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Apr. 23, 2008
Copyright © Las Vegas Review-Journal

Home sales show signs of life

As LV closings increase, median prices for new and existing homes drop

By HUBBLE SMITH
REVIEW-JOURNAL
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WORD OF WARNING

NEW HAVEN, Conn. -- An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don't lose their homes.

Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.

"I think there is a scenario that they could be down substantially more," Shiller said.

"Basically we're in uncharted territory. It seems we have developed a speculative culture about housing that never existed on a national basis before."


Click image for enlargement.

While sales of both new and existing homes in Las Vegas trail last year's numbers, they're picking up momentum, a local housing analyst said Tuesday.

New-home sales increased for the third straight month to 1,146 in March, though the first-quarter total of 2,296 is down 44.1 percent from the same period a year ago, Dennis Smith of Home Builders Research reported.

The total includes 188 high-rise condo units, led by 102 closings at Palms Place at an average price of $668,130.

Median price for all types of new homes sold in March was $278,630, a 9 percent decline from a year ago.

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    • The resale segment continues to improve with 1,899 recorded closings, the fourth straight monthly increase. For the first three months of the year, existing home sales are off 34.4 percent at 4,916.

    Nationally, the National Association of Realtors reported Tuesday that sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.

    The median price of a home sold last month in the U.S. was $200,700, a decline of 7.7 percent from a year ago and the seventh consecutive year-over-year price drop. It was also the second biggest decline following a record 8.4 percent drop in February. These records go back to 1999.

    "Like I've been saying, it looks like we're close to the bottom," Smith said. "I'm talking about sales. The price is not a reflection of whether the market is turning around. It's a lagging indicator. You have to have better demand."

    Resale prices are being dragged down by foreclosures and short sales, he said. The $230,000 median in March is down 19.3 percent from a year ago.

    "Even if more than half of the resale total are foreclosures or short sales, so what? The most important thing is to get rid of the excess inventory and that is what's happening, although the lenders could step things up a little bit," Smith said.

    "We know of instances where short sales are taking months to get responses from the selling banks. Are they holding offers while waiting for higher offers? Are they understaffed? Whatever the reason, they need to speed up the process."

    David Vaughn of Las Vegas said he made an offer for the full amount of $229,900 on a foreclosure home advertised in the Review-Journal by Countrywide Home Mortgage. That was 12 weeks ago.

    "I called Countrywide," he said. "All the financing is in place. I can't get them to even talk to me."

    Las Vegas-based SalesTraq reported 1,076 new-home closings in March, a 40.3 percent decline from the same month a year ago. The median new-home price has dropped 10.2 percent to $276,292.

    Existing home closings were down 62.8 percent in March to 980 and their median price dropped 13.9 percent to $247,000.

    SalesTraq President Larry Murphy tallies foreclosure sales separately from existing sales. He showed a record 2,468 foreclosure sales in March, nearly five times more than March 2007. Their median price was only $225,165.

    The big news is the price decline, said Debi Averett, founder of Housingdoom.com blog site.

    Prices are still falling like a rock, but the drop in home sales isn't as steep as the market shifts from "plummeting" to "stagnating," she said.

    "Sadly, lower prices means more foreclosures and more foreclosures means lower prices," Averett said. "Even this isn't bad news for everyone. There's a lot to be said for affordable housing. It's just sad that getting Las Vegas back to that world is such a painful process."

    Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491. The Associated Press contributed to this report.



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    VegasMortgageGal wrote on May 01, 2008 05:47 PM: If any of you are actually in the real estate business you would know that people are buying right now and the market is stimulated without a question. If you are in the business and writing the previous dissapointing posts, then your on the way to being unemployed. Share the words foreseen in your crystal ball, otherwise, you don't know anything different than Dennis.


    robert wrote on April 23, 2008 04:25 PM: Don't worry..naca is coming.
    www.naca.com


    Flip Flop wrote on April 23, 2008 02:34 PM: Hay don't blame the reporters for the confusing stories and BS reporting. The RJ has always supported both sides of any situation that way when they claim they were right (at least 50% of time) regardless of how it goes.

    So every other day, they report housing slump continues then housing slump over. NO matter what happens, they reported the truth.

    Anybody, anybody, anybody that puts their faith in anything in the RJ and bets their money on it is a guaranteed loser.


    Doofus wrote on April 23, 2008 12:34 PM: The Smith "twins" are at it again, Dennis and Hubble. jesus, its up, its down its sideways, what the hell, they have yet to get market predictions right! I know what I see and I know things are still grim....read the financial reports and look at the number of homes still going into short sale and foreclosure status each week! For the last remaining fools still out there who beleive the time to buy is now! Well you idiots, take a breath, slow down and ask your self, what if the NAR/GLVAR interests,shills, real estate grifters and promoters are wrong? The real estate price knife is still falling all across the Valley, care to catch it at your own peril! No? Think you are smater than the average dog? Go ahead make my day. I am the guy who is sitting out there waiting for 40 cents on the dollar sales and will be there to pick you cleaner than a Tyson chicken!


    Tom wrote on April 23, 2008 11:29 AM: I cast my Village Idiot vote for Dennis Smith.


    Patrick wrote on April 23, 2008 09:48 AM: Yes Dennis Smith, you were right the bottom seems to be close. Of course you have been saying the same words for over a year. I guess your next forecast is home values will eventually rise. Don't know when but homes will rise in value.


    RealtorNot wrote on April 23, 2008 09:09 AM: Apparetnly, these housing shills dont read both the Case Shiller Housing Index for Las Vegas nor the UNLV own projections for housing sales. Both point to another 20% downward correction is resale prices for SFR before the historic trend line for appreciation meets prices. The pain continues!


    Real Estate Pro is right wrote on April 23, 2008 08:40 AM: We are a LONG way from the 'bottom.' There were so many types of loans FAR worse than what subprime offered. For Alt-A you only needed a pulse and a decent FICO score to get a loan. Amateur investors bought dozens of homes and used the cash out to float their way through. The equity kept everybody going. This is a complete crisis that has been grossly understated.


    2zero wrote on April 23, 2008 08:26 AM: Yes Dennis there is light at the end of the tunnel....but what about the horn sounding the warning that is with it?

    Get of the track, Dennis...lol!


    Brent wrote on April 23, 2008 08:25 AM: cynic,

    That`s right, and then there are those of us who built our own homes on lots somewhat larger than a parking space and cannot be grouped into the Kelly Blue Book of Housing.


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