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Las Vegas new home sales up in 2010, resales down
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CRAIG L. MORAN/LAS VEGAS REVIEW-JOURNAL FILE
A home is shown under construction on Audobon Peak Avenue in Las Vegas in July. Builders pulled 4,550 new-home permits in 2010, up 18 percent from the previous year. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
Updated: Jan. 18, 2011 | 9:19 a.m.
It was another tough year for the Las Vegas housing market, and the road ahead looks treacherous with forecasts of some 2 million foreclosures nationwide, a local housing analyst said Monday.
Las Vegas finished 2010 with 5,341 new-home sales, up 1.3 percent from the previous year, and 42,673 existing-home sales, a 4.9 percent decrease, Home Builders Research reported.
The median new-home price crept up about 1 percent to $218,080, while the resale median fell 3.3 percent to $119,000.
Not bad, considering early predictions that home values would plummet 20 percent to 30 percent in a city that leads the nation in foreclosure filings.
"Prices have not fallen off the cliff any further," said Dennis Smith, president of Home Builders Research. "They've been pretty flat. That's got to be encouraging. The biggest problem going forward is the unknown with houses that the banks are holding."
The "foreclosure mess" continues to put downward pressure on pricing and creates difficulty with appraisals for both homebuilders and owners, Smith said.
Nevada had 13,472 new foreclosure filings in December and 1,551 foreclosure sales at an average price of $164,800, Irvine, Calif.-based RealtyTrac foreclosure listing firm reported. For the year, there were 163,557 foreclosure filings and 34,683 foreclosure sales.
Home Builders Research reported 361 new-home sales in December, compared with 477 in the same month a year ago. The 3,835 recorded resales were down from 4,346 in December 2009.
Builders, subcontractors, banks, mortgage brokers, title companies and real estate agents all had to make adjustments to survive the worst housing depression in recent history, Smith said.
"All builders have changed something in their business plan to survive in the present level of consumer demand for new homes," he said.
Homebuilders pulled 307 new-home permits in December, bringing the 2010 total to 4,550, an 18 percent increase from 2009. Smith said he thinks the permit tally will drop to about 4,000 in 2011, given weak economic fundamentals in the market. He doesn't see a lot of new projects being planned, particularly large communities that would spur permit activity.
Resale prices are likely to dip a little in the first half of this year, Smith said.
"People talk about the banks, and that's easy to understand, but what we need to talk about is Freddie (Mac) and Fannie (Mae) and FHA. Those are the ones controlling the biggest inventory of homes," the housing analyst said.
Nothing happened with the foreclosure crisis last year, Smith said. Banks released some of the homes and those homes were sold, he said.
"We know there's going to be more houses released. That's what we're told by every source out there," he said. "From the banks, we hear they're doing all they can. Are they? We have no way of knowing. We hear 2 million foreclosures. Are they saying we're going to see double the number of foreclosures in Las Vegas?"
A January report from Credit Suisse shows Las Vegas with weak buyer traffic outside of distressed listings. December's traffic index improved from November, but indicated traffic levels below agents' expectations.
Agents said buyers remain focused primarily on distressed properties, although one agent noted an interesting shift.
"Cash buyers feel that they have been overestimating their return on investments as they have bought foreclosure properties that are not returning their resale expectations," the agent said. "They are moving toward short sales a bit more."
Prices remain pressured by foreclosures and short sales, or lender-approved sales for less than the mortgage owed, the Credit Suisse report said. The bank's home price index increased to 33 in December from 25 in November, but remained below a neutral reading. Anything below 50 indicates sequentially lower home prices.
There appears to be little reprieve in the near term as inventory levels continued to rise in December, Credit Suisse noted.
MarketWatch placed Nevada No. 1 among five states where housing recovery will take the longest.
The state has the highest mortgage delinquency rate in the country at 8.3 percent, the highest unemployment rate at 14.4 percent, and it has suffered the biggest peak-to-trough tumble in home prices at 56.4 percent, MarketWatch reported. The other states with a long recovery time are Michigan, California, Florida and Rhode Island.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
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To help clean up this mess:
1. The banks need to approve short sales quickly. This ridiculous process is like a pair of concrete boots keeping housing prices at the bottom of the lake.
2. Banks shouldn't be allowed to sell homes at the court house steps. For whatever bologne reason it is, or just a game they have to play to collect PMI (Private Mortgage Insurance), homes that couldn't get approved for a short sale, then sell at a $100,000 discount to some random investor at the steps that flips the house.
3. I've always liked the idea about limiting building, mostly from the perspective of "Where is the water going to come from?" Have you seen Lake Mead lately?
