Las Vegas-Clark County Condominium Transactions – 1^st Quarter 2009

Less than half the transactions in condominiums throughout the metropolitan area are reported through the Multiple Listing Service leaving a void in understanding what is occurring within this product type. While the MLS provides a much richer data set in terms of loan types, unit features and seller concessions, for instance, I am currently analyzing the 2,454 transactions that occurred during the 1^st quarter of this year.

Herewith some of our initial analysis: I chose to subdivide all of the units into separate categories rather than lumping high-rise units such as Turnberry Towers into the same category as an entry level stacked-flat. There aren’t any real ‘industry standard’ definitions so I chose four broad categories based upon a perusal of the data:

1. Stacked Flat or Garden Style, generally single level 2 & 3 story design. Also sometimes referred to as a ‘walk-out’ unit. Nearly every apartment-to-condominium conversion in the last few years was represented by this product type. There were 1,415 transactions accounting for 57.7% in the quarter
2. Mid-rise – usually five to 25 stories, often constructed of steel frame and/or cement block. This category accounted for 3.4% of the transactions with 83 units changing hands. While there were not a lot to include I also grouped ‘resort’ style transactions in this classification, e.g. Lake Las Vegas.
3. High-rise units accounted for 4% of the transactions with 98 units changing hands.
4. Bulk Sale transactions accounted for 34.9% with 857 transactions. Bulk transactions does not refer to any particular product/building type but rather when multiple units changed hands during a single transaction. The largest single transaction in this category was for 305 units valued at $45,500,000 or $149,180 average per unit in a mid-rise product.

After subdividing the transactions into the above categories I then looked at the distribution of all 1,415 transactions and then the subset of those that transferred due to foreclosure/trustee’s deed. I also looked at the subset of what I sometimes refer to as Normal or Arms Length transactions.

Some of the findings on the foreclosure/trustee’s deed transactions are included in this report.

Units ranged from 392 (subdivision name: Scarlet & Grey, I think this was built by McKellar Devemopment) to 2,526 square feet (Sandstone in Mesquite) in size with prices ranging from $1,000 (Avalon) to $592,439[1] - see footnote 1. While the average transaction price was $90,798 the median price was $75,000. There were 1,070 REO units or just over ¾ of all the transactions and 345 Normal unit transactions. REO/Foreclosure units traded for an average price of $88,086 with the median slightly lower at $73,000.

Price per square foot ranged from $1.08 (that Avalon unit in Hooterville) to $732.81 (Meridian, of course) with an average of $88.63 and a median of $74.30 per square foot. REO properties changed hands at $87.05 and $72.20 per square foot, respectively. The

decline in nominal prices as well as price per square foot is even more dramatic than the decline in single family prices and value ratios. With the steep decline in transactions from February to March (nearly 41%) the value ratio declined nearly 9% month-to-month.

Looking at the price distribution chart shows a similar breakdown in pricing for all the units versus those Trustee/Foreclosure transactions. This particular chart also shows the distribution of Normal transactions represented by the Dark Blue bars. As in single family transactions the distribution to the low end is not quite as pronounced as for the REO/Trustee/Foreclosure transactions.

For those who have been in Las Vegas long enough to remember I was reminded of “Where Life Begins at $49,900” when looking at this chart. I don’t recall the exact year but I am pretty sure it was 1988 or 1989 while I was working on the master planned community of Desert Shores. In addition to the extensive use of television for Rock Springs Vista, I used to drive by a billboard touting the community and its starting price.

Those were the days when you could drive from Green Valley to Desert Shores in about 25 minutes. My point is: it just goes to show how we have overshot the mean in pricing by quite some margin on our way to equilibrium, particularly in the condominium market.

The distribution graph for $/S.F. shows a more favorable picture for Normal transactions

Age of the units did not seem to matter in terms of the percentage represented by Trustee/Foreclosure transactions.

I did not expect to find any surprises in the distribution of units by square footage or by bedroom count and there are none in this 1^st quarter’s data.

The best performing condominium community in terms of number of Normal transactions was Village Green Condo, a conversion located within the Las Vegas Country Club. That is most likely due to the fact that this project was still marketing units during the 1^st Quarter. There were other communities that were close in the Normal category.

And the worst performer in terms of most Trustee/Foreclosure transactions? It has certainly received a lot of press lately: Meridian at Hughes Center. And, unfortunately, there wasn’t another project anywhere close to this snake bit community.

I find census tracts or block groups much more valuable when looking at geographic data, however, the media seems to prefer ZIP codes since they are more easily identifiable and generally easier to geocode even if the data isn’t particularly useful. Since nearly everyone can identify with a Zip code the largest percentage of Trust Deed/Foreclosure transactions occurred in the 89128 area; this Zip code also showed the highest amount of Normal transactions, also.

For further information on the condominium analysis please contact me at:

 This report with a few additional graphs can be downloaded at www.ResidentialResources.com under the My Blog tab.

Frank Nason

Residential Resources, Inc.

FrankNason@ResidentialResources.com

Toll-free: 866-597-2855 or 702-597-2855