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real estate:
Home prices plunge as rising defaults take their toll
Fri, Apr 24, 2009 (2 a.m.)
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Nevada set a record in March with more than 10,000 homeowners defaulting on mortgage payments, and the price of existing homes sold last month in Las Vegas plummeted to its lowest level since 2001, raising the question how much further they can fall.
Since June 2006 the median price of existing homes sold has fallen 53 percent from $289,500 to March’s $134,900. The price fell $7,600 from February to March, according to research firm SalesTraq.
“Every time I see it go down $3,000 to $5,000, I am surprised,” said Dennis Smith, president of Home Builders Research. “I don’t know how low it can go. I remember when I thought it would be difficult to go below $200,000.”
Steve Bottfeld, executive vice president of Marketing Solutions, said he thinks the price is “pretty close to the bottom right now.” He said it could fall another $3,000 to $7,000, but doesn’t see it dipping much below $130,000.
Smith said the median price is deceiving because few homes priced above $400,000 are selling because of the inability to obtain financing. That is skewing the numbers downward, he said.
Foreclosures are the key factor driving prices. Sixty-six percent of the 3,626 existing-home closings in March were bank-owned homes with a median price of $127,500. The median price of the nonbank homes was $149,900.
Banks don’t have an emotional attachment to a property and have shown a willingness to drop prices to make a sale. Although the number of homes repossessed fell in March to its lowest level in one year with 1,846 homes foreclosed, a large number of foreclosures are expected in coming months.
Nevada set a record in March with 10,351 homes defaulting on mortgage payments, which lead the nation in foreclosure filings.
California-based RealtyTrac reported Nevada had 19,849 foreclosure filings in March, a 26 percent increase from February, and 159 percent higher than March 2008.
The previous record was set in February with 8,406. The increase paves the way for more bank repossessions and foreclosure sales, which depress prices in the market.
“I think prices will continue to come down,” said Daren Blomquist, RealtyTrac’s marketing communications manager. “I just don’t think they will be at the rate they were because you have already seen massive depreciation in places like Las Vegas.”
Las Vegas, by the way, was ranked No. 1 in the nation in the first quarter in foreclosure filings with one for every 22 households. That’s 19 percent higher than the fourth quarter and more than double the filings in 2008’s first quarter.
“There appears to be no end in sight,” Smith said. “I am very concerned because it is not going to help prices as long as you have foreclosure inventory. I think right now it is going to take the job situation to flatten out first.”
Repossessions were held down during the first months of the year because of a moratorium by lenders, Fannie Mae and Freddie Mac, observers said.
Bottfeld said he’s not surprised that delinquencies are increasing in light of job losses, but that doesn’t mean all of those late payments are going to turn into foreclosures.
He said he expects a bump in foreclosures by the end of the second quarter, but suggested it will be short-lived because of a $350 billion federal program targeting foreclosures.
“There are enough programs in place right now, and hopefully that will slow it down,” Bottfeld said. “It will not stop it. Nothing it going to stop it, but it may be slowed in the second half of the year.”
Not everyone, however, takes that view. Blomquist said his firm expects foreclosures will remain at a high level in Nevada for at least the rest of the year.
“That is a big concern for the housing market in Nevada, especially Las Vegas. But the good news in some of the hard-hit areas is that we are starting to see home sales rise because prices are so low. That at least is creating a market for these lenders to clear their inventory of foreclosures. That is a hopeful sign that markets are trying to stage a recovery.”
Las Vegas recorded 3,626 existing-home sales in March, the most since August 2006 and 86 percent higher than March 2008. In February 2,759 existing homes sold.
Blomquist said it’s impossible to predict when the price slide will end or when foreclosures will start to drop. The federal program to stem foreclosures may not help markets like Las Vegas because homeowners aren’t eligible for part of the program if they are more than 5 percent underwater — they owe more on their mortgage than their home is worth, Blomquist said.
Those homeowners are still eligible for loan modifications by lenders, but the question is whether lenders are getting enough incentive from the government to do that in markets where prices have fallen so far, he said.
Blomquist said his firm is hearing anecdotal reports from real estate agents that many homeowners who can afford to stay in their homes are choosing to walk away because the values have fallen so far.
“I think it is already a problem and will continue to be a problem,” Blomquist said. “A lot of owners don’t have motivation to stay in their home. I don’t think we have seen the full extent of the people who have walked away that we will eventually see. There is no incentive for people to continue to make that payment on homes that are vastly underappreciated in value.”
In March the new-home market improved for the second consecutive month with 468 sales reported by SalesTraq. That’s up from 353 in February, but 57 percent below March 2008.
