Archive for February, 2010

The Beginning of a Solution for Summerlin Mall?

Friday, February 19th, 2010

Without question, the Michelle Sterling Las Vegas real estate team spends more time with clients in the master-planned community of Summerlin than anywhere else in the valley. The last decade has been so successful for Summerlin that it’s hard to believe anything could possibly become an eye-sore in such a meticulously groomed residential environment. But, as they say, nothing is perfect, and the uncompleted and mothballed Shops at Summerlin Centre Mall is a case in point. Located right next door to the billion dollar Red Rock Resort, the steel skeleton that was to form the beginning of a new upscale retail village/mall sits rusting and eerily idle instead. General Growth Properties Inc. (developer of the Summerlin Centre project) is itself struggling to emerge from a long and complicated bankruptcy proceeding (originally filed over a year ago) that effected their vast commercial/retail holdings nationwide.

However, that process received quite a jolt yesterday as Simon Property Group Inc., the nation’s largest shopping mall owner, made a $10 billion hostile bid to acquire General Growth Properties. What could this mean for Summerlin real estate and the future of the Summerlin Centre mall? It’s too soon to know, but Simon Property enjoys a strong financial profile that allows it to continue developing projects even through the economic downturn. Let’s hope that Simon succeeds in their bid for General Growth and sees fit to make our own local issue a completion priority in their plans going forward.

CitiMortgage Program for Nevada ??

Sunday, February 14th, 2010

CitiMortgage launched a highly encouraging pilot program on Friday that is designed to address the hard realities of people heading for foreclosure in a more productive way for all concerned. Initially rolled-out as a test case in six states, the new process will be implemented nationwide by Citi if positive results warrant the expansion. One can only hope that Nevada is included at some point, as the Las Vegas real estate market would certainly benefit from this attractive foreclosure alternative. How does the program work? Here is an explanation from CNNMoney.com:

Instead of borrowers falling further and further behind on their mortgages, leading to an eventual foreclosure sale, they can stay in their homes for up to six months, if they agree to then hand over the deed to CitiMortgage. The borrowers the program targets are already seriously delinquent, having missed at least three monthly payments, and are well on the road to losing their homes. It includes a pledge from CitiMortgage that it will pay the borrowers a minimum of $1,000 to help with relocation expenses. Citi will also forgive any difference between the value of the home at time of repossession and what the borrower owes. Once the deed goes back to the lender, the borrowers walk away free and clear.

One of the most attractive features of this program it seems to me is the potential to cool tempers a bit, alleviate a certain amount of frustration and most importantly provide a framework for mutual cooperation. In exchange for relocation assistance and complete debt forgiveness, the resident must keep the property in good condition during the six month transition and pay all utility bills. One can only hope that many people would prefer this process to wrecking the home, throwing the keys on the floor and suffering the credit consequences of a full-blown foreclosure. After all, it’s not like the various loan modification programs are making any significant difference. The percentage of qualifying borrowers actually participating has been disappointingly low, and the percentage of mortgage defaults even after a loan modification has been discouragingly high.

Michelle Sterling Team Social Networks – Connect with Us and Follow Along !!

Friday, February 12th, 2010

The Michelle Sterling Las Vegas real estate team is fully integrated into the world wide web. We are Internet real estate specialists and have worked very hard over the years to build a formidable online presence in our home market. Naturally, we are very excited about the business centric developments in the social networking sphere and have moved aggressively to establish our visibility in yet another sector of the online universe. In fact, team members are already experimenting with Google Buzz, which was launched just 48 hours ago as a new social networking feature for Gmail. We invite you to connect to the Michelle Sterling Team through Facebook and Twitter and we look forward to the ongoing discussion about our professional passion, the market for Las Vegas homes.

MS Las Vegas Real Estate on Twitter

MS Las Vegas Real Estate on Facebook

Another Blow to Lake Las Vegas

Wednesday, February 10th, 2010

Lake Las Vegas can best be described as a “speculative” investment that continues to get riskier all the time. A never ending bankruptcy reorganization for the developer, combined with a potential class-action lawsuit against Credit Suisse AG (over alleged predatory lending) is now topped by the headline grabbing news that Ritz-Carlton Lake Las Vegas is closing completely May 2nd. Over the past 18 months our Las Vegas real estate team has been bombarded with inquiries about the purchase of vacation property in this once alluring luxury oasis. It’s been very tempting for many prospective buyers to discover properties in such a beautiful luxury community selling for as little as 30 cents on the dollar compared to peak prices. The questions are constantly asked; what will end up happening to the community? Are these good values at these incredibly cheap prices? What are my chances of substantial upside if the community recovers? Will the community bounce back or not?

We have constantly advised extreme caution and reminded people that if Lake Las Vegas property is selling for as little as 30 cents on the dollar compared to the market peak, it’s certainly not for no reason. As a corollary to this, we also remind people that if something seems too good to be true, there may well be a good reason for it. The Michelle Sterling Team has no idea what will happen to the Lake Las Vegas community over the course of this drastic economic downturn and couldn’t even guess as to whether it will eventually recover and prosper. One thing is for sure, the odds of recovery look slimmer every day. The loss of the Ritz is a huge blow and we wish to express our sincere condolences to the 350+ employees that will be losing jobs that must have seemed fantastic when they first landed them.

