Southern Nevada Market Conditions--November 2007

SELLER CONTRIBUTIONS: This measure returns the propensity of the buyer to request—and the seller to provide—buyer points to expedite transaction closing.

November 2007

Single Family Residence--
% Sellers Contributing = 55%
Average Contribution = $9,155

Condo/Townhome--
% Sellers Contributing = 56%
Average Contribution = $7,799

October 2007

Single Family Residence--
% Sellers Contributing = 55%
Average Contribution = $10,322

Condo/Townhome--
% Sellers Contributing = 55%
Average Contribution = $5,542

The propensity for sellers to provide buyer support increased from October to November—but only slightly. The average contribution declined for SFR but increased for CONDO.

As a generalization, a good estimate of the seller’s expected contribution is
between 3.00 and 3.50% of the transaction value.

THIS YEAR VERSUS LAST YEAR--

Relative to last year in terms of transactions, the market is -38.6% behind YTD.
Given the market is entering the winter/holiday cycle, it would not be unreasonable to assume
the market will finish the year about -38% to -42% in back of 2006.

Closed Last Year = 27,749
Closed This Year = 17,039

Change = (10,710)
%Change = -38.6%


MARKET OVERVIEW—CHANGE FROM PREVIOUS MONTH

Based on the changes from the previous month, the market should be judged as continuing to move toward the buyer. The rate of movement toward the buyer is slowing but both Percent Selling (market efficiency) and ABSORB RATE (market speed) are still declining from month to month. This implies that price erosion will continue. Sellers who are motivated (willing to meet market price) should make every effort to identify and move to market price as soon as possible to maximize seller equity. This opinion is a virtual duplicate of the September and October opinions.

Supply (listed), which has been climbing at a steady and consistent pace, appears to have peaked and is now in a slow decline. Market peak, in terms of supply, peaked at about 29,300 units on or about September 14, 2007.

The market is moving toward the fall/winter cycle. This cycle usually manifests a reduced transactions count. The change in the direction of supply will most likely not influence the intensity of the negative nature of prices in the short run. It would not be unreasonable to assume the decline in the supply curve is most likely attributable to fall/winter cycle, as opposed to a change in trend. If this notion is true, the supply will return to market at the conclusion of the cycle.


SOUTHERN NEVADA MARKET BUY/SELL INDICATORS--

SUPPLY = Supply has peaked and is declining slowly (Slight tilt to Seller)
DEMAND = Continuing in moderate decline‐‐however stabilization is near (Strong Buyer)
FAILURES = SFR significant increase, CONDO steady (Strong Buyer)
PERCENT SELLING = Declined significantly for both types (Strong Buyer)
MONTHS SUPPLY = Significant increase for both types (Strong Buyer)
60 DAY ABSORB = Declining (market slowing) at about 1‐2 points per month (Extremely Strong Buyer)
PRICES = All price indicators off significantly‐‐SFR close below $290K (Extremely Strong Buyer)
SPECIAL COMMENT As an estimate, about 5‐7% of all closings are short sales
SPECIAL COMMENT1 Expect price declines to slow in the short run‐especially for CONDO


The reader should note the DISTRIBUTION SUPPLY/DEMAND table. The current ratio is 12.6 to 1—down from 13 to 1 in the previous month. However, higher-end properties face ratios of 46 to 1 (46 competitors for each property in escrow). This implies an exceptionally competitive high end market.

The reader should expect a continuation of the negative price trend with SFR moving slowly toward 280K. Expect CONDO to demonstrate more price stability and resiliency although fluctuations will occur on a month to month basis.

The strongest sub-market is South SFR. The weakest is South CONDO. As a general rule, the relative strength of markets can be deduced by the 60 DAY ABSORB RATE.