Greetings from Developer and Investment Services! We took a brief hiatus last month and hope you find this month's information useful and valuable.

July was the hottest month on record for Las Vegas. The sizzling temperatures certainly made the phrase "dog days of summer" apropos and had us all running for A/C cover or simply leaving the city for cooler temps elsewhere. The last three months have been a see-saw with May closings down after the federal home buyer tax credit expired, then June rebounded in surprising fashion followed by a drop in July. Inventory is slowly increasing as the banks are releasing more REO (foreclosure) properties into the market.

The combination of the desert heat, the summer season and the expiration of the federal tax credit have caused some buyers and sellers to pause during the past 30 days although overall activity still remains brisk. Investor activity has been consistent for the past 18 months representing over 40% of sales volume during the time period. This alone should prove to naysayers that Las Vegas is far from the abyss and that brighter days are ahead, despite the short term challenges we face.

We continue to discuss opportunities with investment groups from Hong Kong, Shanghai, Tokyo, Australia and Canada. While some have been in acquisition mode, others are gearing up by performing significant due diligence as it relates to the financial and legal aspects of investing their capital in the U.S. markets. Although we put our crystal balls in storage for the time being, we do predict a massive amount of foreign investment in the U.S. during the next 3-5 years. Devoting capital and human resources to leverage these opportunities will pay dividends to those who are patient.

Here's a quick summary of what transpired in the residential real estate market in Las Vegas in July:

• Closed sales volume: July sales volume for SFR and condos declined from June's numbers. With approximately 3,700 total closings, this was a 12% decrease vs. June. With the closing date on the federal tax credit being extended to September 30th, this should buoy closings for the next two months.
• Days on market:The number of days to sell a single family home in July was essentially flat decreasing from 62 to 61 days while days on market for condos increased from 55 to 57.
• Sales price as a percentage of list price: Single family properties that closed in July remained stable, selling for approximately 98.9% of list price signaling continued strength in demand with limited supply. For condos, the ratio was 98.5%.
• Months of supply: Months of supply for single family increased 10.3% and condos increased 7.5% over June. Single family inventory is now up over 15% year-over-year and there is approximately four months of supply overall, which is up 45% from July 2009. Supply continues to be limited most for properties listed below $200,000.
• Notices of Default (NOD): Total NODs decreased 11% in July compared to June. Single family NODs were the lowest in a year yet condo NODs were the highest in a year. Unfortunately, there are no signs of moderation as strategic defaults are underway. Most experts believe that it will be 2014-2015 before the majority of the distressed assets have been processed. Sales and restrained selling by banks, albeit more REOs are being released as of late, have kept listed inventories down but foreclosures will remain a key component of re-sale inventory in the foreseeable future.
• Short sales: In July, short sales represented 45% of active single family and condo listings, essentially unchanged vs. June. Of the homes currently under contract with a contingency, the majority, approximately 80%, are awaiting short sale approval by the bank.

This issue features new Market IQ candy, the latest on commercial notice of defaults, trends in homeownership and a few words on keeping the main thing the main thing.

We appreciate the opportunity to provide you with meaningful market intelligence and insight. Stay cool, hydrated, start preparing for the upcoming football season and for you parents with kids still in school, yes, we can finally go back to our regularly scheduled programming soon. Yeah!

Tremendously,

Brian Krueger

There is a parallel between the current commercial property market and the residential market of two years ago. Banks are the new owners of the properties. The number of properties continues to mount with lender owned properties escalating to 249 projects in Q2, 2010, compared to 145 in Q2, 2009, for office, industrial and retail space. This represents an increase in approximately 1 million square feet.

While traditional sales continue to compose a large proportion of closed deals, we expect that bank sales will continue to make up a greater proportion of sales and therefore the market will be subject to bank pricing on these assets. Additionally, with vacancy rates remaining elevated, downward pressure on prices is expected for some time. The upside for the market will be when bid/ask spreads shrink and further deals clear the market. This will help re-establish a base for the market and we can move on from there while we await any possible economic expansion.

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This is a trend we have been watching closely and will continue to monitor. Investors are particularly interested in it because they want to know the strength of the rental market in the years ahead. We all know that job growth is the fuel that creates future housing starts which in turn increases the GDP for the city, state and country. Single family vacancy rates continue to hover around the 5-6% mark and with homeownership rates falling consistently over the past two years, people will continue to flock to rental housing until they feel confident about purchasing again and have gone through a financial restoration process.

Despite negative media reports portraying the title of the infamous movie, “Leaving Las Vegas”, recent intelligence has shown that Las Vegas and Nevada are balanced when looking at net migration. Check out the chart below showing the trends across the U.S.

Click here to view migration chart

To learn more about the X-Change way of purchasing properties with cash contact us at Investment Services.

To inquire about how Investment Services and Special Asset Solutions can provide investment opportunities and asset management and disposition services please contact us at Investment Services.

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The Main Thing

Stephen Covey, author of the 7 Habits of Highly Effective People, notes in his book that "the main thing is to keep the main thing the main thing."

Here is a simple series of statements to focus on to keep the main thing the main thing:

Watch your thoughts, they become words.

Watch your words, they become actions.

Watch your actions, they become habits.

Watch your habits, they become character.

Watch your character, it becomes your destiny.

Isn't it interesting that a simple thought can ultimately determine your destiny? So, what is your destiny? Your destiny is the main thing you want to achieve in life. Start journaling, draft a mission statement, include your positive affirmations and start living the main thing.

Sales IQ takeaway: With the halfway point in 2010 behind us, now is a great time to have a 1-2-1 with yourself to draft or redraft your mission statement and determine the main things in your life that are important to you.