Bill Loucks
Realty Executives
702-286-3608

The main question we hear most often is: “Is this the right time to buy/sell our home?” Normally asking a real estate agent these questions, is like asking a barber if you need a haircut. Of course, the answer is yes, sit down in the chair. We will attempt to clarify our logic with some facts, rather than give the standard answer.

After the record run up in prices that began in October of last year and ended in April 2004, our market increased at a record level with some areas increasing as much as 50%, our market has paused for a breather. Prices have decreased from the record high levels by 10-15% in many areas.

To understand what is coming next, we need to understand what just happened. The resale housing market run up was fueled by several factors. Low interest rates were a large factor. Rates still remain near the lows and are not expected to rise significantly over the near term.

Specifically for the Las Vegas Valley, the resale market was impacted by a shortage of new homes. Many builders were on a lottery system, and if you were fortunate to have your name drawn, you still waited 9-12 months for your home to be built. As the new home market fell behind with supply versus the demand it had, buyers turned to the resale market. Because the supply was low, builders were able to raise the prices with each new phase release, and this was a benefit to the resale market. Now, builders have caught up with the demand, and in some cases have excess supply, or standing inventory available.

In the beginning of 2004, most builders refused to sell to investors, opting to only allow owner occupied sales. This caused the investors to turn to the resale market and this was also a factor in the price run up. Pulte Homes continued to allow investors and was very aggressive in raising prices as investors poured into the Pulte communities. Now that the supply is back to normal levels, Pulte Homes made headlines with the huge price reductions on their homes. This brought the prices back to reality, although many investors who bought at the higher prices are calling their lawyers. The Pulte reduction was necessary because Pulte raised their prices more than most, and is not a reflection of the overall market in that scale.

After the price run ups in both the new and resale markets, most investors have moved on to other cities due to the fact that our rental market became over saturated and investors can no longer get close to breaking even with the lower rents that they have to charge to find a tenant. This is another factor helping to cool off our resale market.

To recap, the main reasons for the run up were low interest rates, a shortage of new homes, and investors flooding our market. All of these factors came together at the same time and created “The Perfect Storm.” This unprecedented run-up in home values lasted for about 8 months.

The market cooled off after the builders brought more inventory online and investors left the market. In the resale market, many owners are taking their newfound wealth and leaving the state.


Based on statistics provided by Equity Title, the number of resale homes for sale from June 2004 through October 2004 swelled from 5,459 in June to 11,385 in October. The trend of supply is still increasing however is slowing. The demand level remained constant during the same time period. The trend for the demand level is slowing as well. The median list price is declining and is down about 10% from the June levels.

Right now we have a large supply of homes available and demand levels are not increasing. As a result, homes are sitting on the market longer, and buyers are bargain shopping. Offers are coming in lower than list price, and motivated sellers that must sell, are lowering prices to move their properties.

Industry experts we have spoken to expect this trend to continue until the spring. Prices can be expected to remain soft, and possibly fall further before leveling off and resuming our normal rate of increase. The wild card will be interest rates. If rates remain near current levels, this scenario could very well play out. If rates rise dramatically, this will change the entire picture.

The long-term picture remains strong. We are running out of available land for new homes. Richard Lee of First American Title predicts that we will run out of land for new homes in ten years if the current pace of building continues. We are already starting to see more high-rise condo projects coming online, and more will follow. Single family homes will continue to be a good investment and will only get better as we run out of land.

To answer the question of selling now, yes, it’s a good time to sell now. Prices are coming down from the recent high levels, and they could go lower before leveling off and beginning to rise again. Most sellers have significant profits over just a year ago even with the recent reduction. What we don’t know is how much lower prices may go, and if interest rates rise, buyers will have to buy less house to keep the same payments. Rising interest rates will negatively affect prices. What is important to note selling now, pricing the property properly is the key, and it may take 45-90 days to sell.

Is it a good time to buy? Prices have come down from the recent high levels. Will they go lower? Maybe, however the risk of waiting is the interest rate variable. Sellers are considering lower offers now, however if the demand level increases, they won’t have to. So, yes it’s a good time to buy.

If you are considering upsizing or downsizing, it’s a great time to do this. There is plenty of inventory to select your new home from, and you will be able to find exactly what you want without having to settle. Sellers are considering contingent offers now, where in the recent past most did not.

Of course if you are considering either buying, selling, or both, being represented by experienced agents who understand what is going on in the marketplace is critical and can save you thousands of dollars as well as unnecessary headaches. Bill & Stacy Loucks are ranked in the top 2% of agents in the Las Vegas Valley and are listing specialists, having sold over 40 homes in the past year. Our buyers continue to refer business to us, and use us again when it is time to find their next home.