Home-price decline’s halt may be final, or just pause

By Buck Wargo

Monday, Aug. 3, 2009 | 2 a.m.

The chances are growing less likely that Las Vegas median home prices will fall to $100,000, according to a Las Vegas housing analyst.

But no one should expect prices to shoot up anytime soon despite a lack of inventory, said Larry Murphy, president of SalesTraq, a housing research firm.

“It appears prices have stopped falling,” Murphy said. “It’s possible that prices could fall further and hit $100,000 by the end of the year, but I don’t think that will happen.”

The median price of existing homes sold in Las Vegas in the first quarter fell 16 percent, but by the end of June that 16 percent decline remained unchanged. The median price was $148,000 in January but was $125,000 at the end of June.

But Murphy warned of a false bottom and said that even though prices won’t fall to $100,000, they still have room to drop.

The price may settle depending on what happens with foreclosures the rest of the year. Murphy said he expects another wave because of the high jobless rate and people walking away from their homes. A lender moratorium on foreclosures ended in March, which should also add to the supply.

Murphy said the anecdotal evidence from Realtors is that they are getting more assignments from lenders to put foreclosed homes on the market. That comes at a time when multiple offers for homes have started to disappear because of the limited supply of attractive foreclosure homes.

Back in December 2007, no one could have predicted that home prices would have fallen 34 percent in 2008, Murphy said. Even the luxury market hasn’t been immune from the housing slowdown, as some had once suspected.

“Not one corner of this market has hidden from the economy, including the luxury market,” Murphy said. “The luxury market is hurting right now.”

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Investors looking to identify which real estate purchases are the best performers — in this market, that means they are depreciating the least — might consider the findings of housing experts in the Las Vegas Valley.

Single-family homes fared the best among properties when comparing the first half of 2008 to the first half of this year, said Larry Murphy, president of SalesTraq, a Las Vegas housing research firm. Their median price fell 34 percent in that period.

Homes performed better than an acre of undeveloped land, whose median price fell 42 percent over that time frame, he said.

Third on the list were mid-rise condominiums, which fell 49 percent. They were barely ahead of high-rise condos, whose values fell 50 percent, and other condos and town homes, which fell 51 percent, Murphy said.

The worst investment was apartment conversions, with values falling by 56 percent, Murphy said.

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Although new-home sales remain weak in Las Vegas, DR Horton has eclipsed the traditional front-runners in the market when it comes to sales through the first six months of 2009.

DR Horton recorded 425 sales, easily surpassing the 282 of Pulte-Del Webb and the 249 of KB Home, according to SalesTraq.

Housing analyst Dennis Smith, president of Home Builders Research, credits the builder for not being afraid to compete with foreclosures and for its terrific marketing.

In its recent “Repo Myth Sale,” the Texas-based builder tried to show how foreclosed homes cost more than they appear because if they are in poor condition, they require refurbishing that makes them more expensive than new homes. New homes also come with a warranty and improvements that make them worthwhile, the builder said.

In a market where many first-time buyers have been frustrated by losing to investors who are plunking down cash and outbidding them for foreclosed homes, appealing to those buyers is important.

“It is a great marketing move to bring this issue to consumers’ attention,” says Smith, who adds that other builders have tried similar strategies.

Longer version of these stories appeared in this week’s In Business Las Vegas, a sister publication of the Sun.