Cold million-dollar market depresses home-sales numbers

By Buck Wargo

Friday, April 3, 2009 | 2 a.m.

Sales of homes priced at $1 million or higher is at a standstill.

Home Builders Research reported that in February only one new home priced more than $1 million closed escrow. That is pushing the new-home median price to a monthly low of $219,900, a decrease of $63,100 or 22 percent from February 2008, Home Builders President Dennis Smith said.

“That speaks kind of loud,” said Richard Plaster, founder of custom-home builder Signature Homes. “It says there is no market. With the way the economy is going people feel poorer, and they are not willing to stretch.”

Signature is focusing on homes under $250,000, although there is some limited interest from independent businesspeople and others who are well off, Plaster said.

“They were thinking, ‘If this is bad as it gets, I will go ahead,’ ” Plaster said. “It is more ego-driven than shelter-driven.”

Sixty-five percent of new-home closings in February were priced under $250,000, Smith said. Eighty percent were priced under $300,000.

In contrast, only nine new-home closings were more than $500,000, Smith said. A decrease in condominium sales contributed to that decline since only 15 high-rise units closed in February, Smith said.

“It is just verifying what we all know — that it is difficult to sell ($1 million homes) because of problems getting financing,” Smith said. “Because of that, you are not going to see a big increase in the luxury market.”

Even for those who can get financing or use cash, there are plenty of 3,000-square-foot homes whose prices have fallen to make them much better bargains than buying new, Smith said.

In the existing-home market, SalesTraq reports nine homes priced at $1 million or more were sold, including one by a bank. Three million-dollar-plus homes were repossessed by banks in February, according to SalesTraq’s Larry Murphy.

In February 375 new homes sold, an increase of 100 from January, but the February number was still down 58 percent from 2008, Smith said.

For the first two months of 2009, Smith said the 659 transactions were 1,114 fewer or a 63 percent drop from January and February 2008. That includes 14 apartment conversions.

Sales of new homes should remain slow with 139 permits taken in February in Henderson, North Las Vegas, Las Vegas and unincorporated Clark County. The 319 permits issued for the year is down 57 percent from the first two months of 2008.

This year could produce the fewest number of new-home permits since the mid-1980s, Smith said.

In the existing-home market, sales remain steady with 2,606 in February to bring the year’s total to 5,142, an increase of 2,125 or 70 percent from the first two months of 2008, Smith said.

Smith put the median price at $145,000, a one-month decline of $10,000 or 6.5 percent. That’s a year-over-year decrease of $90,000 or 38.3 percent.

Smith said new listings posted by Realtors show prices will continue to decline. The listing price fell 8 percent in February compared with January and is down year-over-year by 41 percent.

The inventory remains flat even though the number of existing-home closings has been strong, Smith said. New listings are keeping pace: 4,954 new single-family homes and 1,204 condominiums and town houses were listed in February.

Among the listings, 39 percent are bank-owned properties. Eighty percent of the existing-home sales are bank owned, Smith said. Short sales account for more than 30 percent of the listings, but only 9 percent of the sales through Realtors, he said.