Smaller home price drop may signal bottom

By Brian Wargo (contact)

Friday, June 12, 2009 | 3 a.m.

Housing analysts said a moderate price drop in May could signal that higher-priced homes are finally starting to sell in Las Vegas.

Home prices in May dropped by their smallest percentage since November 2007 as demand approached record levels, according to the Greater Las Vegas Association of Realtors.

The median price of homes sold in May was $140,000, a 1.2 percent decline from April when the price was $141,720. Prices, which are at their lowest level since 2001, according to the Realtors’ group, had dropped by 4 percent a month in the previous two months and had declined by as much as 8.6 percent in January. The May drop was the smallest decline since a 0.4 percent drop from October 20007 to November 2007, according to the group, which tracks all homes sold through Realtors.

Whether this means steep price declines in Las Vegas have ended remains to be seen. Since its peak in June 2006, the median price of single-family homes has fallen 55 percent from $315,000, according to the numbers, which can include new homes sold through Realtors.

“We may be reaching a bottom, but we have to be careful because it could be a false bottom,” said Las Vegas housing analyst Steve Bottfeld, executive vice president of Marketing Solutions. “Larry Murphy (SalesTraq president) always says one month does not a trend make. Show me another month that goes up or pretty much stays the same, then we have a trend. We may be at the beginning of the end. We may have an upward trend in pricing.”

Rather than an indication that price drops have moderated, the mix of homes sold in May could have skewed the median price, said John Restrepo, principal of Restrepo Consulting.

The average price of single-family homes sold in May was $172,558, a 3.8 percent increase over April. That is the first increase this year, suggesting some slightly higher-priced homes are selling.

“What is happening is that we are beginning to see higher-priced homes in the market sell, which is a good thing because we are not looking at investors (buying these homes),” Bottfeld said. “We may be looking at something beyond first-time homebuyers back in the market. Prices at the higher end are finally getting to ... where people can buy them.”

Inventory has been decreasing because of strong sales, creating more competition. On the Multiple Listing Service, 21,181 homes were for sale at the end of May, a 4.2 percent drop from April and a 9.3 percent decline from May 2008. The number of new listings in May was 4,211, a 2 percent decline from April and 18 percent decline from May 2008.

Housing analysts say a moratorium on foreclosures earlier this year stopped some homes from being placed on the market, but the end of that moratorium and a wave of new foreclosures this summer should add to the inventory in the coming months.

Realtors’ President Sue Naumann said banked-owned properties accounted for 80 percent of the sales in May.

Bottfeld said the next round of foreclosures may not necessarily depress prices as in the past. The reason is that the foreclosures might be higher-priced homes lost because owners might have been laid off.

In May, 3,355 homes sold, a 1.8 percent increase over April and 61 percent more than May 2008.

When adding in the 737 sales of condos and town houses, the total is the highest since August 2005 and is approaching the record of 4,414 sales in June 2004.

The condos and town houses sales in May were 1.4 percent higher than April and 177 percent higher than May 2008. The median price of condos and town houses was $65,000, a 0.8 percent increase over April.