Las Vegas housing stays hot thanks to short supply

Kevin Rademacher

Wednesday, July 20, 2005 | 10:47 a.m.

Recent economic reports have warned of possible stagnation overtaking the red-hot Las Vegas housing market.

Tuesday morning, however, residential real estate analysts Larry Murphy and Steve Bottfeld said they're not worried. Bottfeld, executive vice president of the consumer research firm Marketing Solutions, said a new boom could be upon Las Vegas by fall.

In fact, "we're already there," he told a packed house at the Crystal Ball Quarterly Real Estate Seminar.

June sales and development activity illustrate the point, Bottfeld said, pointing in particular at the 3,387 new home closings for the month.

"June was the highest number of new home sales in the history of real estate in Las Vegas," he said, adding the the 5,511 existing home sales in the same month mark the highest level for 2005.

Serving as a testament to the market's strength, statistics also indicated that the average number of days on the market for resale homes fell to 48 and that 98 percent of homes sold went for list price. In May, resale homes were on the market an average of 55 days.

The current boom also is moving along without the unpredictability of a large investor contingent, Bottfeld said. He said that about a third of last spring's real estate rush was attributed to investors. The number of investors has since dropped to about 14 percent.

Murphy, president of the research firm SalesTraq, said that there is currently a six-week supply of new homes on the market and a three month supply of resale homes. While those numbers are considered healthy for the current market, they are expected to fall because new homes will not come on line quick enough to satisfy demand.

"In the future, inventory is heading down because we're not pulling enough permits," he said.

In the last 12 months, new home sales have exceeded new home permits by 4,619 -- excluding apartment conversions, according to figures from SalesTraq and Marketing Solutions.

The result, Murphy said, will be rising home prices. Currently, the median new home price -- excluding condo conversions -- is $307,015. That number could reach $330,000 by the end of the year.

Bottfeld said that the price should not stifle growth, but it will expand the market geographically.

"The traditional suburbs are changing," he said, pointing to the creation of new suburbs and bedroom communities in areas like Pahrump's Mountain Falls subdivision and the planned Coyote Springs development straddling the Clark and Lincoln county lines about 60 miles north of Las Vegas.

Additionally, he said one in four new home buyers are from California, where the median home price is about $500,000.

"Our $300,000 is cheap," Bottfeld said.

He also said wealthy Baby Boomers are continuing to treat themselves to larger, more expensive homes as they prepare for retirement, and they find Las Vegas an attractive place to buy.

"The only bubble you'll see in this market is in a champagne glass," Bottfeld said.