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Las Vegas housing supply hits 3-year low
Expert expects trend to end as foreclosures increase
Associated Press File
Home prices have stabilized in the Las Vegas Valley over the past couple of months as inventory has fallen, but experts say a lot more foreclosures are headed to the market.
Fri, Jul 24, 2009 (3 a.m.)
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The number of existing homes on the market fell to the lowest level in more than three years, but the declining inventory is likely poised to rebound after Las Vegas reported a jump in foreclosures in June, according to newly released statistics.
After a record number of existing-home sales in June at 4,663, SalesTraq reported that the inventory on the Multiple Listing Service fell to 12,653 or a 3.4-month supply — a level not seen in several years, President Larry Murphy said. The listings are the fewest since 11,497 homes were on the market in December 2005.
The dwindling supply of foreclosed homes is one reason existing-home prices have stabilized in the last couple of months, housing analysts said.
The median price of $125,000 in June is the same as it was in May, SalesTraq said. The research firm revised its April existing-home price down to $120,000, signifying that prices have rebounded slightly since that low-water mark was reached.
Murphy, one of the housing statistic gurus in Las Vegas, said the inventory decline matches anecdotal evidence by real estate agents, who are saying the lower-priced foreclosure supply has been picked over by buyers.
Foreclosed properties accounted for 62 percent of the sales in June, down 2 percentage points from May, and sold for a median price of $113,900. The nonbanked-owned properties sold for a median price of $145,000 in June, according to SalesTraq.
Murphy said he doesn’t see anything positive in the numbers, even though inventory has declined and the record number of sales surpassed May’s by more than 600.
“The bottom line — my gut feeling — is that we can tell ourselves there has been an improvement and prices have stabilized, but I don’t see anything significant. Nothing jumps out at me that says the worse of it is absolutely behind us and happy days are here again,” he said.
Murphy said he expects the local housing market to thump along the bottom for a while and prices to stay in the range they are in.
“I don’t think it’s any great news,” Murphy said. “It’s more of the same.”
One red flag is home repossessions, Murphy said. In June, 2,486 homes were foreclosed, 717 more than May and the most since August’s 2,810. He said he wouldn’t be surprised if as many as 3,000 homes are repossessed in July.
From March to May, fewer than 2,000 foreclosures a month were reported, with the low being 1,289 in April.
Murphy said it’s starting to be obvious that the dip in foreclosures was because of a self-imposed moratorium by lenders that for many ended in early March. That should increase the supply of homes in the coming months and hopefully there will be buyers to match the bigger inventory, he said.
Data released last week by California-based RealtyTrac point to more foreclosures in the pipeline.
In June 8,726 default notices were filed against Nevada homeowners, and 3,786 homes were repossessed statewide.
RealtyTrac said unemployment-related foreclosures account for much of the increased activity, and the high number of borrowers who find themselves owing more on their mortgages than their homes are worth represents a significant risk.
Overall, foreclosure filings rose by 9 percent compared with May and were 115 percent higher than June 2008, RealtyTrac said. There was one filing for every 59 households, which leads the nation.
The second-worst state in foreclosure filings was California with one filing for every 132 households. Arizona was third with one filing for every 158 households.
For the first six months of the year, Nevada foreclosure filings were up 61 percent compared with last year’s period. They were 23 percent higher than the second half of 2008, RealtyTrac reported.
Las Vegas housing analyst Steve Bottfeld, executive vice president of Marketing Solutions, said the latest housing statistics tell him that Las Vegas has hit bottom.
The stabilizing of home prices is one reason and the decline in inventory is another. New- and existing- home sales hit their highs in June, he said.
Existing-home sales exceeded the number of foreclosures created for the fourth consecutive month, he said. Even though the moratorium has ended, he said he thinks that trend “now looks solid.”
Financial institutions have about 13,000 repossessed homes that have yet to be put on the market, down from 16,400 in February, Bottfeld said.
SalesTraq said the 474 sales in June was the highest monthly total this year, but is still paltry by historic comparisons. Sales were down 46 percent compared with June 2008.