The median price of new homes edged up slightly to $218,000 in March from $216,334 in February. The price, however, is 39 percent below the peak of $355,435 in June 2006.
Builders took out 242 permits in March, the most since 396 were issued in October, SalesTraq reported.
Discussion: 27 comments so far…
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A friend of mine, a housing superintendent,is building a custom home in Henderson. And he says it's sad to see the City inspector that he called for approvals pull up 1 hour early, and park under a tree. Nothing to do. But hey-he needs to make a living, too. The supt doesn't dare say a word about it, or the inspector will nail him to the wall for pitty-pat nothings. This is getting bad...
It's time for the government to take a long hard look at the places that REALLY need help, Las Vegas being one of them. In some parts of the country, the gov't help is sufficient, but here and other cities where the foreclosure rate is so high and the price of the homes are so low, there should be exceptions. And let's face it - it's not as if the serious problems are happening in 200 cities in this country; it's only happening in a select few areas. But it's typical gov't bureacracy.
"Steve Bottfeld, executive vice president of Marketing Solutions, said he thinks the price is "pretty close to the bottom right now." "
At the height of the real estate bubble, Bottfield once laughed at the idea of a bubble in Las Vegas real estate and mockingly proceeded to blow soap bubbles in the air at a conference. Bottfield has since been consistent in saying that there will be no downturn, then the downturn will be brief and then we will go to new highs, and now for the last couple of years, the above statement. Why can't a single Las Vegas newspaper do any real reporting and simply say that Bottfield has been wrong throughout this entire real estate downturn and that he is not to be believed? Is the real estate ad money that valuable? I guess so.
The medium price is meaningless. The price/sq/ft is $75.00 and dropping. I purchased a fixer upper in 1997 for $64/sq/ft and thought it was a great deal, sold it in 2004 for $162/sq/ft.
I would not touch any house in Vegas, today, for more than $64/sq/ft!
This too shall pass.
I am a renter in a home that's just started the foreclosure process (thanks to my landlord who hasn't paid his mortgage since May 2008, I just found out). Hopefully, I will have a couple of months to find somewhere to go. I moved to Vegas in mid-2007 and have been watching and waiting for my time to buy. Trouble is, with articles like these, I still don't know when to do it. I appreciate the discussion section and comments more than the articles. I find the posters to be more truthful and insightful.
Does anyone else think the stimulus bill might not have been a good idea? Cutting taxes on employers so they don't continue to bleed and might be able to keep employees could have been better? Thank you harry Reid, your blind obedience to the idea of "fairness" will surely bankrupt everything in Nevada.
Bottfeld sure has a nice gig with the Sun. He is about as credible as Fox News.
Just like those quotes from Natl Assoc of Realtors. Gimme a break.
I want a 1000sf condo on the strip for $200K or less. Tell me when it gets there and I'm in.
My mother has a condo in Summerlin. In 1994, she paid $85,000. The condo across from her was forclosed on August of 08, and just last month auctioned off for $42,000. That tells me, that anyone looking to buy a place, that this would be the time... I can't believe the prices could drop so low... very scary.
I finally figured it out. Brian Wargo and the Sun keep quoting Steve Bottfeld for one reason: to make Bottfeld look sillier each time.
Without his ludicrous, over-the-top, bubble-denying, bottom-calling quotes, some readers might miss the point of the story. But throw in another silly bottom-is-in quote and the point hits home.
That is, they really don't know where the bottom is, and they won't know until two years in retrospect. They've been calling the bottom at $215,000, $200,000, $195,000, $175,000, $155,000 and now at $135,000.
Pretty soon they'll say $125,000 is the absolute bottom. And then they'll say it again six months later when the price is down to $117,000.
And Dennis Smith is just as compromised as a source. He thinks now that he sounds so amazed at the magnitude of the downturn, it somehow insulates him from being so wrong all the way down. It's the "Boy, I goofed!" defense.
Wrong, Dennis. We're keeping track, and you're just a tool of the local Real Estate Industrial Complex, which relies on commissions from getting people to buy homes, regardless if it's truly "a great time to buy."
"I appreciate the discussion section and comments more than the articles. I find the posters to be more truthful and insightful."
One significant difference between the articles and the comments section is that the articles are written by people whose names you know, who you can call out and question, quoting people whose names you know, "experts" you can research and make your own decisions as to their agendas or experience.
The comments section -- despite the Sun making folks here "register" and having editors "moderate" the comments (IE, remove comments seen as offensive) -- is mostly anonymous, wholly unverifiable, and hidden behind the "stage names" of people who could have insidious agendas of their own.
