NEVADA ECONOMY: New-home sales drop in January - Business

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Feb. 22, 2008
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NEVADA ECONOMY: New-home sales drop in January

More foreclosures than resales in observer's count

By HUBBLE SMITH
REVIEW-JOURNAL

Housing in Southern Nevada

Click image for enlargement.

Sales of new homes hit a 15-year low in January with 881 closings, a 56 percent decline from the same month a year ago, as the Las Vegas housing market continues to work its way to the bottom.

The last time monthly new-home sales fell below 1,000 was May 1993, when there were 990 sales, housing analyst Dennis Smith of Home Builders Research said.

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"It'll pick up," he said. "Want to bet? The numbers are bad. You can't hide the numbers. But the good thing is the cycle is moving. We're not dead in the water."

The median price of a new home in January was $274,000, down nearly $61,000, or 18.2 percent, from a year ago, Home Builders Research reported.

For the first time in years, single-family detached new homes are selling for less than $200,000, Smith said. Centex has been selling nine homes a month in the Mesa Verde community of North Las Vegas for $97 to $113 a square foot, a price that hasn't existed for eight years, he said.

Smith counted 1,488 resales in January, down 38.6 percent from a year ago. The median price of an existing home dropped 14.4 percent to $239,900.

Larry Murphy of Las Vegas-based SalesTraq said it's the first time he's counted more foreclosures than resales. He showed 2,177 repossessed homes in January, compared with 1,061 existing home closings. The median price fell 11.8 percent to $247,000.

Murphy said he's been talking to Realtors who now specialize in real estate-owned properties, or repossessions by the bank.

"That's their niche," Murphy said. "These people have set up with a staff to handle bank repos. That's all they do."

There are 34,026 homes in foreclosure in Las Vegas, the latest statistics from California-based RealtyTrac show.

"I said we were near the bottom, but I have an empty feeling about that," Murphy said. "I'm giving up. I'm just going to report the numbers. I'm not going to make any more predictions."

SalesTraq reported 901 new-home closings in January at a median price of $275,000, down 18.8 percent from a year ago.

Available resale listings stabilized at 23,803, receding from a peak of 27,417 in September.

Alex Edelstein, developer of Manhattan and ManhattanWest midrise luxury condos in Las Vegas, said the decline in resale inventory since September is a new phenomenon. Normally, inventory pops back from holiday lows, but inventory has "plunged" in the last six weeks, he said.

He estimated 50 homes are being rented out or taken off the market every day.

"There has been a tendency to focus on foreclosures and distressed sellers, but most sellers are smart enough to know that if they hold on, they're going to get a much better price in a year or two," Edelstein said. "That causes them to pull their homes off the market, which lowers inventory and creates a better supply-demand balance. And that's where things stabilize and start turning around. The fact that there are now 5,000 fewer homes available for sale than just five months ago is impressive."

Smith said the market had to get to this low point in sales sometime and he thinks it's there. Sales aren't going to drop much lower and the government's economic stimulus package should help sell homes, he said.

The new limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is 125 percent to 175 percent of an area's median home price, which would give Las Vegas a new FHA ceiling of $400,000 and new Fannie Mae and Freddie Mac ceilings of $417,000, the Southern Nevada Home Builders Association reported.

SalesTraq showed 358 new home permits in January and Home Builders Research had 347, down from more than 1,000 in the same month a year ago. That follows December in which just 215 permits were issued.

Smith said we're still seeing the "stockpiling effect" from October, when builders pulled 1,840 permits before the building codes changed. That's going to keep monthly permit counts under 500 for the next few months, he said.