The median new-home price was $209,382 in June, about $2,000 less than May. New-home prices have held steady for the past five months because builders say it is hard to make a profit by cutting prices much further.
Despite the dip in median prices, the price per square foot for new homes rose in June. They sold for $107.65 per square foot in June, up by $1.06 per square foot compared with May
The number of active subdivisions fell to 288 in June, 37 percent below the 460 active subdivisions in June 2008.
The average sales per subdivision in June rose to 1.65, the highest since December when it was 1.81 sales per subdivision, SalesTraq said.
Home construction remained tepid by historic standards, but 343 permits issued in June are the most taken out by builders since 396 were issued in October.
Discussion: 21 comments so far…
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expert???
hee hee hee...
hoo hoo hoo...
haa haa haa...
want to laugh your derriere off...
jump over to the review journal and read their real estate archive...
it is absolutely amazing how wrong these clowns have been...
dead wrong...
There is something going on out there. Its true the inventory has dropped. Clearly banks are trying a new strategy.
I want to buy another property but I am waiting until these weird games end.
Foreclosures are booming and bank owned deals are drpping in slowly. I have plenty of time to wait...
my parents bought a $600,000 house in anthem last fall and thought that it is a good investment. It is brand new. I think that they are senile. What do you think?
You can thank Geitner for the lack of inventory! He gave his friends aka crimnals on Wall Street a nice little accounting change called "market to market" which allows them to keep the inventory on the books without disclosing the loss on the P/L. Only in America crimnals who steal over a trillion dollars from society don't go to jail...
Very funny article - don't have to go to comedians to have a belly laugh. You know the investors are buying these things so they can rape the rest of us and there will be more foreclosures as greed abounds and as the market continues to slide. As for folks buying 600,000 houses - if they can pay it maybe they aren't senile. Thinking that the current situation is a real improvement - that is senile!
My wife and I are carefully looking to purchase a home. With the banks playing games with their inventory it makes it difficult to know when to pull the trigger. Now, can someone tell me what happened to the Andrea McNulty story? Now those comments were fun!
Here is piece from realty check, claim is they don't want prices to fall further.
http://www.cnbc.com/id/32108755
"the shadow knows"
A TV station in Phoenix did a story on a "shadow market." There is a huge number of houses not on the market. They are in a bank created limbo.
Wonder why banks drag their feet? Because they can control the number of houses on the market. Why won't my bank get back to me about refinancing? etc. Then they drag out the foreclosure and sales prep process.
haha!
i saw this article and i was like "i bet you ANYTHING steve bottfeld is quoted in it" and sure enough, there he is.
we have NOT hit bottom, you moron.
we still have year over year decrease in visitors and gaming revenue and around 13% unemployment.
that drives EVERYTHING.
until our core business of gambling and tourism picks up, and casinos feel good about hiring people, housing will continue to be a downward slide.
Brian Wargo writes: "Murphy said it's starting to be obvious that the dip in foreclosures was because of a self-imposed moratorium by lenders that for many ended in early March."
Really? It's just now STARTING to be obvious to Murphy? The rest of us "non-gurus" figured that out one month into the moratoriums back in November.
In addition to Bottfeld's bogus REO inventory numbers, there are probably twice as many houses that have received the first Notice of Default, but the banks aren't taking the next step because they don't want to take possession of the home and be responsible for upkeep, HOA dues, taxes, etc. Also, they're still hoping the gov't will jump in with THE EVEN BIGGER BAILOUT.
I would guess there are about 50,000 homes in Las Vegas that are either in default, vacant or held by banks. Sooner or later, the banks will have to start taking back these homes and show the losses on their balance sheets.
The mortgage company that sold the note could care less about re-financing as they bought insurance from AIG. When the note goes to foreclosure the lender gets the house and collects from the AIG insurance contract. Months later they sell the home and collect the proceeds from the sale. Why would they re-finance? They are getting more than 100% back doing it this way. They lose money on a re-finance.
hey Leftiebob,
i think you meant to say the mortgage companies ,
" could not " care less about re-financing ...
there is a difference .
also ...
when will all the crappy news people pull there heads out of that dark spot between there legs , and start reporting news that THEY themselves had actually investigated ... on there own , not ...just re-reporting ,,,,
,,here's a scoop.... walk into any bank ... and ask for "someone" who can give you an answer ,,,
vegas is also running out of empty desert land...buy some quick before the runup!!!