The only way in which these comments should be taken as seriously as a story researched and written by a reporter for a legitimate newspaper is if the Sun takes steps to (a) verify identity of each poster and require them to use their legal names, and (b) to verify all comments as fact, or require them to be cited as opinion.
This problem will continue to increase in Clark County as long as the supply out grows the demand.
It is time for everyone to look back and see that the national home builders used Clark County as their own personal gold mine for ungodly profits. Over built the cities and counties and raised prices to records profits of 50% realized on each home. All this with little to no regards for what was going to happen when the bubble burst...
THE BUBBLE HAS BURST...
The question is why are they (cities and counties) allowing home builders to build new homes when so many people are losing theirs... it just keeps adding to the horrific problem of supply ... and how can a person see the bottom in prices if supply keeps increasing.
Shut down new home construction for at least two years... save and Clark County...
*** FYI... did you all know that the builders are asking the legislators to limit their liability on construction problems from 10 years to only 3 years.... they look like they are ready to RUN FROM THIS STATE.... the senate has already passed it onto the assembly... you need to call your representative and tell them H*** NO...
James P. Reza - That's why they call them articles and comments.
The fact is that as far as Las Vegas's housing boom and bust, the newspapers have been nothing but shills for the real estate industry. This is verifiable by anyone who can search through archived news stories on the internet. In the case of Steve Bottfield, for any reporter to quote him as a housing expert shows a complete lack of integrity and a concern for the real estate ad revenue above honest reporting.
For you as a fellow report/writer to come on here and start attacking the integrity of commenters, please give me a break. Try looking a little harder at your own profession's integrity. If there was not a problem with the way Las Vegas newspapers have reported on the housing crisis, you would not see half as many of these critical comments here.
For the record, I'm not and have never passed myself off as a "reporter." I am an entertainment, nightlife and travel writer. Reporters earn degrees in Journalism. I did not.
Further, I attacked no one. I questioned the legitimacy of anonymous comments on an internet message board made by unverifiable individuals and sources.
My point stands. If someone has something to say, they should be willing to stand behind it with, at the very least, their legal name. Anonymous comments are useless, unverifiable, and full of hidden agenda.
Let it be noted that James P. Reza isn't a real estate shill. No, he's just a guy who needs Las Vegas to do well for his personal enrichment. If Las Vegas continues to tank, he doesn't get to sell books or write feel-good stories about the city. Always follow the money. ... This is from a Google link:
James P. Reza is a Las Vegas native who lives, breathes, and writes about all things Las Vegas. He is the editor of the Best Places Las Vegas guide, author of the Berlitz Pocket Guide to Las Vegas, and consultant editor for the Time Out Guide to Las Vegas. His writing has appeared in Conde Nast Traveller, ID, and Rudy Maxa's Traveler. He is also the nightlife columnist for the Las Vegas Mercury.
James P. Reza - And you have continued to evade the underlying issue. Journalistic integrity is being violated due to the Las Vegas newspaper's lopsided reporting of the housing crisis. Comment on this for once instead of attacking commenters' integrity only because they may be anonymous. Frankly, 50% of the comments here and elsewhere are a little bizzare, but that's why they call it a "Comments" section. For you to then not so subtly attempt to undermine all comments just because they don't agree with you is nonsense. And posting your full name is rather meaningless. If you have a point, make it. I don't care who you are. Once again, "Comments".
Despite the fact that there is simply no way of verifying if I am the James P. Reza noted above, the difference between anonymous comment contributors and myself is that I can be Googled. That was exactly my point, wasn't it?
It should be noted that the Las Vegas Mercury hasn't published in many years. Then again, accuracy isn't what the anonymous Internet is about. That, too, was exactly my point.
As a point of clarity, I have not made any comments regarding the veracity or accuracy of the Sun's article; my sole comment on the article was "This too will pass." I base that opinion on my family's 45 years in the valley and what we've seen come and go. I have a vested interest in Las Vegas because I live here, as should anyone who lives here.
James P. Reza - wow, so you spend you days googling yourself I guess. Good for you.
You are once again being disingenous. You are basically inferring that most of the commenters here have "insidious agendas", and that newspapers should only allow postings by people who have their indentities verified. Thankfully 99.99% of the newspapers in the country do not agree with you. Perhaps this is why your Mercury or whatever went out of business?
As a point of clarity, the Las Vegas newspapers (no doubt your own included) are illustrating just how corrupt they are when they continually print this real estate nonsense week after week. If they need the ad dollars so badly, then they should put a disclaimer on the article. This should be the point of the discussion here. Not your whiney complaints about anonymous posters.
