Home sales, prices cool a bit in July

By Buck Wargo

Friday, Aug. 14, 2009 | 3 a.m.

Las Vegas home sales slowed slightly in July and prices resumed their downward spiral after stabilizing the previous two months, according to the Greater Las Vegas Association of Realtors.

Despite the pullback in sales and prices, the 4,602 single-family homes, town houses and condos sold by Realtors are the most July sales ever and only 100 behind June’s record, the group reported. The group tracks all home sales in which Realtors are used.

In July 3,738 single-family homes sold, 47 fewer than June. The 864 condos and town houses sold were 53 fewer than June.

“It is probably a reflection of the lack of inventory,” said Dennis Smith, president of Home Builders Research, about the decline in sales from June. “No. 2, the difficulty of trying to get some financing for sales is always a problem for Realtors.”

At the end of July 20,423 single-family homes were available, 1 percent less than June and 13 percent below July 2008.

Despite the number of sales, the median price of single-family homes sold in July dropped $1,200 to $138,800 after holding at $140,000 in May and June.

Smith said the price decline is so small that it indicates home prices are stabilizing. But he added prices aren’t increasing because a large percentage of foreclosures is dictating the market.

Since its peak in June 2006, the median price has fallen 56 percent from a high of $315,000. There is one indication, however, that it could rise at some point, Smith said. The median price of new single-family homes in July was $149,900, a 2.7 percent increase over June. That rare increase may indicate lenders are running out of lower-priced homes and putting higher priced units on the market, Smith said.

“That is a number to watch,” he said.

In July 5,087 new listings of single-family homes were 6 percent more than June and 876 more than April, according to the group. New condo and town house listings were 10 percent higher in July at 1,338.

Foreclosures are still depressing prices. A report last week by Deutsche Bank said 81 percent of Las Vegas homes were underwater at the end of the first quarter — the fourth largest number in the nation. The report said that number would rise to 90 percent by 2011’s first quarter.

The report suggested that nationwide, home prices will decline another 14 percent on average. It doesn’t give a specific amount for Las Vegas.

The report was criticized by some Realtors as damaging to potential sales.

“I have lost five clients in the past week because of it,” said Bruce Hiatt, who deals in luxury high rise units. “It is more evidence of bashing the real estate market here. They think prices are going to down 14 percent, and they are going to wait for more foreclosures. They are thinking, “Why should I buy when the prices are going to be cheaper?”

Hiatt said he is upset because the report doesn’t back up its claim about prices declining. He said the clients who have walked away are those looking at condominiums at more than $1 million.

That’s frustrating because about six weeks ago, a lot of prospective condominium buyers were entering the market because of falling prices, he said. There has been at least a 60 percent discount, he said. July’s condo sales were 141 percent higher than July 2008.

It’s been an education process for prospective buyers who have the wrong impression about Las Vegas high rises, Hiatt said. Many think there are tens of thousands of residential condos available on the Strip when in fact there are only about 1,300 between Sky Las Vegas and CityCenter. Other condominiums are off the Strip or north of it.

“We try to educate them that there is not that much supply, and that we are not going to see a high rise for many years,” Hiatt said. “It is causing them to avoid Las Vegas and go to other cities.”

In July the Realtors’ group reported the median price of condo and town houses was $67,000, a 1.5 percent increase over June, but 50 percent below the price in July 2008. The average price of units sold was $87,256.

Hiatt said he’s concerned that the Deutsche Bank report could become a self-fulfilling prophecy because homeowners may walk away when they don’t see prices appreciating anytime soon.

Many real estate observers suggest the next wave of foreclosures could include those who can afford to pay their mortgage, but will refuse to do so because they are so far underwater.

“Their report may create reality and people on the fence will walk away,” Hiatt said.