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

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Geri Crane wrote on June 02, 2008 09:37 AM: I am in Fl.. - it is the same here. Speculators just as they are doing with oil, they did with the housing market. Mortgage and financial people got greedy. People got greedy. Now theyare crying the blues. Why is it that no one can see that everything impacts everything else. When are we going to get wise??? sharen wrote on May 19, 2008 10:20 AM: As usual old news about housing. Nothing about May. Joe Friday wrote on February 23, 2008 08:53 PM: "Blame should be placed on the realtors, builders, investors, media, and related industry for helping to create an artificially inflated price level." BUYERS and nobody else created the artificially inflated price of Las Vegas homes. They stood in line to bid up the prices. Richard Allen wrote on February 23, 2008 12:40 PM: Well Adam its called 'SUCK IT UP AND BE A MAN". You took the risk of being a homeowner. You knew the prices were outta this world. You could have rented for a lot less. YOU could have walked away and said no. YOU Adam could not use a calculator and figure out 5th grade math. So we all ask when are YOU going to be a MAN about this? ------------------------------------------------ This is real bad for reg homeowners who bought their home in the last 3-4 years and who have reg 30yr loans because we won't be able to sell for the next 2 years. We can not sell for what we owe on the home, even if we wanted to or had to, adam wrote on February 23, 2008 10:35 AM: What do you do if you need to refi a reg 30 year loan and the value of your home is now below comparables. Worse than that what if you took a second out with a high borrow rate +9.5% to fix up up your house only to find out your house is now not worth what you owe. ...most homes owned by reg homeowners aren't selling unless deeply discounted such as firesales and foreclosures. This is real bad for reg homeowners who bought their home in the last 3-4 years and who have reg 30yr loans because we won't be able to sell for the next 2 years. We can not sell for what we owe on the home, even if we wanted to or had to, there is neg equity. Hard to find close comparables since reg homeowners are having trouble selling in zipcodes like 89121. The foreclosure programs set up to help those in trouble are for ARM lones or those already way behind in payments. Blame should be placed on the realtors, builders, investors, media, and related industry for helping to create an artificially inflated price level. Anyone who thinks the prices are going to magically come back in 6 months is disillusioned. More like 2-3 years if your lucky. The prices have to continue to come down until demand outpaces supply, which is highly unlikely since economy has slowed also. This is really bad for the reg homeowners because we are saying how low can it go? And banks will not refi if the value of your home is now way below comparables. Richard Allen wrote on February 23, 2008 07:13 AM: Mark my words the New Mantra will be 200 THOUSAND DOLLARS IS A LOT OF FREAKIN MONEY FOR A HOUSE!! ------------------- The median price of a new home in January was $274,000, down nearly $61,000, or 18.2 percent, from a year ago, Andrea Feodorov wrote on February 22, 2008 08:20 PM: "There has been a tendency to focus on foreclosures and distressed sellers, but most sellers are smart enough to know that if they hold on, they're going to get a much better price in a year or two." - Alex Edelstein It's no wonder Mr. Edelstein expects owners at his Manhattan Condos to hold onto their property. Manhattan Condos was on a leaked, BankUnited blacklist last month as a "non-permissable project." The domino effect from that publicized list makes it doubtful that anyone could get a loan for a "Manhattan Condo." In other words, those souls who bought his condos have nothing to do but sit on their investment. And, yeah, with a little luck they WILL get a better price...some day. GOD wrote on February 22, 2008 08:02 PM: The bubble has popped and prices still have a long way to go --- DOWN. Speaking of bubbles, check out the Mega Bubble Show --- IT IS UNBUBBLELIEVABLE! ISell4You wrote on February 22, 2008 07:14 PM: Unfortunately, there aren't any "Closers" reading the RJ today. If there were it would sound a lot like this. "This is the best time to buy. Don't buy into the panic, buy into Providence!" Come on Realtors, Always Be Closing. JOhn O'Neill wrote on February 22, 2008 06:34 PM: Dennis Smith of Home Builders Research, and all these other soothsayers are pure idiots: If anybody beleves that the market is going to get better anytime soon then, go ahead, if you have the bucks and are looking to hold your home for the traditional 30 years I am sure you'll be okay. But tradiotinal LV real estate may be here to stay for awhaile after the plunge finally stops...and I say GOOD. We should look at homes as long term investments that take 15, 20, or even 30 years to appreciate in any meaniingful manner, that way, our children and their children can afford to buy homes as well. And to all the idiots who SIGNED mortgages that had adjustible rates and interest only loans...I hope you don't loose your home, but if you do, don't blame the big bad bank, blame yourself and GREED. And before you lose your house you better have let you cars go back and defaulted on your credit cards, because AFTER you have exhausted ALL efforts THEN lose your house...or...do you want big brother to bail you out BEFORE you give back the SUV, boat, and AMEX? Read All Comments