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Aug. 25, 2009
Copyright © Las Vegas Review-Journal

Home prices rise nationwide, but not in Las Vegas

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Workers build a home in southwest Las Vegas on Tuesday.
JOHN LOCHER/LAS VEGAS REVIEW-JOURNAL



Shane McElroy looks around on Tuesday at homes being built in the neighborhood where he and his wife Ericka, left, just bought a new home in Las Vegas. The home, which has yet to be built, is the first home the couple have bought.
JOHN LOCHER/LAS VEGAS REVIEW-JOURNAL

The worst may be over for the U.S. real estate market, a new report issued Tuesday suggests.

Nationally, prices in the second quarter posted their first quarterly increase in three years, up 2.4 percent, according to the widely watched Standard & Poor’s/Case-Shiller’s U.S. National Home Price Index.

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    • “This is an impressive turnaround,” Robert Shiller, creator of the index, said in an interview on CNBC. He warned, however, that the continuing wave of foreclosures could depress prices again.

    The monthly index of 20 major cities also rose 1.4 percent from May to June, with Dallas and Denver clocking their fourth-straight increase.

    Only Detroit and Las Vegas saw prices fall in June. Las Vegas’ index reading fell to 107.31 in June from 109.49 in May, while Detroit fell to 69.49 from 70.05.

    Las Vegas has now dipped below the Case-Shiller basis line. But that is a good thing, said Dennis Smith, president of Las Vegas-based Home Builders Research. It means houses are undervalued here.

    “That’s why we’re selling (homes). Affordable housing was always one of the descriptions of Las Vegas before 2002 and 2003. When houses were no longer affordable, that’s when the market took a dump,” Smith said.

    Las Vegas is due to rise in the Case-Shiller index, but Smith wouldn’t predict when.

    Unemployment, running at 13.1 percent in Las Vegas, is a key factor. Some local economists are now predicting it will be 2012 before things turn around, Smith said.

    The Case-Shiller data reflect changes from May to June. But new local data seem to corroborate the trend.

    SalesTraq, another Las Vegas housing market research firm, reported a 0.7 percent increase in July resale median prices to $124,900 from $124,000 in June. The price has been hovering around $125,000 since May. New home prices edged up $1,000 to $210,000.

    Home Builders Research reported that Las Vegas, which leads the nation in the rate of foreclosures, saw a slight increase in median new home prices in July to $206,549, up $1,059 from the previous month, while median resale prices stayed the same at $125,000.

    “The sharp free fall in prices is over,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York.

    Jeff Canarelli, vice president of sales for Las Vegas-based home builder American West, said the Case-Shiller report is “very positive.” He’s seeing more sales to first-time home buyers at subdivisions such as Lexington at Highlands Ranch.

    “We’ve known we’re near the bottom,” he said. “I think Las Vegas gets an A-plus for affordability. People want a good home as opposed to a foreclosure as long as it fits in their affordability range.”

    Smith said he’s getting a feel from talking to industry insiders that Las Vegas’ housing market has stabilized. It will probably bounce from month to month, he said.

    But one analyst offers a warning.

    Anyone expecting a rebound in home prices and consumer sales or a sharp V-shaped recovery is in “fantasyland,” said Mike Shedlock, investment adviser for SitkaPacific Capital Management.

    Nevada has $149 billion in mortgage debt and 65.6 percent of the properties have negative equity, according to a report from Core Logic First American. Nationwide, there is $10.1 trillion in mortgage debt, 32.2 percent of the properties have negative equity and 5.4 percent are nearly “underwater.”

    Steve Hawks of Platinum Real Estate Professionals in Henderson said Case-Shiller is an accurate barometer for home prices nationwide, but the index rose only because there’s a shortage of bank-owned houses that should be on the market.

    “At least it’s good news,” he said. “People don’t mind overbidding because the payment’s not that much different with interest rates so low. Once you go above $250,000, sales get slower.”

    The Case-Shiller 20-city index tracks repeat sales on the same properties over time, but it closely tracks only 20 cities, not the whole country. The national index tracks more regions, but not every metropolitan area.

    The Associated Press, Bloomberg News and McClatchy News Service contributed to this report.

