Las Vegas builders have reacted to a story on foreclosure crisis featured in a national newspaper. Even out-of-state residential market analysts shared their views.
The story said that Las Vegas builders are constructing 1,100 new homes in the midst of 9,517 vacant newly-constructed units in foreclosure properties listings, and questioned whether new construction is the right thing to do in the midst of record numbers of Las Vegas pre foreclosures and completed foreclosures.
The figures used by the newspaper was sourced from a housing research firm, which later explained that the total number of 9,517 includes 1,017 newly-built single-family houses in Las Vegas and 8,285 unoccupied condo-hotel and condo units at high-rise developments downtown such as CityCenter and Trump International. The number also includes 215 new homes in Pahrump and Northern Arizona.
Analysts are concerned that the story might worsen the foreclosure crisis in Las Vegas. They figured that if appraisers get information about overbuilding, they would lower their appraisals further and buyers would not be able to finance their home purchase.
Ironically, one of the officials of the research firm who gathered the numbers was the one explaining that there is no overbuilding in Las Vegas. He said that Las Vegas overbuilt in the past, but that some builders now, particularly the big ones, are building to respond to demand and not engaging in speculative building.
Builders explained they are not building without demand and they are buying land in preparation for the time when foreclosed homes for sale in Nevada have already been absorbed by the market. At this time when land prices are cheaper, home builders want to take advantage of buying opportunities and position themselves for building projects in the future.
Analysts also said that bad news might affect the investment decisions of private-equity groups considering investing in Las Vegas real estate. Further investments in Las Vegas will help the city rise from its foreclosure crisis.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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