Bottom-scraping prices for foreclosed-upon and bank-owned homes mean bargains for savvy buyers

Some real-estate market watchers predict Las Vegas will reach bottom when home prices match those in Detroit, one of the nation’s hardest-hit cities for foreclosures and unemployment.

Homes are reportedly selling for just a few thousand dollars there.

Las Vegas is getting close. The Greater Las Vegas Association of Realtors reports that the cheapest single-family detached house for sale on the Multiple Listing Service is $10,000.

It’s an 1,160-square-foot, single-story home with three bedrooms and a bath, built in 1957, at 1389 Lawry Ave., near Martin Luther King and Lake Mead boulevards.

The bank-owned home lacks amenities such as a pool and spa, built-in backyard barbecue and custom landscaping, and needs repairs. However, it features decorative wrought-iron bars over the windows and reinforced-steel dead bolts on the doors.

What do you expect for $8 a square foot?

There are 10 homes listed for sale in Las Vegas for less than $25,000. Most are fixer-uppers in older parts of town, Realtor Robin Camacho of top10realestatevalues.com said.

Interested in a condominium?

She found 12 units on the Multiple Listing Service between $11,000 and $20,000, again not in the most desirable areas. At the bottom is a 776-square-foot, two-bedroom unit at 1720 W. Bonanza Road for $11,500.

Her best deals are found primarily in the east and north areas of Las Vegas. They’ve been built since 2000 and are priced from $55,000 to $100,000.

Some need work and some are ready for move-in, like the 1,400-square-foot, two-story home near Sam Boyd Stadium that’s listed for $62,000. All it needs is a fresh coat of paint — maybe just wash the walls — and the carpets cleaned and it could be rented tomorrow, Camacho said.

The home sold new for $217,000 in 2007 and will probably get bid up to $85,000, she said.

Tim Sullivan of San Diego-based Sullivan Group Real Estate Advisors said some home prices may fall even more.

"I think you will find that a few poorly located homes may see further price drops," he said. "But the best stuff may be leveling soon."

The key to price stability in Las Vegas is jobs and foreclosures, he said.

Camacho uses about 70 different factors to determine her top 10 deals, including price, taxes, amenities, condition and location of the home. Homes rotate in and out of her Web site almost hourly as new homes come on the market, she said.

"We’re looking to show houses that are the best value for our client’s money," Camacho said, "not just the best price."

Investors are snapping up some of the deals for rentals, looking to beat any possible price turnaround, she said. The median price of existing single-family homes in California turned up 4.2 percent in May to $267,570.

The median price in Las Vegas was $130,000 in May, unchanged from the previous month, Home Builders Research reported. It’s down 43.5 percent, or $100,000, from a year ago and has returned to the same level of December 2000.

Home Builders Research President Dennis Smith said he’s hearing from Realtors that real estate-owned assignments from the banks are increasing dramatically. Some of those are tentatively going to be listed at $40,000 to $50,000, he said.

How long it takes the marketplace to absorb these homes will help signal when we can expect to see the bottom of the resale housing segment, Smith said.

"The reason prices, especially resales, continue to go down is because that’s all that’s selling," he said. "Why is that? Because the lending environment has changed to where it’s difficult to obtain a new loan on anything but (Federal Housing Administration) FHA and (Veterans Affairs) VA."

An excess supply of homes on the market — many of them vacant and in foreclosure — continues to put downward pressure on prices, economist Keith Schwer of the Center for Business and Economic Research said.

Nevada has been identified as one of four housing bubble states and has experienced the highest rate of foreclosures in the nation.

The Case-Shiller Home Price Index followed a tight trend line for Southern Nevada from 1987 to 2002, followed by a modest increase in 2003. From 2004 to 2006, the index took off vertically, peaking in 2006, then descending steeply into March. It’s now dipped below the trend line, signaling a return to housing affordability in Las Vegas.

Sellers have slowly and reluctantly lowered home prices, but not enough to soak up excess inventory, Schwer said.

"We have seen housing price declines over time," he said. "Housing markets invariably adjust slowly to an excess supply, but rapidly to excess demand."

Housing analyst Smith doubts that median prices in Las Vegas will ever go as low as Detroit.

"Detroit is home to GM," he said. "How many people are moving from Detroit to Las Vegas and how many people are moving from Las Vegas to Detroit? I don’t know any."

Contact reporter Hubble Smith at hsmith @reviewjournal.com or 702-383-0491.