Comments (59) | Add a comment
Local existing-home sales surge
-
Photo by Steve Andrascik
Vegas One Realtor Ramona Johnson prepares to hang a "sold" sign Wednesday on her listing at 2613 Colanthe Ave. in Las Vegas. Statistics from local research firms Home Builders Research and SalesTraq revealed a 5.2 percent jump in resales in May. Buyers snapped up 2,606 units.
Tools
REVIEW-JOURNAL
Updated: Sep. 26, 2008 | 3:40 p.m.
The number of existing homes sold locally in May surged to its best showing in 14 months even as sales of new homes lagged, according to two new housing reports released this week.
Statistics from local research firms Home Builders Research and SalesTraq revealed a 5.2 percent jump in resales in May, with buyers snapping up 2,606 units. Buyers bought 2,477 existing homes in the same month a year ago.
The last time resale closings surpassed 2,600 homes in a single month was March 2007. Closings on existing properties spent fall and winter mired at around 1,500 units a month.
"May data for the Las Vegas housing market suggests that recovery has begun for the resale market," SalesTraq President Larry Murphy said.
Sales of new homes, however, stayed below 1,000 units in May. With the exception of March, new-home sales have languished below 1,000 houses a month since January.
"The new-home segment is idling, and kind of waiting for pent-up demand to hit them hard," Home Builders Research President Dennis Smith said. "Anytime you have a cycle like this, there's going to be some pent-up demand."
Though they share separate fortunes, sales trends in the resale and new-home segments share links.
Thanks partly to a bumper crop of foreclosures on the market in Las Vegas -- about a third of resale listings in the city are in default -- prices have plummeted 22.5 percent, or $65,000, from their October 2006 peak of $290,000. The lower prices are summoning buyers and investors back to the market, Smith said.
But less-expensive resales also hurt demand for new homes, given buyers' perceptions that foreclosures are bargains relative to nondelinquent properties. Half of all resales sold locally in May were foreclosures, going for a median of $215,000. The median on nonbank-owned properties that closed in May came to $239,000. New homes posted a median of $269,990 in the month.
The supply of resales on the market in May dropped to 20,573 units, down about 20 percent from 25,282 units a year earlier. That gives the market an existing-home inventory of about 10 months, Murphy said, just outside the six- to nine-month range analysts consider healthy.
The indicators paint a picture of a market that could come back to life soon.
"We're not on life support, and we're not even in critical condition anymore, but we are still in the hospital," Murphy said.
The local analysts' improved resale reports follow other recent signs of life in the local market.
A June 2 report from banking company National City Corp. and analysis firm Global Insight found that housing prices in Las Vegas returned to historic norms in the first quarter. The study's authors noted that additional price declines could visit Southern Nevada, but they called Las Vegas a "fairly valued market" and added that most of the area's price correction had passed.
Plus, the median price of single-family homes sold through the Greater Las Vegas Association of Realtors halted its yearlong slide in the spring, with prices rising slightly from April to May. Single-family homes sold through the association's members went for a median of $236,692 in May, up from $235,875 in April.
Murphy said three indicators would signal recovery in the housing market: a decline in inventories, an increase in sales and a marketwide halt to falling prices.
The first two have happened, but not the third.
Analysts said May's results don't herald a permanent end to declines in local home prices and sales.
Rising oil prices and a deteriorating job market could complicate chances for a widespread housing recovery, Murphy said. What's more, though banks sold about 1,300 foreclosures in May, they took possession of another 2,500 or so foreclosed homes in the same month. Until that statistic reverses itself, and banks are disposing of more homes than they're taking over, prices could continue to slump.
And sales tend to turn sluggish in the warm summer months, Smith said, so closings will likely flatten and prices probably soften in the next few months. Expect a continuing credit crunch, with banks loath to lend to home buyers with less-than-perfect financial histories, to hamper the market, too.
"The bad news is, it's not going to turn around overnight," Smith said. "It's going to take a while. Things will be flat, at best, for a while. If there's any good news, it's that anybody who can qualify for a home has the buying opportunity of a lifetime."
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.
Comments
Terms & Conditions
The following comments are provided by readers and are the sole responsiblity of the authors. The Review-Journal does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please use the Report Abuse button.
Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 24 hours. Please do not submit a comment more than once.
Sign In to Comment
Please sign in or register to comment. For more information visit the Registration FAQ.
Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.
RSS
Twitter
Facebook
Ok, let's get this "multiple offer" noise out on the table. Here's what's going on...
Banks are listing properties for well below what they think is market value in order to draw in buyers. Buyers, attracted by the low asking price, throw offers at the property while the bank sits back and takes their time responding. They then take the highest acceptable offer and hope it closes.
These buyers are simply participating in an informal auction. This is how you move property fast... price it low and get some bidders, ummm buyers.
Now let's think about the stats for a second. It seems that there are folks here that want us to believe there is a feeding frenzy going on. If that's the case, then why is there still 12 months of inventory. How can it be a frenzy if only 1 in 10 homes available sells???
Furthermore, the foreclosure pipeline is still full with no end in sight. The numbers set records a couple of months ago and those homes aren't even on the market yet.... yet. And don't get me started on Alt A's.
So, although there are some good signs out there, let's not forget that we're comparing them to 1 year ago. Anybody here regard May 2007 as a banner month? Perhaps the paper should also mention that sales are still well below (30% below) 2005 and 2006 numbers, when the boom was clearly over.
But wait, how many more people does Vegas have compared to 2 or 3 years ago? Probably 100,000 more people, yet sales are still lower?
The bottomline is that more sales is good, but there is still more supply than demand and that means prices will be going down for a while.