SOUTHERN NEVADA ECONOMY: Housing sales rise, prices fall - Business

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Mar. 20, 2009
Copyright © Las Vegas Review-Journal

SOUTHERN NEVADA ECONOMY: Housing sales rise, prices fall

Permit count hits record low in February

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Housing in Southern Nevada

Despite an increase in Las Vegas home sales, pricing pressure continues downward and doesn't appear to be letting up, a local housing analyst said Thursday.

Dennis Smith of Home Builders Research reported 375 new-home sales in February, an increase of nearly 100 units from January. However, the two-month total of 659 is down 63 percent from a year ago.

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The resale market continued to "percolate" with 2,606 recorded escrow closings, up 75 percent from the same month a year ago, he said.

The median price of all recorded new-home sales in February was $219,900, a drop of $63,100, or 22.3 percent, from a year ago. Existing-home prices fell 38 percent, or $90,000, to $145,000.

"Has affordability returned to the new-home market? Absolutely," Smith said. "The Las Vegas new-home segment has to be considered one of the best deals anywhere in the country when you bear in mind the long-term potential for appreciation."

New-home permits hit a record low in February at 139, down from 179 in January. Smith doesn't expect homebuilders to significantly increase their permit count during the year. They could produce the lowest number of new homes since the mid-1980s, he said.

Housing market numbers typically lag what's actually happening, Smith said. For instance, they don't account for the Federal Reserve's action Wednesday, buying up to $300 billion in long-term bonds, a move that will keep interest rates low.

"It's not all bleak," Smith said. "Lower rates are going to help. What the Fed has done is virtually say, 'We're going to keep rates low for the foreseeable future. Let's get this thing changed.' They're going to keep throwing stuff against the wall until it sticks."

Lower interest rates and reduced home prices equate to affordable housing. Home sales will pick up as the job situation and economy start to stabilize, Smith said.

"We've got to get through the inventory of resales and we're not there yet, but there's a light there," he said. "The housing market is starting to get in position to recover."

BusinessWeek ranked ZIP code 89131 in northwest Las Vegas No. 15 among the nation's top 27 areas with the most improved home sales. Fourth-quarter home sales totaled 284, up 27 percent from the year-ago period. The median price was $275,934, down 18.5 percent, BusinessWeek reported.

Ken Perlman of San Diego-based Sullivan Group Real Estate Advisors said he likes to frame Las Vegas in the context of the greater region and the United States as a whole. Fundamentals still exist, particularly a lower cost of living relative to Southern California, the feeder market for Las Vegas.

"It all relates to jobs and I think the key to the economy is basically employment," he said. "That's going to determine the housing turnaround. Obviously, foreclosures are too, but bigger than foreclosures is the employment picture."

Perlman expects to see some further softening in new-home prices, but said builders literally stopped building because median prices have dropped below replacement costs. There's not a lot of standing inventory and not a lot of new supply, 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. Susan wrote on March 25, 2009 03:19 PM: The banks are holding back how many house are forclosed because they dont want the prices to go down even more. Even some forclosed homes are still over-priced for what they are. rb wrote on March 21, 2009 09:41 PM: www.zeitgeistmovie.com perry wrote on March 21, 2009 07:35 AM: can you said more foreclosure next coming month JB Redding wrote on March 20, 2009 05:11 PM: Dennis Smith continues to prove that he is in the pockets of home builders with his constantly rose-colored view of the Vegas housing market. I would challenge Mr. Smith to point to just one negative comment he has made about the Vegas market over the past 24 months. Just one. Of course, he can't do it. My only regret is subscribing to his useless newsletter for one year, thinking it would give me some keen insight into the Vegas market. Instead, it just told me what the builders were wanting to hear in any particular month. Can't you folks at the RJ find a more reputable source to get market insights from? tarheel123 wrote on March 20, 2009 02:57 PM: I love it, smoke and mirrors!!!!!!! When and why did Dennis Smith become Hubble Smiths end all be all? Same story different day...... this stroy is tired just like Hubble! dt wrote on March 20, 2009 11:53 AM: thank goodness!! Its all finally over. We have hit bottom and everything is going to be great going forward. roger wrote on March 20, 2009 09:50 AM: All I can ask at this time is whether these same real estate and economic professionals were up and screaming 2004-2006.."hey LV housing is way overpriced, it is not a good time to buy".... my guess is no...and they wonder why people look at their comments as self serving propoganda or in my opinion outright fraud? Perhaps a more beneficial report would be an investigation into whether the demand for housing of yeras past that pushed prices up to outrageous levels, was legit or a product of a market manipulated by crooks. Just curious. cas127 wrote on March 20, 2009 07:52 AM: "when you bear in mind the long-term potential for appreciation." Partying like it is 2003... Freddie wrote on March 20, 2009 07:09 AM: GO CUBS! Wooo Hoo! Robert London wrote on March 20, 2009 06:04 AM: "The housing market is starting to get in position to recover." Yes, and the Chicago Cubs are starting to get in position to win a World Series too.