Congratulations, Las Vegas! After 62 consecutive months as the poster child of the foreclosure crisis, Las Vegas’ foreclosure rate dropped below that of Arizona (1 in 300 in Arizona, compared with “only" 1 in 301 in Las Vegas). Granted, this isn’t a huge difference. But how does this ever-so-slight improvement impact real estate investing opportunities in Sin City?
It depends on how you look at it. First, a reduced foreclosure rate is good news; however, this drop comes as a result of Assembly Bill 284, which dramatically increases the time it takes for Nevada’s non-judicial foreclosure process to play out. AB 284 forces lenders to vouch for each foreclosure they initiate, with severe penalties for falling asleep at the switch.
At the same time, the number of “sweet spot” properties available – listings priced under $250,000 – is also way down. In a city that once had a glut of unsold listings in this price range, today there are barely 5,000, compared with more than 10,000 just half a year ago.
While those seeking primary residences prefer properties that are move-in ready, many real estate investors are willing to do the legwork necessary to get a property ready for occupancy. For investors, this means that there are still numerous opportunities in Las Vegas distressed real estate – short sales, REOs, etc.
In order to thread the success needle, it’s a good idea to maximize the odds of success. For some investors, this means learning how short sales really work. Others choose to dip their toes into the investing pool as buy and hold investors. Still others mix and match their strategies based upon ever changing market conditions.
In the short term, short sales are a good place to focus investing energy. There are still a lot of homeowners struggling to find solutions to impending foreclosure. AB 284 has temporarily slowed the foreclosure rate. But it won’t indefinitely stop foreclosures. The reason? While many lenders are being exceptionally cautious about documentation in the early days of this bill, and are being careful to comply with the letter and the spirit of the law, foreclosures that should proceed – will.
Because of this, there’s a legitimate place in the Las Vegas real estate market for investors. Homeowners facing certain economic ruin want and need to avoid foreclosure. And the short sale remains one of the best ways for them to do it. For this, the Las Vegas real estate market needs investors.