Comments (12) | Add a comment
Las Vegas new-home sales report gloomy
Tools
LAS VEGAS REVIEW-JOURNAL
Rising optimism among national home builders has yet to spread to Las Vegas, where new-home sales totaled just 216 in January, down from 237 in the same month a year ago and the lowest level on record, Home Builders Research reported Monday.
The report comes on the heels of the National Association of Home Builders-Wells Fargo home builders' sentiment index increasing for the fifth straight month.
New-home building permits in Las Vegas fell to 222 in January, 10 fewer than a year ago and 158 fewer than two years ago.
The home-building industry remains stagnant in Las Vegas because of many factors working against the housing market, said Dennis Smith, president of Home Builders Research, who has been tracking the Las Vegas market since 1988.
"What's holding back the new-home market is excess inventory in the resale segment," Smith said.
With an estimated 200,000 homes in Las Vegas "underwater," or worth less than the principal mortgage balance, builders are reluctant to resume construction because many of the existing homes could go into foreclosure and swamp the market.
Consumers also might not be able to afford move-in costs associated with buying a new home, including higher down payments and mortgage insurance premiums for those with damaged credit scores, he said.
"Another factor is the insecure job market. Yes, we're creating jobs in hospitality. That's great, but we're not creating jobs that instantly improve consumer demand for housing," Smith said.
Although permits and sales are down, net sales per subdivision are averaging 0.5 to 0.6 a week over the last three weeks, about the same pace as last summer. More people are expressing interest in buying a new home, but they're having trouble qualifying for financing, Smith said.
The new-home median price is holding steady in Las Vegas, slipping less than 1 percent from a year ago at $207,000, according to Home Builders Research. The price has been hovering around the $200,000 mark for about three years, with small increases in some communities.
Las Vegas-based SalesTraq reported 4,434 existing home sales in January at a median price of $100,000, an 8.3 percent decrease from a year ago and the lowest price since the 1990s.
"It could go up next month, but I've got to tell you, I don't see anything acting as a catalyst for change, especially the junky-funky, hokey-pokey $25 billion settlement with the banks," housing analyst Larry Murphy of SalesTraq said.
That doesn't affect homes financed by Fannie Mae, Freddie Mac and the Federal Housing Authority, which is about 60 percent of the Las Vegas market, Murphy said.
"They (banks) almost choke and gag when they say the words 'principal reduction,'" he said. "They say in some cases there may be principal reduction of $34,000. How much are people in Las Vegas upside down? About twice that."
The robo-signing settlement is the latest -- and potentially the largest -- piece in the U.S. housing policy puzzle, said Jed Kolko, chief economist of the Trulia.com online listing service. Partly punishment for wrongdoing, it is also an attempt by the government to help the housing market, he said.
Smith, of Home Builders Research, said the settlement may be a step in the right direction, at least to make banks abide by the rules. Although banks are expected to release more foreclosures onto the market later this year, it will probably be at a pace that will not overwhelm the market, he said.
"The problem is so large and so widespread, the only fix is to let the free-market system work," Smith said.
The gap between new and existing median home prices will stay around $100,000 as foreclosures and short sales continue to apply downward pricing pressure on both and new and resales, he said.
Although new-home sales are down on a monthly basis, there's still a market for consumers who want a quality product delivered in a reasonable period of time, real estate consultant Jeff Galindo said.
"What new builders continue to offer is flexibility and the opportunity to purchase now and be able to move your family here when you want," he said.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
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
The Dec housing sales initially was reported at +5%, this mornig the revised numbers was - .5%. revised downward as usual. a 5.5% down ward move total. they seemed to be cooking most economic numbers every month. will see what happens with the revision for Jan soon. down playing the bad news always.
all these conflicting articles in the last two weeks .is it good or bad ? i count 4 articles say it is getting better .3 articles it is getting worse .
The ONLY Borrowers with DAMAGES (lost money) are those who: (1) obtained conservative mortgages (<80% LTV) and (2) stayed current (never defaulted) despite being increasingly upside down due to the Borrowers who defaulted. Yet, the damaged borrowers are ignored and mocked. REFINANCING? Even with refinancing of debt that exceeds property value, the borrowers who defaulted may still win in the end as they are not upside down! To make matters worse, Government refinancing programs, such as HARP1, is financially HARMFUL to borrowers who must pay upfront FEES (non-refundable) and pay tens of thousands of dollars to resolve any gap btwn existing loan balance and refinance amount. HARP2 removes refinance limit, but the honorable borrower is still upside down (loan > property value)! GOVERNMENT GETTING RICH. Who ever follows where the restitution (shakedown) money goes? It is spread within Government as seen my the many secret millionaires in government. FLAW IN LAW. The foreclosure mediation law does not appear to require the defaulted borrower to pay any money into a trust acct until the "paper trail" dispute is resolved. The borrowers who default then squat for as long as possible and are enriched. This law has therefore caused further decline in real estate values and thus the economy. REAL SOLUTION IGNORED. Years ago, Govt programs should have reduced Principal in phases to borrowers who stayed Current (never defaulted) on mortgages obtained from 2004-2007 (high point of boom). That would have avoided most or all defaults and real estate values would have been more stable and thus the economy. ADS. radio ads now offer "credit restoration" to those with foreclosure or short sale on record. So the FICO system has no integrity? TV ads say STOP paying your mortgage if upside down. Those who pay their mortgages while upside down are mocked as fools.
""The problem is so large and so widespread, the only fix is to let the free-market system work," Smith said."... the free market ? by that do you mean the unregulated, lax credit standards, subprime, fraud laced, buy a house with zero down on a no doc loan, 'free market' that created this mess in the first place?
unless someone finds a way to inject subprime and raging fraud back into the game we are never going to see an influx of buyers needed to push demand needed to offset the overwhelming supply...
So which is it?...Optimism or Gloomy?....The RJ can't decide...the professionals can't decide.....LOL....why even waste time writing these silly articles...seriously...all this does is fuel consumer fears and indecision, but, maybe that makes for good copy.....Analysts lose credibility, Realtors/New Home Builders lose business, Beat Writers get blamed for riding the fence or being shills for either entity....who benefits then?
Call Harry, the Mayor's of LV and NLV they seem to have plenty of ROMM and MONEY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! to house us all!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Optimism may soon fall to pessimism since there`s many speculations gas prices may reach $5 agal by summer driving season, Don Trump says $7 a gal maybe reached. and the principal reduction will help to lower prices of homes even faster since the price of homes should be reduced by the P reduction amount. all the investors that are buying at fantastically low prices may find even lower bargain basement prices with big losses in the previous purchases. $5 gas will kill the econ just like it did in 2007-8. money out the window. how many more bail out money is there for Bama Greed and Pelosi.??
" builders are reluctant to resume construction because many of the existing homes could go into foreclosure and swamp the market."..builders are worried about foreclosures ?? were they worried about over building during the 2004-2006 'boom' years too ???
hold on there Smirnoff...dont the numbers show 5000 people are still moving here every month??? only city in the history of the world to lead in unemployment and population growth !!!!!
don't worry......the governor is going to create 50K jobs.
he created two yesterday.
@oh_my- The housing collapse has resulted in abandoned homes & foreclosures, and reduced population. Suburban lawns & treees consumed most of Lake Mead water.