Regular buyers picking up slack left by Las Vegas home investors

A few years ago, bargain-hunting investors were snapping up homes by the dozen in Las Vegas. They sent prices soaring and revived a market left for dead during the recession.

Still, some people wondered, what would happen when they leave?

Today, sales volume is lower and prices aren’t growing as rapidly, but regular buyers are starting to pick up the slack the investors left behind.

Banks aren’t throwing open the vaults like they did during the bubble last decade, and the resale market has shown some signs of a cool-down this year amid a dip in listings. But traditional buyers appear to be propping up the market without investors carrying a heavy load, part of a shift to a more normal time for Las Vegas housing, at least compared to the wild swings of the past decade or so.

“I would say we’re really back to a traditional market,” said broker Heidi Kasama, of Berkshire Hathaway HomeServices’ Summerlin office.

Regular buyers haven’t completely “filled that void” of investor purchases, but that process “just takes time,” said Scott Beaudry, owner of Universal Realty and president of the Greater Las Vegas Association of Realtors.

And compared to the depths of the recession, he said, when bankruptcies, foreclosures and layoffs were pummeling Las Vegas, “We’re in a happy place.”

Buyers picked up about 24,400 previously owned single-family homes in the Las Vegas area this year through September. That’s down 12.7 percent from the same period in 2012 and 4.4 percent from 2013, but up 9.4 percent from 2014 and 2.7 percent from last year, according to GLVAR data.

Meanwhile, lenders issued about 17,100 purchase loans for Las Vegas-area homes this year through June, up 41 percent from the same period in 2013, according to national housing tracker Attom Data Solutions of Irvine, California.

Amid the rise in traditional deals, employment and the population have grown, and historically low interest rates have dipped even lower. Nationally, the average rate on a 30-year mortgage last month was 3.46 percent, down from 4.49 percent in September 2013, according to mortgage-finance company Freddie Mac.

Also, real estate pros say that people who went bankrupt, lost their home to foreclosure or sold through a short sale after the economy crashed are increasingly getting loans again, after being ignored by banks for several years.

Rick Piette, owner of brokerage firm Premier Mortgage Lending, said he hasn’t seen a “substantial easing” of lenders’ qualification guidelines. But people whose finances got hammered years ago are “coming out again and purchasing.”

Such buyers have waited long enough on the banks’ no-loan lists, he said, and they’re also now “recovering from the shell shock” of the worst recession in decades.

“We had such a huge crash,” Beaudry said, and the resulting fear “takes time to get over.”

That crash, however, lured investment firms like the Blackstone Group and Colony Capital to buy cheap homes in bulk in Las Vegas – a poster child for America’s housing boom and bust – and turn them into rentals.

With investors scooping up homes, prices rose at one of the fastest rates nationally. By 2013, Las Vegas home prices were up about 30 percent year-over-year and a peak of almost 60 percent of resales went to cash buyers, according to the GLVAR.

Investors flocked to other cities for bargains as well. But Las Vegas, one of the hardest-hit areas of the country during the recession, was “definitely an investor magnet,” with one of the highest volumes of cash deals, Attom senior vice president Daren Blomquist said.

The buying binge sparked a boost of business for real estate agents, title and escrow companies, and others in the industry, according to Berkshire’s Kasama.

“Nobody else would buy at that time,” she said.

Investors eventually backed out in droves amid the higher prices they helped create, but they haven’t completely left. In September, about 26 percent of resales went to cash buyers, the GLVAR reported. The median sales price of single-family homes last month was $233,500, up 6 percent from a year earlier.

Overall, the market is showing some signs of losing steam — the annual jumps in sales volume and mortgage lending slowed in the past year compared to the prior year, according to GLVAR and Attom data, and about 12,800 single-family homes were listed for sale by the end of September, down 4.4 percent from a year earlier.

But no one expects the easy lending or rapid sales of the boom years to come back anytime soon, nor does it seem like anyone wants them to.

Builders sold almost 39,000 new homes in the Las Vegas area in 2005, compared to about 4,600 this year through August, according to Home Builders Research. Also, lenders issued almost 81,000 purchase loans in the area in 2006 alone, Attom says, a time when borrowers could easily get a mortgage, for little or no money down, without showing proof of income.

Lending has picked up from recent years but is “nowhere near what it used to be,” Home Builders Research founder Dennis Smith said. “And that’s a good thing.”

Contact Review-Journal writer Eli Segall at 702-383-0342. On Twitter at @eli_segall.