Comments (58) | Add a comment
Housing analyst predicts increase in sales, median price in the coming year
-
Photo by Jeff Scheid.
An open house is held Saturday on Carbondale Street in Las Vegas. Housing analyst Dennis Smith is projecting a slight bump in home sales and prices. » Buy this photo
Tools
More Photos
-
A bank-owned home in North Las Vegas is seen Feb. 13, 2009. Housing analyst Dennis Smith predicts foreclosures in 2010 "will remain manageable as far as affecting prices." Photo by Jeff Scheid. » Buy this photo
LAS VEGAS REVIEW-JOURNAL
Updated: Apr. 10, 2012 | 10:52 a.m.
New-home sales in Las Vegas are projected to increase to about 5,400 in 2010 and the median price should be close to $220,000 by the end of the year, a slight bump from December's median of $216,000, housing analyst Dennis Smith said Thursday.
The president of Las Vegas-based Home Builders Research reported his year-end data and 2010 projections in his first housing webinar, which replaces his annual housing outlook previously held at various locations around the city.
New-home prices fell 13.2 percent in 2009 and are down from a high of $330,900 in 2006.
"I think we're going to see a slight increase," Smith said. "I'm not saying we'll see a huge jump, but by the end of the year, I think we'll be looking at closer to $220,000 than $210,000. The only thing that could change this is a flood of (foreclosure) inventory, the 'silent inventory' everybody talks about."
Las Vegas has the fifth-highest foreclosure rate in the nation with one out of 119 households in some stage of foreclosure filing, according to Irvine, Calif.-based RealtyTrac.com.
Bank of America plans to release about 500 foreclosure homes a month in Nevada, and that's OK, Smith said. The market can absorb those.
"We've been hearing about this for over a year and it hasn't happened yet. I don't hear that banks are dumping a bunch of foreclosures on the market. Obviously, that could change. My best guess is the number of foreclosures will remain manageable as far as affecting prices," said Smith, who's been tracking the Las Vegas housing market for 22 years.
He's projecting about 45,000 resales this year, nearly identical to the 44,885 recorded resales he counted in 2009. The median price for resales will edge up 3.3 percent to $127,000 in 2010 and climb another 5.6 percent in 2011 to $134,000, based on a stable inventory of 8,500 homes on the market.
Las Vegas Realtor Steve Hawks said he respectfully disagrees with the analyst's forecast.
"No way prices are going up," Hawks said. "Interest rates are going up, which will cause the average person to qualify for less home, which means sellers have to lower prices. And the new FHA (Federal Housing Authority) guidelines are knocking out about half of the FHA buyers that were looking in '09, and then job losses from government agencies start to hit this year with the budget cuts. But the good news is sales volume should be just as high as '09."
One of the key housing indicators is building permits, which decreased 37 percent to 3,850 in 2009. However, they steadily rose from a low of 179 in January 2009 to 355 in December. Permits were running around 20,000 a year in the late 1990s and peaked at 32,879 in 2004.
Smith said he's fairly confident permits will increase by about 500 this year and climb above 5,000 in 2011.
"We've got other builders re-entering the market and the local builders that went away ... I called it hibernating ... they're ready to get back in the picture," he said.
When will permits get back to 20,000?
"I don't know when we'll get to 10,000," Smith said. "I don't see a lot of speculative building out there that would create more standing inventory. If the smaller and private builders are having a hard time finding financing, it'll be a long time before they're overbuilding again in Las Vegas."
John Restrepo of Restrepo Consulting Group said Las Vegas has unfortunately been one of the hardest-hit housing markets and is lagging the national recovery.
He's concerned about a Credit Suisse report showing quite a boost in the number of Alt-A and option ARMs, or adjustable-rate mortgages, due to reset this year and into 2011.
"We haven't seen the full ramification of that," Restrepo said. "Try to refinance? Maybe they can't because of declining values. That has an effect on consumer confidence and that's important to us."
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
Nevada loses retail jobs
Nevada lost 8,800 retail jobs in 2009 and total retail employment is down 15,200 jobs since the start of the recession two years ago, the Retail Association of Nevada reported Thursday.
The retail industry employed 132,200 people as of December, compared with 141,000 in the same month of the previous year, a report compiled by Applied Analysis, a Las Vegas-based business advisory firm, shows.
Consumer confidence, a key indicator for spending, increased to 53.6 in December from 38.6 a year earlier, but is down 37 points from 90.6 in December 2007 when the recession began.
People can't shop if they don't have a job. The economic analysis showed the unemployment rate rising to 13 percent in December from 8.4 percent in December 2008. There are 176,000 individuals actively searching for work today compared with 121,300 one year ago.
Declines in statewide personal income are equally discouraging. Nevadans have cumulatively lost $25.4 billion in income since the start of the recession, or $9,800 per capita if allocating that loss over the state's 2.6 million residents.
Eight of 14 economic indicators in the Retail Association of Nevada report were negative, or in the red, in the one-year comparison and 10 indicators were in the red from two years ago.
"I wish there were more positives," said Mary Lau, president of the retail association. "When you look at the amount per capita taken out of our economy -- $9,800 -- this is extremely painful. If there's anything positive, it's that it's not falling as fast as it was, the unemployment rate, commercial bankruptcies. It gives us some light at the end of the tunnel."
Assuming Nevadans would otherwise have maintained an income level equal to that attained in December 2008, they cumulatively lost $9.6 billion in income, or $3,700 per capita, in the past year.
Allyson Crisman, project manager for Applied Analysis, said the decline in personal income is particularly astounding and relevant for retailers. It's money that wasn't spent at their stores.
Poor economic conditions have also drained state and local government revenue. General fund revenues are estimated at $2.4 billion, or $238 million below estimates for the state budget in 2009.
"What we're dealing with today is probably more normal than what we saw in 2007 and 2008," Applied Analysis principal Jeremy Aguero said. "What we lost was predicated on unsustainable prices and spending. What we've given back in the economy we probably shouldn't have had in the first place."
Hubble Smith/Las Vegas Review-Journal
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.
Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.
RSS
Twitter
Facebook
Las Vegas is an unattractive place to live.
Hubble, Can you tell me why you wrote an article on NEW home sales, yet the accompanying photo is clearly an existing or resale home? Just a note, I would think, that the majority of people reading your paper would be much more interested in resale home prices than in the price of a new home at this time. Yes, I understand the economic link between permits,jobs and the local economy etc. etc. Some people read the article and don't distinguish between new and existing home prices. They see $216,000. and think that's the average price of any home sold, when the reality is much more disturbing, $127,000. I live on a street with 19 condo buildings. They are like an up and down duplex vs. side by side, so 38 actual units. There are 6 units empty, already foreclosed, and who knows how many in the process of foreclosure. If the lenders ever flooded the market with foreclosures, the average resale price would drop UNDER $100,000. Not a pretty picture!!!