LV home market called red hot

Jennifer Shubinski

Friday, July 25, 2003 | 10:59 a.m.

The only thing that matches Las Vegas' rising temperatures is the Valley's sizzling housing market.

Homes are selling in days. Buyers, eager to get a home, are offering sellers more than the listing price.

In a word, it's hot.

"We've never been in a market like this," Steve Bottfeld, vice president of Marketing Solutions, said Thursday at the company's second-quarter Marketing Trends presentation. "We get to work in a market with 100 degree heat, but we work in a (housing) market that is a lot hotter than that."

Driving to a home-inspection appointment Thursday, real estate agent Leslie Beville said she is working with clients in Henderson and is having a hard time finding homes for sale.

"In Henderson, especially in Green Valley, they are going," she said. "If you are ready to buy, you better buy."

Homes in the Las Vegas area are selling in an average of 46 days, and most are selling for 98 percent of the listing price. Many are selling at the listing price -- or more, Larry Murphy, president of research firm SalesTraq, said.

Beville, an agent with Coldwell Banker Premier Realty, last week sold a home in Green Valley in one day at $5,000 over the listing price.

The 1,600-square-foot home, bought in 1994 for just under $135,000, sold for $210,000.

"I listed the house at 2 p.m., I had the first phone call at 5:30 p.m. and it was sold the next day at 6 p.m. and we had three offers," she said. "Right now there are no negotiations."

The number of new and resale homes sold in the Las Vegas area rose in June, bringing the total number of homes sold in the Valley through June to 31,098, according to SalesTraq.

New home closings in June, totaled 2,042 in the Las Vegas area, up from 1,921 in May, SalesTraq reported.

The number of resale homes sold also continued to be strong. In June, 3,959 resale homes were sold compared to 3,842 in May, according to SalesTraq.

A lack of inventory in the new home market is fueling the rising prices and demand in the resale sector, Murphy said.

Waits for new homes can be as long as 18 months, and some communities have stopped selling homes because they can't keep up with the demand.

"There is no standing inventory," Murphy said. "If you try to buy a new home, you can take your checkbook and wave it around and say please take my money -- and nobody will."

Potential home buyers have resorted to camping out overnight just to get their names in a lottery for a lot in new subdivisions, Murphy said.

Standing new home inventory began to fall after Sept. 11, 2001, as builders stopped pulling new home permits. The fewer pulled permits, in turn, meant a smaller supply of new homes coming onto the market in the year to come.

It has only been in the last few months that building permits have begun to pick back up as confidence in the Las Vegas housing market continued to be strong.

In June, 2,163 new home permits were issued, compared to 1,710 in June 2002.

"The increase in inventory would have been enough, under normal circumstances, but because of job formations, which I think are being understated at every source, that demand pressure will continue," Bottfeld said.

Much of the pressure on the Las Vegas housing market is coming from the area's rising population, and it isn't expected to slow down anytime soon as job growth continues.

An average of 7,028 people a month have moved to the Las Vegas area this year, through June, according to the University of Nevada, Las Vegas' Center for Business and Economic Research (CBER). That's compared to 6,695 a month in 2002.

In 2001, Clark County' population was estimated at 1.49 million people. That number has grown to 1.58 million people this year, and is projected to reach almost 2 million people by 2010.

Southern Nevada's employment is expected to grow by 2.4 percent by the end of the year and 3.5 percent in 2004, CBER has forecasted.

Much of the in-migration has been fueled by the casino industry, as it continues to create new jobs as hotel rooms are added.

Las Vegas grew from about 61,000 hotel rooms in 1998 to about 127,000 hotel rooms in 2002, according to the UNLV center. More than 3,800 rooms are expected to come online in 2003, according to the Las Vegas Convention and Visitors Authority.

Steve Wynn's Wynn Las Vegas casino-resort, boasting 2,700 hotel rooms, is expected to open in 2005.

The search for a home may get even more intense as interest rates, at historic lows for months, begin to creep back up.

Jeff Uniak, vice president of strategic alliances for Countrywide Home Loans, said the increase hasn't been enough to scare buyers away -- yet.

"Interest rates hit their bottom in June at 4.99 percent for a 30-year fixed," he said. "They will creep up by 2004."

The average mortgage rate so far this year is 5.7 percent, Uniak said.

The continued pressure on the new and resale housing market may result in double-digit appreciation numbers next year, Bottfeld said. He told the audience of Realtors, home builders, and lenders to expect increases as high as 15 percent.

"The last time we've seen something like this was in 1983 in Southern California, which resulted in the doubling of housing prices," Bottfeld said. "The demand for (Las Vegas-area) housing over the next 18 months is going to be incredible."