With the high price of foreign property, investors are bargain shopping in the United States to take advantage of the favorable rate of exchange while it lasts. One of the most popular housing areas being scrutinized is the Las Vegas real estate market, said Glen and Diann Tonnesen of Prudential Americana Group Realtors, who have been local agents for more than 24 years and have a team of agents who work with them. "Over the past few weeks we have suddenly been deluged with requests from Canada and the UK in particular. Earlier this year we would maybe get five or six international emails a week. All of a sudden we are getting four or five a day. Most seem to be looking for second homes that are relatively inexpensive compared to their native countries."
Spurred by this shift in the market, the Tonnesens announced this week that they have put several systems in place to make the process easier. They have secured commitments from local lending institutions that, in spite of the recent credit crunch, are willing to offer foreign nationals living outside the country favorable investment financing with 30% down despite the recent credit crunch. Foreign residents with good credit and local employment can obtain financing with as little as 5% down. Their company has also transitioned to a paperless real estate process using Transaction Point software. Original contracts can be emailed out and international buyers can now sign those contracts and email them back without having to also Federal Express a hard copy. In addition, the Tonnesens have also identified several local handymen who can be hired by an international buyer to do a walk through of the property in their stead prior to closing. "We have tried to identify the hardest points of the overseas transaction and make it simpler to manage."
Foreign currencies, which have posted significant gains against the US dollar in recent weeks, have international investors eyeing the depressed US housing market looking for bargains and affordable second homes. Canadian currency got a boost after a report showed the economy expanded for the third straight month in July. It climbed above $1 on September 20th for the first time since November 1976, and Canadians are flocking across the border. "We didn't have too many Canadians buying before because of the exchange rate," said agent Judy Campbell who was originally from Newfoundland herself but has lived in Las Vegas for more than 30 years. "But now they are writing that they want a place to get out of the cold winters and they can finally afford one."
Gold also broke through to a fresh 28 year high and the dollar hit a new record low against the euro. For the first time since it began trading, the euro now buys one dollar and 40 cents, having started out at almost the same value. In addition, the Pound Sterling hit a one-month high against the dollar, peaking as high as $2.0331 in trading.
"Though the news media has been touting Las Vegas as the one of the markets most likely to crash after high appreciation rates, the decline in prices seems to be stabilizing due to the continued steady growth of 6,000 new residents each month and an expanding labor shortage as more of the multi purpose mega projects like the MGM City Center come online," said Ms. Tonnesen. "But currently prices are still at a three year low with the number of foreclosures to choose from providing a bonanza for those with cash. And Las Vegas new homes builders are offering incredible incentives in order to move standing inventory so they can go on to new projects."
One of the most popular investments for the international buyer seems to be the mixed use high rise projects going up along the Strip and in downtown Las Vegas. In addition to more luxurious high rises in the MGM City Center and the Cosmopolitan, mid rise urban lifestyle developments like Sullivan Square and Manhattan West are also gaining in popularity. Prices range from the high $200s to over $5 million for some of the penthouse properties, with a wide range in between for preconstruction. Similar properties in London would cost between $600K and $12M, making them attractive to UK buyers.
Amie Hawthorne, another agent with Prudential adds, "We have seen some great steals to be had in the growing high rise resale market where the original buyers intended to flip quickly rather than hold long term . They bought at the top of the market and they are struggling to make their payments, and now they just want to get out. And our international purchasers are taking advantage of that, especially now that we have made the process easier for them."
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