Report: Vegas, Detroit show weakness as home prices rise nationally

By Steve Green

Tuesday, Aug. 25, 2009 | 9:27 a.m.

The new Case-Shiller Home Price Indices issued Tuesday show the Las Vegas real estate market continues to underperform the national market.

Home prices overall rose in June in 20 big-city markets covered by the report. But Las Vegas and Detroit were the two exceptions, with falling prices.

The report, issued by credit rating agency Standard & Poors, said that overall the 20-city index of home prices rose 1.4 percent from May to June.

But prices were down 2 percent in Las Vegas and 0.8 percent in Detroit, Standard & Poors said.

Tuesday's report is in line with recent reports on home prices and foreclosures showing some stabilization nationwide -- but also showing continuing problems for the Las Vegas and Nevada markets.

Las Vegas was hit hard by the subprime mortgage crisis starting in 2007 as many mortgages went into foreclosure when their interest rates reset higher.

Homeowners -- many speculating that prices would rise -- typically found themselves underwater as the debt against their properties exceeded their values.

The U.S. gambling capital more recently has been hit hard by the U.S. recession, which reduced visitation to Las Vegas and sharply reduced activity in the big Southern Nevada construction and development industries.

Las Vegas-area unemployment has soared, hitting 13.1 percent in July.

Overall, the good news about the national economy was contrasted with the bad news in Las Vegas in Tuesday's Case-Shiller report.

"As seen in both seasonally adjusted and unadjusted data, as well as the charts, there are hints of an upward turn from a bottom. However, some of the hardest hit cities, especially in the Sun Belt, show continued weakness," David Blitzer, chairman of S&P's Index Committee, said in a statement.

"While not alone, Las Vegas and Detroit continue to be two markets that are struggling severely. These are the only two markets that fell in June and saw deterioration in their annual rates of return. Since their relative peaks they have fallen 54.3 percent and 45.3 percent, respectively," the report said.

While falling home prices are a symptom of the troubled economy in Las Vegas, they are keeping real estate agents busy selling homes that are now suddenly affordable for those able to quality for mortgages.

The Greater Las Vegas Association of Realtors earlier this month said that with bank-owned foreclosure sales still dominating the market, sales of existing homes, condominiums and townhomes in July were off just slightly from June's record numbers. July sales totaled 4,602 units.

The Realtors said the median price of existing single-family homes in the Las Vegas area was $138,800, down 0.9 percent from June. The median price of condominiums and townhomes was $67,000, up 1.5 percent.