SOUTHERN NEVADA REAL ESTATE: Home sales stats bleak - Business

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Apr. 20, 2007
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SOUTHERN NEVADA REAL ESTATE: Home sales stats bleak

Closings from bank repossessions rise, but resale prices remain fairly steady

By HUBBLE SMITH
REVIEW-JOURNAL

BY THE NUMBERS

New home closings: Down 43.2 percent in first quarter

Existing home sales: Down nearly 20 percent in first quarter

Closings from bank repossessions: 402 in March, up from February (231) and January (248)

Quotable: "I'm just saying people disagree on what happened, but quarter by quarter, this is what happened. Sales are down, prices are mixed and inventory is up."

SOURCE: Larry Murphy, SalesTraq

A worker carries boards atop a home under construction on Falcons Flight Avenue in the Prominence subdivision in the Aliante community on Thursday morning.
Photo by Clint Karlsen.

A roofer works Thursday on a house under construction at 4008 Fuselier Drive in North Las Vegas. New-home closings in Las Vegas fell 43.2 percent in the first quarter, a housing researcher said.
Photo by Clint Karlsen.

New home closings dropped 43.2 percent in the first quarter to 5,264 and existing home sales are down nearly 20 percent at 8,539, Larry Murphy of Las Vegas-based SalesTraq reported Thursday.

"Despite the fact that sales are down, prices are pretty stable," Murphy said at his Crystal Ball housing seminar at Texas Station. "That's what's different about this town. It's been three years since the boom and how many times has Money magazine and Forbes magazine said there's going to be a bursting of the bubble and a 30 percent drop in prices? That hasn't happened."

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Murphy told about 1,000 real estate professionals at the session there are some alarming figures, like the 402 bank repossessions that accounted for 13 percent of the 3,175 existing home closings in March. That's up from 9 percent in both February (231) and January (248), Murphy said.

"However, we may be at or near the bottom," he said. "Even with the repos, we have month-over-month sales gains, the highest number of new home permits since August and prices are still relatively stable."

Murphy showed the median new home price at $308,471 in March, a 3.5 percent decline from the same month a year ago. For the first quarter, the median price of $324,035 is up 4 percent.

The existing median home price of $280,000 in March is down 1.8 percent from a year ago and the first-quarter median of $280,667 is down 0.3 percent.

"We can disagree on what's going to happen, we can even disagree on what did happen," Murphy said. "There are people out there who deny that we ever landed on the moon and there's some who say the holocaust never happened. I'm just saying people disagree on what happened, but quarter by quarter, this is what happened. Sales are down, prices are mixed and inventory is up."

SalesTraq showed 22,970 available listings on the MLS in March, a 13-month supply based on current sales figures. With some 590,000 residential units in Las Vegas Valley, that's less than 5 percent of the inventory, Murphy noted.

Federal regulators are tightening lending requirements for so-called subprime loans and that's going to cool off the rapid increase in housing and land prices in Las Vegas, economist John Restrepo of Restrepo Consulting Group said.

"It's good for buyers," he said. "It's going to improve affordability a little bit. This is a good cycle."

Dennis Smith of Home Builders Research, another Las Vegas-based housing research firm, reported 1,799 new home sales in March, bringing the total for the quarter to 5,204. It's the lowest first three months since 2001, he said.

"The first quarter of 2007 will go into the archives as one that most in the home building industry would like to forget," Smith said. "However, it would be better if many would file it into their memory banks to be able to reflect on how the housing market can fluctuate."

Since the late 1980s, housing sales, prices and permits have risen almost every year in Las Vegas. Starting in 2005 and continuing into this year, the "back side" of the cycle reminded the real estate industry that annual increases are not automatic, Smith said.

"It also reminded everyone that although Las Vegas has some unique traits, it is not impervious to what goes in the region and nation," he said.

Las Vegas' housing market fits in perfectly with the laws of supply and demand, Andrew Pugh of SellFastLV.com said. With the excess supply of homes for sale, the question is how does the market return to equilibrium and how long will it take, he said.

"Right now, I see little evidence of rising demand or falling supply," he said. "Wages are pretty steady and interest rates don't have much room to fall. Construction has slowed, but there's plenty (of homes) available and few speculators in sight. In other words, unless there is a significant drop in rates, I expect there to be an excess supply until prices drop. Once that happens, we'll start to see an increase in the number of sales. How long this takes is another issue altogether."

Steve Bottfeld of Marketing Solutions said it may be sooner than everyone thinks. He made two predictions at Crystal Ball.

"One, we're at the bottom of the real estate cycle. We go up from here, starting in May," Bottfeld said to a round of applause. "Two, when will prices finally be affected by sales? Let me show you."

He then put up a picture on the video screen of a frozen lake with the word, "Hell," on it.

Kurt Lehman of Realty One Group said he's not so sure about that. He searches the "revisions to price" field in the MLS and sometimes finds 300 price reductions in a 24-hour period.

