Friday, Dec. 21, 2001 | 10:56 a.m.
The Las Vegas Valley's new home sales are set to surpass last year's record-breaking tally, but local new home closings plummeted in November, a new report showed Thursday.
New home closings in Las Vegas were down 20.2 percent this November compared to November 2000, from 1,867 units last November to 1,489 units last month, the residential research firms SalesTraq and Marketing Solutions reported.
Separately, another report from real estate brokerage CB Richard Ellis shows a weakening apartment rental market as well, with apartment vacancies rising from 7.2 percent in October to 8.4 percent in November.
Spencer Ballif, first vice president of CB Richard Ellis, credited new apartment community supply and casino industry layoffs for the increase. He also said the fourth quarter is traditionally a "soft time for the market."
Researchers with SalesTraq and Marketing Solutions attributed the decline in new home closings to several factors, including the build-out last year of numerous subdivisions.
There are 44 fewer new-home subdivisions in the Valley today than existed a year ago, the report said.
Larry Murphy, president of SalesTraq, said it's too early to attribute the drop in new home closings to the unsteady economy that has followed Sept. 11.
"It typically takes a minimum of 45 days from the decision to buy a home to the actual closing," Murphy said. "Often, it takes two months to three months to close. We've got to look downstream at least three months before we can make any legitimate calls regarding a correlation between Sept. 11 and new home sales.
"When we see what happens in December and January, we'll have a better idea of whether this is a real trend."
November's drop in new home closings follows a year of record increases, including a 40 percent increase in closings in October, when numbers rose to 2,132 closings from 1,523 closings in October 2000.
Steve Bottfeld, executive vice president of Marketing Solutions, said October "is usually the strongest month of the year" for new home closings.
SalesTraq's data show that in spite of November's performance, new home closings will be strong this year.
Overall, closings are up 8.8 percent for the year, from 18,026 transactions at this time last year to 19,609 transactions this year.
Bottfeld said the Valley would still witness a record year for closings.
SalesTraq's November statistics also found continued increases in the local median price of a new home.
That median price is up 10.3 percent, from $160,345 in November 2000 to $176,871 in November of this year.
A little less than two years ago, in January 2000, the median new home price in the Valley was $148,451.
Bottfeld said land prices are likely to exert continued upward pressure on the median new home price.
"Right now, builders are struggling to get enough land to build product," he said.
Even as the median new home price has grown, local consumers have snapped up new homes at a record pace, an indication that local homebuyers' purchasing power is increasing, Bottfeld said.
"There was a time when the people we were bringing into the market were primarily laborers," he said. "Now, we're bringing a lot of executives, administrators and professionals here."
In addition, long-time Valley residents often have significant equity built up in their homes, Bottfeld said.
Lower interest rates have also increased consumers' buying power, he said.
SalesTraq's report also found 16.4 percent fewer new-home permits were pulled in November of this year compared to November 2000, though permits pulled for all of 2001 are up 8.2 percent over 2000 levels.
"We don't see that as a serious trend at all right now," Murphy said. "(November's decline) is within the acceptable range. I think we'll see permits increase early on in the next year. We have 50 or 60 subdivisions on our watch list, and I predict we'll start seeing them appear like mushrooms in the first half of next year."
Murphy said another record year for home closings is possible in 2002, though the first quarter might be slow depending on the number of permits pulled in December.
"It's been an emotional year with Sept. 11, but we've also been on a 10-year economic expansion. It's totally natural to slow down and take a breath. At the same time, nothing has fundamentally changed with this economy. The economy is strong, we've got a good labor force, and I think we can look for 2002 to be a better year than 2001, especially if interest rates stay low."
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