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Jan. 22, 2008
Copyright © Las Vegas Review-Journal

Home sales tumble in 2007

Housing still struggling to find bottom in 'unique cycle,' analyst says

By HUBBLE SMITH
REVIEW-JOURNAL
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The housing market in Las Vegas ended the year with a whimper, tallying just 1,340 new-home sales in December for a total of 19,670 in 2007, down 45.6 percent from the previous year, Home Builders Research reported.

Existing-home sales were equally weak, with 1,339 escrow closings in December, bringing the year's total to 24,838, a 40.7 percent decline from 2006.

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    • Las Vegas' housing recession is struggling to find the bottom in a "totally unique cycle," Home Builders Research President Dennis Smith said.

    The only hope is that the market reaches bottom by midyear and sales start to climb entering 2009, he said.

    "The change might be slow, but that's OK for the long-term vitality of the industry," Smith said.

    Larry Murphy of Las Vegas-based SalesTraq counted 1,278 new home sales in December for a 2007 total of 19,299, down 45.4 percent. Sales of 1,452 existing homes brought the annual sum to 23,956, a 40 percent drop from 2006.

    Murphy noted that the 43,255 combined sales in 2007 was the lowest total since 39,187 in 1997.

    "We're still sliding," he said. "This (December data) reflects decisions that buyers and sellers made 60 days ago. They signed papers in October. Based on that, we haven't seen the bottom.

    "In all honesty, I don't see the first-quarter statistics being any different than the fourth quarter," he added.

    Any upswing in buyer behavior won't come until March, traditionally a high-volume sales month, which would show up in second-quarter data, Murphy said.

    The median new home priced dropped to $273,359 in December, down 20.1 percent from the same month the previous year, SalesTraq reported. Existing home median prices fell 11.2 percent to $253,000 in December.

    The median is about where it was in 2004, wiping out that year's 40 percent appreciation and any other gains over the past four years, Murphy said.

    "I think we could see the median go to $240,000 before it stops and goes back up again," he said.

    Yale University economist Robert Shiller said there's a good chance the housing recession could linger for years.

    "This is a classic bubble scenario," Shiller said on Nationalbubble.com. "A few years ago, house prices got very high, pushed up because of investor expectations. Americans have fueled the myth that prices would never fall, that values could only go up. People believed the story. Now there is a very real chance of a big recession."

    Until two years ago, nearly every state had experienced a prolonged housing boom. Nevada, California, Arizona and Florida saw prices double, aided by cheap credit and lax lending practices to borrowers who ordinarily would not have been able to secure a mortgage.

    The S&P/Case Shiller index showed that house prices had declined in October at their fastest rate in more than six years, with homes in Miami losing 12 percent of their value. Futures contracts are pointing to losses of around 35 percent in areas such as Florida, California and Las Vegas, Shiller said.

    American real estate values have already lost about $1 trillion, and it could be three times as much in the next few years, Shiller said.

    "This is a much bigger issue than subprime," he said. "We are talking trillions of dollars' worth of losses."

    Smith of Home Builders Research said he thinks new home prices will decline further this year as builders continue to offer discounts and incentives. Rhodes Homes and Avante Homes were advertising $100,000 discounts on some of their remaining homes, he said.

    In particular, there will be extra problems with several attached housing projects, Smith said.

    "In most down housing cycles, it is common for an oversupply of condominiums to arise. It normally takes some time and price reductions to rectify the matter," he said.

    California-based DataQuick showed the housing slump hammering Orange County, Calif.; Las Vegas; and Phoenix. Orange County's median home price dropped 9.7 percent to $582,750; Las Vegas is down 13.5 percent to $269,990; and Phoenix fell 8 percent to $235,000.

    The median price has fallen for 10 consecutive months in Phoenix and seven consecutive months in Las Vegas, according to DataQuick.