     

     

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    John wrote on October 12, 2009 03:08 PM: Shane McElroy, the man in the bottom picture, was shot to death by his wife (in the background of the same picture) on 10/07/2009. They never moved into the house that is in the background.


    Please leave wrote on August 31, 2009 08:21 PM: If it is so bad here, just go away and milk cows in north dakota. All the negative stuff I read here is funny. I imagine none of you have real voice and this is your way of feeling heard. In a year or two, Vegas will be fine, the casinos, the housing Market, everything. If you really don't think that, and you continue to live here, you are the F'n idiot!!!! Let me repeat... F'n Idiot. If this is the titanic, then get off!!!


    William wrote on August 31, 2009 03:31 PM: Well it looks like this situation is all sewed up. 98% of the people who bothered to comment are all agreed, the market is dead and getting deader. I hope nobody explains this to all the foriegn money (china, canada, europe, mexico, etc.) flooding into Sin City to take advantage of a once in a liftime opportunity to by the greatest growth story in history at a steep discount. I guess these fools just don't understand that Americans and wealthy tourists from around the world have lost thier taste for booze, sex, drugs, and gambling. That is what you people are suggesting, isn't it.


    Mike P wrote on August 27, 2009 03:34 PM: LV Caused ITS OWN DEMISE makes some valid points about bank lending practices.My son and his wife signed papers to buy a nice short sale house in early MAY.The bank has pushed back the closing dates three times,hoping the market would turn around.The selling bank is going to lose its shirt on the deal and is throwing up road block after road block to kill the deal.They just got another closing date,anyone know of a good real estate lawyer?Just in case.


    MikeP wrote on August 27, 2009 03:13 PM: It is going to take years for the housing market to recover here in LV.In addition to thousands of foreclosures,you have dozens of developments which can't sell the new homes.They are a drag on the market.Retirees are no longer coming to LV,they are staying put because they can't afford to move.Add in a high unemployment rate of 13.1, and a forecast of 2013 before employment returns to pre-recession levels,(Yahoo Business),and basically you have no housing market.Plus many many realtors have left the industry,swelling the ranks of the unemployed.


    haw,haw, haw wrote on August 26, 2009 01:01 PM: responding to "hey wtf", I know idiot/imbecile and losers are confused. But, let me see if we have this right. Ivy league schools are supposedly the best education, you can buy, in this country. As a matter of fact, most countries around the world are sending their future/present LEADERS to these schools. And this sound bite idiot "hey wtf" makes an asinine statement, that he/she heard from the talking heads. That Obama isn't qualified for the job. What gross hilarity that most likely is coming from some high school drop-out from the CCSD system or another University of Idaho alum. Go listen to some more sound bites so your intelligence can be provoked.


    hey wtf wrote on August 26, 2009 05:50 AM: If we didn't vote for change, i'd be selling apples on a random street corner. you are the complete idiot. And please don't tell me about spending $ that we can never pay back. The useless Iraq war was not a freebie.


    Free Nevada wrote on August 25, 2009 11:07 PM: > Anyone expecting a rebound in home prices and consumer sales or a sharp V-shaped recovery is in “fantasyland,” said Mike Shedlock, investment adviser for SitkaPacific Capital Management.

    Mmmhmm.

    The $8K tax credit ends on November 30. The real estate market crashes again on December 1, but we won't know until the report is released in late January.


    hey wtf wrote on August 25, 2009 10:38 PM: You are an IDIOT. Obama is not qualified, does not understand business in any way, does not understand economics and worst of all, he couldn't care less. He has Americans where he wants them. Desperate and thinking we need change. Your stupid "change" is a deficit we will never, EVER be able to pay back, taxes that will be outrageous (so we can support all those that don't want to take care of themselves), and government interference in our personal lives unlike anything we have ever encountered in this country. He is a true idiot and narcissist. Thanks for voting for change, MORON.


    oh 'my house went up' wrote on August 25, 2009 09:51 PM: Trust me your house did not go up 3k. So what you're saying is that you didn't put anything down when you bought the house!?!? It's cases like this that got the country in this mess in the first place.


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