Las Vegas Sun

March 28, 2024

real estate:

Report: Home prices expected to fall through 2011

Las Vegas among 10 riskiest areas in country for falling home prices

Updated Tuesday, July 7, 2009 | 10:34 a.m.

Home prices in Las Vegas and throughout Nevada will likely continue to fall through the first quarter of 2011, a new mortgage industry report shows.

PMI Mortgage Insurance Co. of Walnut Creek, Calif., today released its second quarter Economic and Real Estate Trends Report and its closely-watched U.S. Market Risk Index.

Las Vegas is among as many as 324 -- approximately 85 percent -- of the nation's 381 metropolitan statistical areas facing increased risk of lower home prices in 2011, PMI said.

Florida, California, Nevada and Arizona, the states at the forefront of the subprime mortgage catastrophe that led to the decline in home prices, continue to have the highest risk scores, PMI said.

Las Vegas received a score of 99.9 in the index measuring the likelihood prices will decline. That number is based on first-quarter data and is up from 99.8 in the fourth quarter of 2008. In both quarters, Las Vegas was ranked among the 10 riskiest metropolitan statistical areas in the nation in terms of likely home price declines.

But an increased risk of lower future prices is spreading across all regions of the nation due to the significant increases in unemployment and foreclosure rates, PMI said.

"Rapidly rising foreclosure and unemployment rates, continuing declines in house prices and weakening consumer demand all worked to increase risk in the general economy, and the housing market specifically," David Berson, PMI's chief economist and strategist, said in a statement.

But as has been seen in Las Vegas, the lower prices may continue to lure buyers into the market nationwide, PMI said.

"As a result of the continued weakness in prices, and the relatively low level of interest rates, improvements in affordability across the nation's MSAs will continue to incentivize repeat and first-time homebuyers back into the market," Berson said in the statement

For all 381 MSAs, PMI's average affordability index reading was 133.3 in the first quarter of 2009, compared with a reading of 120.6 for the fourth quarter of 2008. In Las Vegas, the index reading was 160.34 in the first quarter -- meaning prices locally were more affordable than in the fourth quarter, when the local index was at 138.02.

The index measures today's housing affordability relative to a 1995 baseline. A score exceeding 100 indicates that homes have become more affordable.

Today's analysis is in line with a report last week showing Las Vegas home prices continued to fall through April at a rate far greater than most big cities. That news was found in Standard & Poor's S&P/Case-Shiller Home Price Indices.

S&P said that comparing home prices in April 2008 and April 2009, the three worst-performing metro areas continue to be the same markets: Phoenix was down 35.3 percent in April, Las Vegas declined 32.2 percent and San Francisco fell 28 percent.

Also last month, the Greater Las Vegas Association of Realtors said the median home price in the Las Vegas area in May was $140,000, down 1.2 percent from April and off 40.9 percent from May 2008.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy