After months of enduring the most extreme sellers' market Las Vegas has ever seen, home buyers are slowly gaining the upper hand.
A multitude of factors are constantly changing in the ebb and flow of the Las Vegas Valley real estate market:
"Whole-heartedly we are in a buyer's market now," said Emily Gunning, a local real estate agent. "Homes are selling $20,000 to $30,000 under the list price in many cases. But keep in mind those list prices are 50 percent higher than 12 months ago, so sellers are not all that injured."
Gunning, who with her husband Sean has closed 100 homes this year and has worked in the Las Vegas real estate for 17 years, said some sellers are offering to pay a buyer's closing costs, or are throwing in a carpet or landscape allowance to get a home to sell faster.
Dennis Smith, president of Home Builders Research Inc., said the market is evolving into a buyers' market, but he said there are still segments that are seeing great demand, namely homes under $250,000.
"Overall it's probably correct to say it's more of a buyers' market than a sellers' market," he said. "It's all relative to price."
The huge increase in the number of resale homes for sale allows buyers to shop around and also causes competition for builders. More homes are sitting on the market longer -- they are no longer selling in hours or days -- but at the same time the majority are selling in less than two months.
There are a lot of homes for sale priced from $400,000 to $600,000 -- which for many Las Vegans is a bit too pricey, industry experts said.
Gunning said houses that saw large price increases are now having a harder time selling.
"I don't know how many of my clients' incomes went up 50 percent," Emily Gunning said. "Sellers are having a problem getting homes sold."
In August, the median price of recorded new homes was $259,700, up from $238,957 in July and a year-to-year change of 26 percent, Home Builders Research Inc. reported this week.
The median price of recorded resales in August was $250,000, up from $247,490 in July and a year-to-year change of 45 percent, the firm reported.
And people can no longer look toward investors to snap up those houses.
"Investors have moved on, primarily to Phoenix. Almost half of our buyers were investors and with those buyers gone, there are 11,000 (to) 12,000 homes on the market and not enough buyers that can afford them," she said.
Smith said many people expected an "inventory adjustment" because of the large number of investors who were buying homes here earlier this year.
"If investors control this market, we're going to have a problem, and the problem is when they put those houses back on the market -- and that's what's happened," he said.
Smith said investors may have to come down on their pricing to sell the houses.
"Instead of $100,000 they may make $60,000, and that's still a good profit," he said. "The market has to find where the price level is, and what are acceptable price levels for consumers."
In an attempt to find those acceptable levels, Pulte Homes this month reduced prices on average between $25,000 and $85,000 at about 40 percent of its communities. Prices at the company's Del Web brand have not been changed.
If someone bought a Pulte home in those communities but has yet to close escrow, those prices were adjusted as well, said Sheryl Palmer, area president for Pulte Homes in Nevada.
Pulte Homes garnered a considerable amount of local attention earlier this year after it increased home prices in a Summerlin subdivision by as much as $142,000 in less than two months.
"We looked at each community individually and what the market is calling for," Palmer said of the price reductions.
She said the high number of resale homes on the market is making Las Vegas real estate more competitive for sellers.
Lee Venable, Kimball Hill Homes regional president, said that competitiveness is leading some home builders, including Kimball Hill, to raise real estate agent commissions that were lowered or eliminated by many builders earlier this year.
"There are a lot of resales on the market due to investors flipping and selling. Not only are they paying a full commission, the home is available immediately," he said. "Even though today's market is slow, you can't walk into a (new home) community and buy something today."
Kimball Hill Homes historically paid a 3 percent real estate commission to outside real estate agents (those sales agents that do not work for the builder). As home prices increased, the company went to a flat fee ranging from $4,000 to $6,000. As the market reached its peak earlier this year, the company stopped paying commissions to outside real estate agents.
"The market has now softened up, so to a degree we've gone back to a fixed dollar amount, about $6,000," Venable said.
Builders across the board are raising commissions to help drive traffic to the new home subdivisions, said Larry Murphy, president of SalesTraq, which follows the local real estate industry.
"The trend is once again builders are cooperating," he said. "Pulte is even over-cooperating, paying a 5 percent commission on anything that closes before Dec. 20."
Pulte Homes is a public company and is most likely trying to boost its final numbers before the end of the year, Murphy said.
"It's a simple matter of economics, everything is market driven," he said. "When there are big long waiting lists, it didn't seem prudent to offer Realtors a commission."
But the reduction and elimination of commissions earlier this year drew the ire of many real estate agents, who make their money off of those commissions.
"What they (builders) didn't realize is a lot of those people were brought by Realtors," said Keith Kelley, broker/ manager of Dyson & Dyson and president of the Nevada Association of Realtors. "So guess what, the buyers have thinned out and now they're (builders) coming back and offering bonuses, so shame on them."
Kelley said he's not sure if the market is leaning toward a buyers' market. He said buyers do have a better chance at getting the home they want because there are now more to choose from, but attributed the softening of the market to the summer months, which he said are generally slow.
He said there are a lot of homes for sale and even though they are taking longer to sell, they are still selling.
Despite the recent increase in supply and lessening of demand, the numbers are still on track for a record, or near-record year.
Both sets of sales numbers, as well as median home pricing statistics, are lagging indicators because it generally takes four to six months for a new home to be built and close escrow and at least 30 days for a resale home to close escrow.
There were 2,502 recorded new sales in August in the Las Vegas Valley, bringing the 2004 total thus far to 18,847, an almost 23 percent increase year-over-year, Home Builders Research reported.
In August, there were 5,851 resale homes sold, bringing the 2004 total thus far to 45,863 resale homes sold, a 46 percent increase year-over-year, the company reported.
"We still have buyers that are out there that want to buy," Kelley said.
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