"I've been showing houses to some buyers in the low-$300,000 range and I'm surprised at how the prices in certain areas are dropping," Lehman said. "And still sales are very slow."

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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. ajberk@yahoo.com wrote on May 10, 2007 04:57 AM: When are the new home builders going to get it!? Do we need any more houses built an hour away from jobs! When are buyers going to get it!Buying a house in the Northwest or Mountains edge is just plain stupid. 3.50to 4 dollar a gallon gasoline should be a gigantic wake-up call to anyone byting a house more then 15 minutes from their job! Whe don`t these realtors ever talk about the congestion and traffic and the effects that has on the real estate market!? Nevdeda Bob wrote on May 08, 2007 09:48 AM: Hey Michael and Nicole...This is post regarding real estate....take your puppies elsewhere or one of us will get a sack and load the little bas...ders up and toss them into Lake Mead! michel wrote on April 25, 2007 07:04 PM: Quality and cute English bulldogs for sale. All of our dogs have extremely good bloodlines with exceptional bulldog confirmations. Most of our puppies come from "Betsy Lou" who happens to be one of the few natural whelpers in this breed. We enjoy raising bulldogs and they get plenty of love and attention and are very good with the children. These pups are classic bulldogs all the way. Great build and lots of wrinkles. They have excellent Champion bloodlines,67 champions in 5 generations,with personalities to match.With full breeding rights SOCIALIZED WITH KIDS AND OTHER DOGS.These sweethearts are the highest quality available,raised underfoot, and come to you very spoiled, very friendly and playful. We have two males left, great stud or show prospects, or just great family dog. nicole wrote on April 25, 2007 07:02 PM: Tiny or teacup puppies I raise all my dogs in my home. They are potty trained, have health guarantee. Shots up to date, vet checked adult, weight 2-4lbs AKC or APRI I have what you are looking for pet show or breeding stock. I want to find the right dog for you, my dogs are family and I am always here to help. I have raised all my dogs. Micro chip and shipping avail. Prices for dogs start at $500.00 and UP. There is a dog for everyone Alfred E. Newman wrote on April 24, 2007 03:19 AM: Subprime mortgages, Alt A (liar loans), no problem! Just add them to the national debt ($8,824,831,187,839.52 as of 4/20/07), no one will notice an extra trillion and the interest is only about 50 billion a year that can easily be added to the Federal budget deficit. It worked for Katrina aid. Things haven't looked this good since 1929! ducksface wrote on April 23, 2007 10:18 AM: It's just really simple, 3.6 times income for people with larger disposable income, 2.5 times income for the people at 28% debt ration. PERIOD. Prices will adjust accordingly. On an appraisal there is a box that needs checked that says what the value was based on. By law the appraisal must be based on 'highest and best use'. That is ALWAYS as rental income since the bluse sky of ownership is not a measurable tangible. Homes must always be cheaper to buy than rent. PERIOD. You cannot by design by an income home with the knowledge of losing $2100 a month on rental fees. And a little more on subject; ask any Realtor about the foreclosures being counted as sales. 1 in 300 will know, but still not understand the ramifications. Also; something missed in the article; interfamily transfers are also counted as sales. Anything that requires a deed counts as a sale. Bubble Believer wrote on April 21, 2007 06:13 PM: Are these clowns for real? Ignoring basic fundamentals that overwhelmingly point to Vegas being at least 100% overvalued is absolutely absurd. These real estate "insiders" can spank each other off to bogus reports all day long, the only one's getting hurt are the ones listening to this nonsense, and out buying houses. Talk about denying the holocaust or the moon landing... more like denying economic reality. Don't believe these koolaid sippers -- just because prices haven't dropped 30% yet doesn't they won't. Expect a slow, painful decline in LV real estate for at least 3-5 years. JD wrote on April 21, 2007 12:07 PM: Try this: http://www.inbusinesslasvegas.com/2007/04/20/feature1.html Jason Voorhees wrote on April 21, 2007 07:51 AM: You are ignoring the basic fundamentals of acquiring a mortgage. There are no more flippers, no more sub prime loans, no more Alt-A loans, no more vehicles for people to but homes prices at more than they can qualify for. They have been eliminated from the market. People will generally now need: Proof of income for three years to get a loan at most 3x annual income, a strong FICO score, and 20% down payment. Las Vegas now has the highest foreclosure rate in the United States, although it is a battle to maintain the lead in this dubious honor. Builder incentives are now very high, that masks the price declines. Housing inventory is very high and climbing. People are getting burned, and it is going to get a lot worse. alan berk wrote on April 21, 2007 02:06 AM: I can`t believe how stupid home buyers are in las vegas. Still buying homes that are at least and hour commute from there workplaces. Same with the home builders. How many new homes do we need built now!? How many of thos homes have the kitec plumbing defect in Macdonald Ranch and Anthem- i wouldn`t buy a house built in the last 5 years. Gee maybe with the cost of gasoline and the trafic congestion people will start moving back into the city. oh well let the stupidity continue. Read All Comments