he really wants to buy a home, there are many well-priced homes available in communities — new homes.

However, what he really wants to do is get a bargain in a resale. Those days, thankfully for underwater owners, are now over. Prices, which clearly were out of whack when banks gave away loans to anyone at all, then went equally out of whack in the other direction.

And while we won’t — rightfully so — see bubble prices again for many years, we also won’t see the back-end-of-the-pendulum prices. Prices are finding the happy medium, and prices in Vegas are still lower than most places in the country. I would venture to say that you cannot find the housing values you see here in any American city of more than 1 million population. Not one.

So tell Delbert all is not lost. He wants a single-story, three-bedroom home with a three-car garage and a pool. Assuming he’s talking about at least 2,200 square feet or so, it is totally unrealistic to think he can get it for $225,000. The days of $130 per square foot are upon us, and that is for tract homes with pedestrian-build quality.

Why? Because that is what it costs to build a house, with land, permits, improvements, construction loan interest, and real estate commissions.

— Michael F., Las Vegas

A: You make some good points here. I agree with much of what you’re saying, especially your points about local homes being undervalued and homes here selling for prices below the national average. Recent reports from various national sources have suggested the same.

I may have been more diplomatic in answering Delbert M.’s question in the May 18 column that prompted your reply. But I hope I covered at least a few of these same points.

For example, when he expressed frustration about being outbid by cash buyers when trying to buy an existing home for about $225,000, I suggested he may want to make more aggressive offers. I also encouraged him to consider a newly built home, as you mentioned.

In any case, you’re right about home prices appreciating here in Southern Nevada over the past year or more. According to statistics from the Greater Las Vegas Association of Realtors, the median price of a single-family home sold here in April was $167,000. That was up 30.6 percent from $127,900 in April of 2012.

At the same time, I think it’s important to remember the real estate roller coaster we’ve been riding for the past decade. Keep in mind that the median price of an existing local home peaked seven years ago, when the median price of a single-family home hit $315,000 in June 2006.

You wrote that local home prices “are finding the happy medium.” I think I understand the sentiment. But, for my money, I’d like to see local home prices appreciate a bit more before I’d agree with that statement.

Send your real estate questions to me at ask@glvar.org. I’ll do my best to answer them in this space.

Dave Tina is the 2013 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 35 years. GLVAR has more than 11,000 members. Email questions to ask@glvar.org. For more information, visit www.lasvegasrealtor.com.