2010 expected to be more friendly to housing than 2009

By Buck Wargo

Friday, July 3, 2009 | 3 a.m.

What is on tap for Las Vegas in 2010 when it comes to the local housing market and economy? Although they will be weak, at least they will better than 2009, according to one analyst.

Keith Schwer, director of UNLV’s Center for Business and Economic Research, says he expects a slight rebound in the new-home market with 5.8 percent more permits issued. That, however, won’t make up for the 56 percent decline in home permits by the end of this year that Schwer predicts.

Although 2010 will be weak by historical standards, it will at least be an improvement over 2009, Schwer says.

Population, which is important to the health of the housing market, will see a 1.1 percent increase in 2010 after falling by 0.4 percent by the end of this year, Schwer predicts.

The population increase will mirror job growth, which is expected to be up 0.9 percent in 2010, he says. That’s after a 5 percent decline in 2009.

Improvements in tourism and gaming will fuel economic gains. Visitor volume is expected to be up 5.7 percent next year. Schwer expects visitor volume to show a 3.7 percent increase by the end of this year. Gross gaming revenue will jump 3 percent in 2010 after falling 2.5 percent in 2009, he says.

All of that will boost personal income in 2010 by 4.5 percent, Schwer says. Personal income in the valley will have fallen by 2.5 percent by the end of the year, he says.

Housing market update

Analyst Dennis Smith, president of Home Builders Research, says about 9,600 single-family homes are for sale without any offers and nearly 2,100 of those are owned by banks. That means 22 percent of the available inventory of homes are foreclosures in contrast to 75 percent of the most recent sales that were owned by banks.

That is going to prompt more lenders to list more foreclosures in July, Smith says.

“This is the next surge of resale inventory that market watchers have been waiting for,” he says. “How long it takes the marketplace to absorb these homes will be a vital indicator of when we can expect to see the bottom of the resale-housing segment.”

It may take months for consumers to work their way through the inventory. Investors will continue to be a major factor because they will try to beat any price increases, he says.

“There will be some amateur investors who try to time it too close and once again get hurt and lose their investments,” Smith says.

Smith says he can’t predict how long it will take to absorb the next round of bank-owned homes. Without knowing how many properties will be released, it is only a guess, he says.

Some banks are slowly becoming more realistic about the housing demand, Smith says. Nearly half of the active short-sale listings have some kind of contingent offer.

Applied Analysis reports the number of used homes on the market as listed by real estate agents continues to decline. During the past year, the number has dipped 36.7 percent or 8,109 units, lowering the inventory to less than 14,000, the firm notes. The inventory has dropped for 13 consecutive weeks with 6,700 fewer properties listed during that time. The number of vacant homes is just under 7,500 — a drop of 49 percent, according to Applied Analysis.

In its housing report on Las Vegas, Hanley Wood shared some of its first-quarter highlights that showed the top seller was Easton Place by Pulte Homes with 23 net sales and prices as low as $100 per square foot. The other top-selling projects were Cactus Hills Square by DR Horton, Montage at West Park by Ryland Homes, Promontory at Coronado Ranch by American West Homes and Sterling Ridge by KB Home.

Some characteristics were that four of the five were in master-planned communities; four were in the western valley; the average home measures 1,925 square feet with a price tag of $204,649 or $106 per square foot; four of the five are detached and the average lot size was about 3,400 square feet.

As for the cancellation rate of new homes and condos, that fell from the first quarter of 2008 when it was 45.4 percent to 25.6 percent at the end of this year’s first quarter.

In other news:

• Kathleen Drakulich has been named a partner at the law firm McDonald Carano Wilson. Before joining the firm, Drakulich served as a partner at Kummer, Kaempfer, Bonner, Renshaw & Ferrario. She is a former assistant general counsel for NV Energy. She served as its counsel during numerous sessions of the Nevada Legislature. In private practice, she has represented local, national and international energy and public utility firms.

• Beth Molasky, a principal of the Molasky Group of Cos. in Las Vegas, is a development partner in a vacation homeownership project in San Diego. Molasky is co-owner of Ocean Pacific Properties, which has opened the Residence Club at Mission Beach, Calif. It is selling fractional stakes in 10 residences. The shares are in one-eight increments and go for either $265,000 or $325,000. The units are 1,081 and 1,227 square feet, respectively. Beth Molasky is the daughter of Irwin Molasky, the prominent Las Vegan most famous for developing the Maryland Parkway retail corridor.

Brian Wargo covers real estate and law for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at [email protected].