When you can buy a home at a price were it will rent at enough to pay the mortgage with a 10% down payment the price has reached it's bottom. It looks like we are pretty close to this right now. With all the foreclosed properties sitting vacant, the owners aren't living in them and they aren't available to rent. This will cut the supply of rental homes and increase rents, which in turn will increase a homes value. I just sold property and have cash, I'm going to be visiting town in a few weeks and am thinking of trying to buy a house, thinking of making offers at about 60% of the listed price and offering to pay all cash, as-is and close in 10-15 days. If I get anything, I will consider it a big time score! Now is the time to buy, you've just got to do it right!
Why Google myself when I have pals in these comments that will do it for me? What was the betting line on how long it would take someone to launch a personal attack?
Oddly, "robert_lv" and I are making essentially the same point. However, "he" wants it to apply only to newspapers and not to the anonymous "sources" presenting themselves in newspaper comment sections. At least newspapers can be called to the carpet for their failures or transgressions. Faceless purveyors of (dis)information cannot.
If only the readers of the comments knew (or could find out) what informs the opinions of all those commenting. That, after all, was my only point. It's interesting that some appear threatened by the prospect of turning on the lights.
James_P_Reza, you need to start using your brain. Youll be able to moderate the noise in peoples comments and form your own opinion rather than blindly following delusional dreams.
"This too shall pass"
...and what wreckage will be left behind when it's over? Sure there will be opportunity but does it do you any good NOW if it's a decade out?
comment /kmnt/ [kom-ent]
noun 1. a remark, observation, or criticism: a comment about the weather.
2. gossip; talk: His frequent absences gave rise to comment.
3. a criticism or interpretation, often by implication or suggestion: The play is a comment on modern society.
4. a note in explanation, expansion, or criticism of a passage in a book, article, or the like; annotation.
5. explanatory or critical matter added to a text.
6. Also called rheme. Linguistics. the part of a sentence that communicates new information about the topic. Compare topic (def. 4).
verb (used without object) 7. to make remarks, observations, or criticisms: He refused to comment on the decision of the court.
8. to write explanatory or critical notes upon a text.
verb (used with object) 9. to make comments or remarks on; furnish with comments; annotate.
What is so insulting and threatening about the idea that sources be transparent, whether they are comments or articles? What gives an anonymous source the right to coattail on the website of a legitimate news source and use that legitimacy to qualify their own random, anonymous commentary?
I'm at a loss.
Eh - back to real life.
Someone needs to tell BOTH SIDES of the story...
You would not believe the difficulties in buying a bank-owned home. I know first-hand as I am buying one as I write. Even though I was pre-approved, with 20% down, and able to close quickly, it has been a nightmare to:
1] find a house suitable to live in and offering the amenities I was looking for in the location that appealed to me;
2] find a listing agent that is NOT controlling the WHOLE process; (not answering phone calls, lying about offers submitted, changing the offer submission dates, trying to start bidding wars if they don't exist; etc.)
3] getting an offer to the bank that owns the property (again controlled by the listing agent);
I wanted to buy last month, and submitted at least 15 or more offers - NONE of them "low-balling" the listing price, most were at or above and yet I was still told that I was "out-bid" by someone else, and 5 have never responded.
And, just so you know, I was looking in the $180k and under range. To get the house I am buying, after weeks of frustration, I bid almost $10k OVER listing price, offered to pay all closing costs, sent letters, and was FINALLY considered and accepted. I feel fortunate to finally be getting a home that I like and want to live in.
...dream on if you think it's easy
James_P_Reza,
Other than enjoying the banter between you and the other commenters... I am not sure what comments you think are without merit or insidious.
I would have enjoyed at the very least to read some rebuttals by you .. other than this too shall pass.... we all know it will... just when is the question .. and hopefully we can learn what caused it and take actions not to have it happen again. Then, and only then can we find our OWN way out ... of this nightmare.
Within those rebuttals, you might have given insight to the rest of us who are just searching for the magical ring that changes our position in life...some of us non-reporters still believing that the magical ring exist..
Dennis Smith of Home Builders Research needs a new job. Obviously he is really really bad at what he does.
In response to the person suggesting that the builders need to be limited on building.
I would suggest there are other factors which are driving the prices down, supply is certainly one of them, but demand is too. If people are losing their jobs and can not pay a mortgage or banks are not loaning the money to buy houses, then the price is driven down just the same.
Clearly it is a balance of all factors, but why not find ways to increase jobs (demand) instead of just limiting supply.