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Experts: Foreclosures threaten possible Las Vegas housing recovery
Sale winds: A Henderson home is advertised for sale on July 13. The median price of Southern Nevada homes sold in June remained at $140,000, the same as May.
Fri, Jul 17, 2009 (3 a.m.)
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There’s a buzz in the Las Vegas Valley’s residential real estate business.
There’s excitement because Las Vegas set a record for existing-home sales in June, with prices holding steady for the first time in almost two years.
Some real estate pros hope the June housing numbers released last week by the Greater Las Vegas Association of Realtors are a sign that prospects for the housing market are improving, but analysts cautioned it’s too soon to say the market is recovering.
Experts say the major roadblock to recovery is the same obstacle that boosted inventories and pressured prices into a free fall: foreclosures.
First, the June numbers:
The Realtors report 4,702 single-family homes, town houses and condominiums sold in June, topping the previous record of 4,414 sales in June 2004.
The median price of homes sold in June held its own at $140,000 — the same as May.
That’s the first time there hasn’t been a median price drop since August 2007, when it rose 1.7 percent.
Prices have fallen 38 percent since June 2008 and 55 percent since the peak of $315,000 in June 2006.
“Everybody is asking if this is the bottom, but I don’t care if this is the bottom,” said Steve Bottfeld, executive vice president of Marketing Solutions. “The key question right now is how long are we going to stay on the bottom.”
Although the housing market is heading in the right direction based on June’s sales and prices, the big worry remains foreclosures, Bottfeld said.
A moratorium on foreclosures earlier this year slowed the amount of inventory hitting the market, but lenders are expected to begin offering a substantial number of newly foreclosed homes.
“Until we see those in the coming months, we won’t know when the market is coming back,” Bottfeld said.
Foreclosures dominated the market in June at 74 percent of the sales, according to the Realtors group.
First-time buyers taking advantage of the homes’ affordability and an $8,000 federal tax credit are gobbling up the inventory, and investors are active as well.
MDA DataQuick Information Systems estimate investors comprise 36 percent of the market.
Las Vegas housing analyst Dennis Smith, president of Home Builders Research, said he is not yet predicting the end of the downturn.
The market may have hit bottom in terms of the number of sales, but until prices stabilize and start to increase, no one can say a recovery is near, he said.
Smith said he wouldn’t be surprised if prices fall another $10,000 and level off for a while.
Once prices start rising, investors will leave the market, Smith said. The question will be whether there are enough other buyers to fill the void and sustain a recovery.
But until that happens, the wild card remains foreclosures, Smith said.
By some estimates, 20,000 to 25,000 foreclosed properties have yet to be put on the market and that could double if foreclosures increase as some expect.
“I think that supply is coming, and it is impossible to say if there is enough demand,” Smith said.
And the demand side is dicey: For the housing market to turn, there needs to be job growth. Right now, unemployment is rising and is above 11 percent, Smith said.
“Until people are confident they can stay in those houses and confident they are not going to lose their jobs, they are going to be reluctant to buy,” Smith said. “The best thing that could happen for the housing market is an improved job market. Then there won’t be sales just to investors.”
Las Vegas housing analyst Richard Lee, first vice president at First American Title, said the record number of sales has captured a lot of attention in the real estate community.
That’s the good news, but the bad news is that the foreclosed properties are the ones being sold. That’s what driving the market because most sales are lower-priced homes, especially those less than $150,000, Lee said. Prices stopped falling in June because there was enough demand to meet that price in the market, he said.
Lee said he wonders whether there will be enough buyers for many higher-priced homes — between $350,000 and $1 million — once the supply of lower-priced homes dwindles.
“I think a lot of people who can afford a $500,000 home don’t know quite yet what’s happening to the economy and are not comfortable buying in this situation,” Lee said.
Tim Sullivan, president of Sullivan Group Real Estate Advisors, said that, although the housing market is close to its bottom, what is different is this recovery will lag compared with past recoveries.
One reason is that real estate growth is driven by jobs, he said. In addition, during the 2001 recession, the housing market didn’t contract, and the market must pay a price for overdevelopment earlier this decade.
“We are paying double this time,” Sullivan said.
Discussion: 16 comments so far…
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Too late, Bottfeld and Smith. You guys lost any alleged credibility with your constant bubble denials and bottom calls since 2006. Now suddenly you're cautious to call a bottom? No one cares what you think.
You guys were compromised in the first place and your cheerleading throughout the downturn removed any alleged credibility. Tell me, how do "local housing consultants" make money? Who uses their "services?" Could it be other members of the Real Estate Industrial Complex, whose only goal is to churn more RE sales?
Why The Sun continues to quote your compromised opinions, who can say? But the rest of us are on to your scams. Take a hike, pompon girls.
Steve Bottfeld says he doesn't care if it's a bottom, but that's precisely what he called in an "analysis" of the Las Vegas market on June 23, less than a month ago. Here's the link:
http://www.glgroup.com/News/LAS-VEGAS--R...
