LV home price trend mixed

Jennifer Shubinski

Monday, Feb. 23, 2004 | 11:08 a.m.

Prices of previously owned Las Vegas homes skyrocketed in January over the same time last year, increasing by almost $30,000, while new home sales and prices softened month over month, local research firm Home Builders Research Inc. reported today.

The median price of a resale home in January was $185,000, a year-to-year increase of 19 percent, or $29,500. January's cost of a previously owned home was also almost 3 percent higher than it was in December, when the median cost of a resale home was $180,000.

"I don't think (the resale market) can maintain that growth rate throughout the year," Dennis Smith, president of the research firm said. "It's record numbers, but it can't maintain that percentage growth rate throughout the year."

The huge increases in the cost of resale homes have appraisers struggling, Smith said.

He said comparable sales, used by appraisers to help determine the costs of homes, can't keep up with demand. That often results in what many sellers and home buyers feel are "low appraisals." In order to close escrow, the buyer must pay the difference in cash.

"It means if you don't have the cash you're not going to get the sale," Smith said. "(Sellers are) not going to get the price they thought they were going to get and buyers have to have the cash, because the appraiser is not going to raise the appraisal."

Smith said while the resale market continues to be "on fire," not every home is being sold above list price. In some areas of the valley, buyers are offering above list price for homes. Popular areas are Summerlin and numerous Henderson neighborhoods, agents say.

But Smith said that housing demand remains strong, and is possibly stronger than it has ever been.

The number of recorded resale homes sold in January totaled 4,080, an increase of 37 percent or 1,112 homes from last January.

Compared to December, the number of resale homes sold in January fell by 814 or almost 17 percent, Smith reported.

The median price of a new home increased in January, year-over-year, while the month-to-month numbers declined.

The median new home price was $204,487, a year-to-year increase of almost 10 percent. But the median cost of a new home in January actually fell by about 2 percent when compared to December's median price of $209,611, Smith reported.

While Smith doesn't think the huge year-over-year increases in resale home prices can be maintained throughout the year, he thinks they can in the new home market.

"I think that it can be maintained, strictly based on demand," Smith said. "What's driving the pricing increases is demand, not land prices, just demand."

The continued demand for new homes is playing out in the number of new home permits issued. In January they totaled 2,648, compared to the average number of permits issued per month, 2,101, in 2003. There were 2,051 recorded new home sales in January, an increase of 510 from January 2003, or a year-to-year increase of 33 percent. The number of new homes sold fell from December to January by 780, or 27 percent.

Smiths said the declines are normal during the winter months.

"It is normal from December to January," he said. "December is usually the biggest month because people are trying to get in before the end of the year for tax purposes."