Strategic Defaults and the Las Vegas Market

Saturday, February 6th, 2010

The issue of strategically defaulting on a residential mortgage is shaping up to be one of the central issues facing the national housing market in 2010, and Las Vegas real estate is no exception. The media has keyed into this issue and given it extensive coverage, including some very compelling articles in the New York Times over the past month. The discussion mostly centers around the difference between private individuals and their feelings of payment responsibility (regardless of the numbers), versus the way businesses make decisions about non-payment in purely financial terms. To choose “strategic” default simply means that payment is stopped even if the resources are there for payment to be made, simply because payment makes no sense on a purely numerical basis. Let’s face it, a purely numerical basis can become very compelling when the numbers represent real dollars in people’s lives.

The big question for 2010 is how many additional residential properties will fall into foreclosure for this specific reason, beyond the large number already expected due to recessionary factors and high unemployment numbers. It seems to me that “strategic default” at the private/individual level is very much a snowball issue. What do I mean? People always feel safer and more confident in numbers and all it’s going to take is enough people willing to step outside conventional behaviors and norms before the whole idea hits a tipping-point and becomes a more socially accepted decision. If strategic default does in fact become a significant contributor to overall foreclosure statistics in 2010 and beyond, it will be a classic “grass roots” movement. You can potentially see this trend developing neighbor by neighbor, street by street, community by community. Will this end up happening on a large scale? It’s just too soon to know, but the potential for this new economic decision making calculus (concerning individual mortgages) to snowball over time is very real.

Catching a Falling Knife ??

Friday, February 5th, 2010

As the rest of the Las Vegas real estate market continues to stabilize, the drama surrounding the high-rise luxury condo sector continues to shake itself out. It’s still hard to believe that so many developers and banks completely misjudged the demand for this product to such an extent. Las Vegas is drowning in luxury condominium buildings that just make no sense based on the original numbers. Prices for units continue to plunge and a floor has not yet been found. Supply and demand can be a brutal arbiter when you find yourself on the wrong side of the fence. 2010 looks to be a very tough year for this “urban style” luxury product.

Right Back Where Things Started – But Worse

Thursday, February 4th, 2010

Well … we just completed an incredibly destructive 10-year circle in the residential real estate market. How’s that for progress? Who could have ever imagined it would turn out this way? The beginning of the Bush (43) era saw the advent of the notion that home ownership was a self evident “good” for both individuals and the US economy as a whole. Pursuant to that idea, a tidal wave of policies and practices were put in place and/or developed (in both the public and private sector) to boost home ownership levels well above historic averages. I think they called it the “stakeholder economy”. Without question, this greatly enhanced enthusiasm for owning your own home (and the newly available financing options to make your “dreams” a reality) found expression in the Las Vegas real estate market as much as anywhere in the country, if not more so.

So … where are we today? Home ownership just clocked-in this week at a DECADE LOW. According to the data jockeys at the Department of Commerce, America’s home ownership level just hit 67.2%, which is the lowest number in a decade. After four million foreclosure notices from 2007-2009, and more being processed every day, it’s safe to say that the entire exercise has been nothing short of a catastrophe, for both individuals and the US economy as a whole. Buying a home is a great idea when it makes REAL sense from both a practical and most especially a financial standpoint. Otherwise, it’s just not a good idea … it’s as simple as that.

Short Sale Activity in the Las Vegas Real Estate Market

Monday, February 1st, 2010

It’s entirely possible that a fundamental shift is occurring in the Las Vegas real estate market that could have important implications for the rest of the country. As we have been reporting in this blog for over a year now, it remains almost impossible to buy a foreclosure property in the number one foreclosure market in America. Unless you plan on paying cash and bidding over list price, your chances of success are shockingly slim. Why is this? The inventory of available foreclosures for sale in the Las Vegas MLS remains anorexic. There are more theories about why this is so than there are speculations about the Kennedy assassination, so there’s no point in even trying to parse that subject yet again.

In any event, the new development in our market that could be of national significance is the increasing prevalence of successful short sale closings. As a percentage of overall closing activity in the resale sector, short sales are steadily approaching 25% of the market, and are poised to climb higher by many estimations. On the upside of this issue is the simple fact that the banks score a better deal for themselves with a short sale as compared to a foreclosure. In addition, the feds have jumped into the process in an attempt to encourage the banks even further …

The Treasury Department is offering incentives on short sales by providing a $2,500 subsidy, $1,000 to the servicer and $1,500 to the seller for moving expenses. In addition, investors can get $1,000 by allowing subordinate lenders to get $3,000 in proceeds from the sale. The program is effective April 5, but servicers can implement it earlier.

On the downside, the logistical hurdles (and sheer span of time) in getting a short sale approval from the banks on a Las Vegas home have been a bureaucratic nightmare up until now. I can’t tell you how long and frustrating this process has been in the past. However, Bank of America is supposedly preparing to lead the way to a brighter future in the form of standardization and automation of the short sale approval process. Where is the “beta” test market for this newfangled short sale administrative and efficiency miracle? Many are saying that it’s right here in Las Vegas, Nevada. Stay tuned !!