4. Wall Street, The Government, Everyone drank the Kool-Aid. We just need to get back to some good lending fundamentals and keep it that way. Unfortunately, the pendulum has swung so far the other way and it's become ridiculous for people to get loans now.
@ Mr.Dru you lost your credibility when you stated subs are now very strict on documentation.
Mr Dru-why are you so quick to blame Wall Street like it is some evil monster ready to steal everything from us poor hardworking folks. Let me explain the consept of investing for you. Person has money, person invests money hoping to make more money. Weither your investing in mortgage backed securities or baseball cards you want to make as much money as possible. The problems we have been experencing had nothing to do with people on Wall St. trying to make money. If that were the case it would have happend 200 years ago. Our current economic problems began in the early 90's when Freddie and Fannie change all the rules. But you don't want to talk about that. You don't want to consider that fact that it was Barney Frank and then later George Bush who wanted everyone to own a home. Don't blame a guy on Wall St who takes an investment that is insured by the federal government and sells it at a profit. Oh, and I have a Finance degree. Where is your political science degree from?
@Dru..thanks for the info.....good stuff to know....
@Roger- Yes contingent vs. non is important as contingent listings have AT LEAST one offer, if not multiple on the property. Therefore, one can assume that the property will be sold sometime in the near future unless the bank/seller refuses all of those offers which is usually not likely as there is almost always a cash buyer w/ one of those offers. Usually contingent listing numbers are the one mentioned, but not always. If one plans on buying then now is the time to do so. We are bumping along the bottom in sales prices w/ crazy low 30 yr rates. So long as you are buying the house for a HOME, not an investment, now is the time to buy. The housing market is just like the stock market, virtually impossible to time at exactly the lowest point in price.
@Dru..yeah I know ceasing construction will never happen, it was just a thought on how to force the issue with moving some of these resale/foeclosure houses... I will agree that deregulation, or a lack of oversight, and can we throw in mortgage fraud ..contributed to this mess....about the inventory... does it matter if it is non-contingent or not? I have never seen any reporting where contingent/non-contingent are based out of the forecasts? Thanks....
Good Job Dru, but not nearly far enough.
@Roger-- REALLY?? Just stop new home building?? Do you have any idea what would happen if that were the case? You could add another few tens of thousands to the unemployment lines and a million more to all muni's deficits!!! And don't come back w/ that illegal workers BS because the subcontractors all are now very strict on documentation!!! And there is not a two year back log of resale inventory, there is about a 4 month supply of NON-CONTINGIENT inventory at today's sales rates!
There continues to be new home building for the very same reason that there is a new car auto mall just south of the dozens of used care lots on Boulder Hwy. That reason being that there will always be a significant portion of the population that wants to buy NEW vs. OLD for reasons such as new features, energy efficiency, customization, etc.
Overbuilding its self did not cause this, DEREGULATION which allowed financing vehicles such as 0% down, 10-yr interest only, on stated income (aka liar and bet-on-the-future loans) was the fuel for this fire. The ability of banks to take those CRAP loans and bundle them up to be sold in the secondary mortgage markets (allowed by the repealing of 1930’s financial regulation) is the cancer that spread into our country’s economy and greed was behind those acts. You should all be peeved at Wall Street for their greed, but yet you choose to believe the talk radio college drop outs.
@LongTime...casino workers at $10/hr....arent they exactly the profile of purchasers who are now walking away becuase they obtained fraudulent liar/no doc loans on 1/2 million dollare houses with inflated incomes? But you are exactly right about income vs. home prices..during the boom years the ratio was outrageous and should have been a huge red flag to someone... @Colorado, right...supply and demand.. I can understand the demand for new homes doesnt equate to demand for resale homes...but the current depressed values are not going to move upward until demand exceeds supply and the 2 year backlog of resale inventory starts to disappear...and that aint going to happen if existing inventory has to compete against new construction at 1990 prices....I think there are things that can be done to alleviate the problem, like the commissioners stop issuing ne building permits until the crisis shows significant signs of improvement, but they appear bent on reviving the city on construction jobs, again....or maybe they are just making too much money off the backs of developers ????
"Not bad, considering early predictions that home values would plummet 20 percent to 30 percent in a city that leads the nation in foreclosure filings."..Many are predicting that the 20% - 30% DROP is correct, just the timing is off by a year. This will be the year you may see that drop as the forclosures flood the market, unemployment stays high (even if a casino hires a $10/hr employee, that is maybe $25K a year with O.T.,, hardly enough for an apartment, let alone a house), and more people walk (strategic default). Of course, let us not forget, property taxes are going up,, yup, did you read yesterday's story in the RJ?