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



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    Meagan Groghan wrote on January 22, 2008 10:38 PM: No agent can predict what the market will do. The responsibilty of the agent is to advise you on what homes are selling for at that time in that neigborhood. No one is holding crystal balls. If you read that article closely you would find that what happened was the buyer bought for $100,000 over comps AT THAT TIME, so yes the agent fell short. What you are suggesting is a much different scenario. If you hold on to your home as a long term investment, you will be profitable.


    RopeADope wrote on January 22, 2008 10:30 PM: The Fed's panic reaction to the market meltdown only reenforces that we are in serious trouble! Jesus, when are the dopes who bought in the last five years realize that they made a very bad deal buying a house in a speculative market. The bubble has burst and there is more pain to come, much more than we have ever seen in our lifetimes!


    RopeADope wrote on January 22, 2008 10:29 PM: The Fed's panic reaction to the market meltdown only reenforces that we are going to see more downturn in housing!
    Jesus, when are the dopes who bought in the last five years realize that they made a very bad deal buying a house in a speculative market. The bubble has burst and there is more pain to come, much more than we have ever seen in our lifetimes!


    RopeADope wrote on January 22, 2008 10:29 PM: The Fed's panic reaction to the market meltdown only reenforces that we are going to see more downturn in housing!

    Jesus, when are the dopes who bought in the last five years realize that they made a very bad deal buying a house in a speculative market. The bubble has burst and there is more pain to come, much more than we have ever seen in our lifetimes!


    RopeADope wrote on January 22, 2008 10:29 PM: The Fed's panic reaction to the market meltdown only reenforces that we are going to see more downturn in housing!
    Jesus, when are the dopes who bought in the last five years realize that they made a very bad deal buying a house in a speculative market. The bubble has burst and there is more pain to come, much more than we have ever seen in our lifetimes!


    Joe Friday wrote on January 22, 2008 08:42 PM: Mr. Murphy says March will see things getting better. Hate to let the wind out his sales but I wouldn't hold my breath.

    On the upside lots of people are buying foreclosures at decent prices.

    Ditto on the call for personal responsibility Mike!

    What were these people thinking???


    lv 2 lv wrote on January 22, 2008 07:35 PM: Thanks for the input. A lesson learned indeed. Hopefully in the long run things will turn in my favor, but for the time being I might as well get used to living here.


    Broker wrote on January 22, 2008 06:12 PM: Lv 2 lv you lowlife scum, looking to your agent to cover your rawdog ass for buying a property that under Nevada law protects each buyer! The earnest money agreement used in this state is written to cover a buyer. Did you have an appraisel? Did you look at comparable properties? You know you loser that due diligence is your responsibilty. I am fed up with buyers who knew full well what they where doing and had their eyes wide open now trying to piss backward on their agent or lender! Quit being a girlyman and deal with the market!


    Mike wrote on January 22, 2008 04:48 PM: lv 2 lv,

    People across the country are learning a very valuable lesson. You trusted a person whom you personally did not know and you took his/her advice on a multi-$100k investment of YOUR money. Everyone needs to learn to be responsible for themselves in every way especially when someone is taking money from you. In this day and age with access to unlimited information, you have to take responsibility for not doing your homework. I moved here 24 months ago and saw the home inventories rising and prices peaking and decided to rent. The information was out there, you neglected to do your homework and took a risk that yielded negative results. We can blame people up the food chain (realtors, bankers, etc) but the real responsibility lies with the people signing their names to documents which they have not read or do not understand for investments that they did not research. I hope this is a wakeup call for personal financial responsibility.

    Mike


    Mr. Smithers wrote on January 22, 2008 04:32 PM: lv 2 lv: I think to prove that an agent mislef you, you would have to prove 1 of 2 things:

    1. That the home they sold you was over-priced at the time you purchased it, compared with other homes selling at that same time. If this were the case, and you took out a loan, then you would probably have as much, or more, of a case against the appraiser that did the appraisal.

    Or

    2. That they told you that prices will go up or that prices will never go down. This is where many agents may have opened themselves up to liability, just to make the sale. While they should know the value of homes at the current time, nobody can ever 100% predict the future.


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