LAS VEGAS: RESIDENTIAL HAS FOUND THE BOTTOM
June 23, 2009
Analysis by: Steve Bottfeld
Implications
May housing data strongly suggests that Las Vegas will experience a bottom to the residential recession in the 2nd quarter of this year.
(Bottfeld then lists 4 reasons: 1) existing home sales continue to exceed new foreclosures; 2) sales continue strongly; 3) inventory at the lowest point in three years; and 4) existing home prices slid "just" 2.4 percent last month).
Then he darn near encourages banks to limit the number of foreclosed/REO homes they put on the market:
"Financial institutions now sit on approximately 14,000 REO's and will certainly add more in the near future. We strongly suspect that it is in the best interests of the financial institutions involved to be judicious in the number of REO's they release each month."
Thanks, Steve. We see whose side you're on now -- the 3-percenters who get paid for churning sales.
anyone with a vested interest in what they are advising for or giving figures for should not be listened to, as they will say what they want in order to line their own pockets...at the expense of the public they are misleading...
"I think a lot of people who can afford a $500,000 home don't know quite yet what's happening to the economy and are not comfortable buying in this situation," Lee said.
actually no, people who would buy properties in excess of 500K have brains, they would not venture into a market which has at least another 20% in price drops to go...
generally first time buyers have no real knowledge and are easily talked into buying on the promise prices will go up,,
lets get some facts straight
1) A house is for living in
2) It is not an investment, prices can go down
3) When prices go down you are in serious danger of having no-where to live, unlike investing in shares
4) Las Vegas has a massive oversupply of poorly built homes
5) The economy won't recover for at least 10 years
6) Taxes are going up to pay for bailouts, thus leaving the public with less money
7) There are massive amounts of empty plots waiting to be built on
8) Banks are holding some 40,000+ properties waiting to sell..
that last houseprice boom-crash-back to original boom prices took more than 10 years, that was a minor housing crash, this time it is a depression, whatever the spin tells you, we are in a depression...
Good points, markp.
Every time I hear someone say "the banks aren't lending," I want to scream.
They are lending, but the people who can easily qualify (20 percent down, 36 percent DTI) are too smart to take on new debt, even at great interest rates, and those who want to borrow/refi don't have good enough credit or any equity in their homes, if they ever had any.
When people say the banks aren't lending, what they secretly mean is banks aren't lending on the same fog-a-mirror terms they did during the boom.
Now, like the "old days," you have to put some skin in the game. No more 80/20 piggy-back loans to avoid PMI, no more option/arms, no more "down payment assistance" scams. And most of those who desperately want to borrow are running short of skin at the moment
haha!
i knew it.
i posted on an article that came out yesterday saying i wonder how long it was going to be until we got something from bottfeld saying we were at the bottom.
haha!
only took one day.
"And the demand side is dicey: For the housing market to turn, there needs to be job growth. "Right now, unemployment is rising and is above 11 percent, Smith said.
"Until people are confident they can stay in those houses and confident they are not going to lose their jobs, they are going to be reluctant to buy," Smith said. "The best thing that could happen for the housing market is an improved job market. Then there won't be sales just to investors."
And we need so-called experts to tell us this.....
"hey it could be worse; you could be in florida where the economy is zero the humidity is high and hurricane season is about to start."
Moved here from Florida in 2006. I run bad.
Ft. Myers, Florida, to be exact--the second worst housing market in the country. I knew it was going to happen--the bubble bursting--but who knew it could be this bad? Good thing Goldman-Sachs is back to making big profits, huh? They recovered from this, but will we?
good point judge...banks are lending but just lending the way they should have in '05. I am not having a difficult time at all getting my clients qualified on good credentials. the days of c and d paper is over. and with the addition of the $8000 first time buyer assistance, there is a real good opportunity for some people to get affordable housing.
Banks ARE lending....I recently got another home loan about 2 months ago for a 30 year fixed, 4.875% intrest rate. No problems, very easy, closed in 26 days.....but I have a 812 FICO and put down 20%. I laugh when I hear that the banks aren't lending. That's not my experience at all. Very simple procedure with no hassles for me.
congrats on the new home breeze!!! it's pretty simple folks, the people who SHOULD be buying houses can, and those who SHOULDN'T can't!!
housing has not i repeat has not hist bottom over 8700 foreclosure last month alone 2500 bankruptcy every month
tourism is down year over year. that's the only thing that matters.
until tourism picks up, vegas will keep sliding.
No one in any aspect of "real estate" will objectively see what is in front of their faces.
They want to see a rosy picture because that's what's needed to sustain their economic future.
The truth might set them fleeing.
Las Vegas property is going down the toilet for another 10 years. High gas price mean no tourism;therefore, no job. No jobs mean real estate will go in the toilet for another 10 years. No question about it. It's coming people. Sell all your property now before it's too late and move to California.
Stick a fork in it...vegas is (Over)done.