JudgeSmales: you are right on, brother. I give my thanks to you and to all other readers who are able to tell the real story. If it weren't for the reader comments, I wouldn't even bother to read the LV Sun web site.
The story itself is laughable. I think the Sun should give an award once we reach the 100th article wherein they say the market has hit "rock bottom". The sad part is there are readers who probably assume there is credibility in the words of these so-called experts.
Banks are definitely attempting to manage the inventory of avaialable homes to avoid a total meltdown. This does not make them villians, it is just simple business sense. As mentioned above though, it makes the reported inventory a false, misleading, and meaningless metric.
If the LV Sun wants to do its readers a real service, stop interviewing these idiot talking heads who will say anything to try to advance their own interests. Instead, how about they tally every house sold in LV between 2003 and 2006 (easy to do since this is public record). Tell us that number because that is roughly the number of homes that are massively upside-down and roughly the inventory of homes that banks either already own or will own in the foreseeable future. Now that is the real LV housing story.
For the readers who don't believe that the banks are hiding inventory, I have not paid my mortgage in eight months (my wife and I both lost our jobs). Our mortgage company hasn't even started trying to re-possess the house. Maybe because more than half my neighbors also have the same bank and many of them aren't paying either. My neighbor has been in her house 14 months and counting with no payment and there is no sale date on her house either. I'm not encouraging anyone to do this, just saying these things are really happening.
hey irete,
I think you meant to say "their heads out of that dark spot"
There is a difference... and it's on their own.
I agree 104, you got to hit up on that vacant desert land at 500K/ acre before it runs out! There's only so much of it... ain't making any more of it!
What happens to homes that are in bankruptcy? Does it affect the numbers for the supply?
Do bankruptcy homes get taken back by the banks faster than a foreclosure since the homeowner threw in the towel?
If you threw in the towel and filed bankruptcy in July, then how long till the bank kicks you out and takes over?
Would the bank report those homes seperately and would that affect the inventory being reported?
the greenspun family that owns the sun is ALSO a big real estate owner and developer in vegas.
ever heard of american nevada or GREEN valley (always thought that was such an arrogant name because there is nothing naturally GREEN about it)?
they should disclose that in every story about real estate in their paper.
it's in their best interest to say "we're at the bottom" so people buy homes and lease out commercial property.
the only bottom we've hit in this town are the strippers at olympic garden.
All of the investors snapping up these homes will find that finding good tenants and keeping them rented is going to be a big challenge. There are many more foreclosures to come.
9ballguy is right. i've posted that same thing many times on these real estate stories.
every time a foreclosure home is put on the market as a rental, it increases supply.
increasing supply + lower demand ( people leaving town, unemployment, no new large construction projects bringing people to town ) = lower rent prices.
The pessimist quoted in the article is saying that we'll bounce along the bottom. If that really is the worst case (and I can't believe the median will truly drop significantly from $125,000 given the record low inventory of new homes), then buying now is the right time because the true cost of purchasing has to include the cost of financing not just the price of the house. Rates will not go down but may go up (short term rates are at Zero and have been for almost a year), so the real cost of a house will go up when rates rise even if prices fall slightly. If you are able and want to buy, do it now because next spring you'll wish you had.
My biggest problem with the article is that the statistics quoted in one area refer to single family homes only but in another part of the article they refer to single family, condos, and townhouses combined so the conclusions are fairly meaningless.
Also the contention that there is only a 3.4 month supply is ludicrous. You have to make a leap of faith that the nearly 8,000 single family properties that are Contingent sales and nearly 3,000 properties that are Pending (meaning the contingencies have been removed) are going to close escrow. Most, but not all, of the Pending sales will successfully close but of the Contingent sales 64% are short sale listings and less than 9% of the 3,710 single family closings in June were short sales.