Home-price projections vary for LV’s ‘basket case’ market

By Brian Wargo (contact), In Business reporter

Fri, Nov 6, 2009 (3 a.m.)

More business and economy coverage

Real Estate in Crisis

What’s going to happen to Las Vegas home prices over the next year? It depends on whom you ask.

National firms project that prices could fall anywhere between 5 percent and 25 percent by mid-2010.

The projections garner headlines but given what the Las Vegas housing market has gone through since the market peaked in the summer of 2006, there is not really much of a difference where prices bottom out.

Existing homes sold for about $290,000 in June 2006 and fell to as low as $120,000 this year — a 59 percent drop.

The price was $123,500 in September, according to SalesTraq. Even if prices fell nearly 20 percent, which some say is likely too much, that’s only a drop of about $25,000 — nothing like the huge dollar-figure declines that the market has already faced.

The most recent forecast issued by First American Core Logic predicts that home prices through August 2010 will decline about 5 percent after declining 25 percent the previous year. The rate has slowed because it was as high as 28 percent between June 2008 and June 2009.

Moody’s Economy.com projects Las Vegas home prices will fall 25 percent between the second quarter of 2009 and second quarter of 2010 from $140,000 to $105,000 for single-family homes. By the end of 2010, it projects the median price will be $101,000, which is a 68 percent decline from the peak of the market, according to Mike Helmar, an economist with the firm

Helmar said some of the projections for the Las Vegas market factor in the $8,000 tax credit for first-time homebuyers being eliminated at the end of this month. Congress is talking about extending the credit.

Helmar says the projections for falling prices are based on the growing level of foreclosures, and suggested it will take awhile to eat through the supply.

“If you take a look at the new foreclosures over the last year and a half compared to sales, they are not even close to eating into the supply of houses,” Helmar says. “In order to move these houses, it will take more of a decline. Las Vegas is the basket case for the housing market.”

Some analysts have suggested that despite Las Vegas having an inventory of existing homes of less than three months, the supply is much greater because lenders are holding on to foreclosed properties and many homeowners are waiting in the wings to put their home on the market.

Another projection came from Fiserv, which says prices will fall 24 percent from June 2009 to June 2010 and another 4 percent through 2011.

More Las Vegas housing analysis

San Diego-based housing research firm MDA DataQuick says Las Vegas bucked the seasonal norm and logged higher sales in September than August, something that’s only been seen three other times in 15 years. It reports a median price of $130,000 for the third consecutive month. That covers new and resale homes and condos.

The 3,608 single-family homes sold in September was the highest amount in a September since 2005 when 4,405 were sold. The 955 sales of existing condos in September was the most in that month since 1,030, also in September 2005.

Interest among investors remains high with the 40.4 percent of all homes bought in September by people who don’t live in Las Vegas, the highest figure for any month this decade, said DataQuick spokesman Andrew LePage.

Las Vegas No. 1 in foreclosures

RealtyTrac, which tracks foreclosure activity around the nation, reports Las Vegas was ranked No. 1 in the third quarter with one filing for every 20 households. That is 9 percent higher than the second quarter and 54 percent higher than the third quarter of 2008. That equates to 5 percent of the housing units in Las Vegas. Reno was ranked ninth.

Mike Mixer appointment

Colliers International announced that Mike Mixer has been named chairman of the Colliers USA Board of Directors for the global affiliation of independently owned commercial real estate firms.

Mixer is managing partner and director of Colliers International in Las Vegas. He also serves as senior vice president of Colliers’ Resort & Gaming Group.

Mixer has been associated with Colliers since 1993 when he formed the Las Vegas office. He has been ranked one of the top three brokers at Colliers and in 2008 was recognized with the largest domestic land sale for the year.

In other news:

• The Hoffman Co., a California land brokerage firm, which recently opened a Las Vegas office, says its land listings includes 261 improved lots. It is also selling 81 finished lots of Astoria Homes on Lone Mountain.

• CIP Real Estate, which is based in Irvine, Calif., announced it has secured 21 leases within the Hughes Airport Center with a value of more than $17 million and more than 350,000 square feet. CIP, in partnership with an investment fund sponsored by Buchanan Street Partners, owns more than 1.8 million square feet in the Hughes Airport Center.

The recent leasing includes six that are new, two that are expansions and 12 renewals.

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 wargo@lasvegassun.com.

Discussion: 8 comments so far…

By nevadaappleslices

11/6/09 at 7:37 a.m.

Suggest removal

anyone that bought a house in the past year should have just flushed their money down their toilet!
By stevem

11/6/09 at 7:59 a.m.

Suggest removal

people don't understand that probably 90 cents of every dollar that flows through this town comes from tourism.

then another 5 cents comes from businesses that support the businesses that work of tourism.

as long as that's down, and until we see a huge surge in people coming to vegas, home prices won't go up.

the "build it and they will come" era is over. vegas needs non tourism, non entertainment jobs now. NOT a stupid sports arena like our bone-head mayor is ramming down our throats.
By bam1969

11/6/09 at 9:01 a.m.

Suggest removal

a lot of "real estate genius" investors have lost a lot of money since last summer. how anyone thought prices had hit bottom is beyond me when the wave of foreclosures was still growing. a house purchased last summer has now lost at least between 25% to 35% of it's value by now.
By OpenRange

11/6/09 at 10:12 a.m.

Suggest removal

Moody's . . . same firm that gave high ratings to many Wall Street firms that subsequently failed (and then were bailed out with taxpayer money).

And remember that this is the same company that was awarded the job of analyzing our current tax structure (http://www.mcclatchydc.com/227/story/772...).
By Patrick_R_Gibbons

11/6/09 at 10:48 a.m.

Suggest removal

Although someone did recently buy a home in Lake Las Vegas for $142,000...

they were from California btw.
By azbycx0918

11/6/09 at 11:47 a.m.

Suggest removal

Investors who bought a house this year did not flush their money down the toilet. They probably are charging enough money in rent to cover the entire house cost, so even if the house value drops to zero they will recoup their investment in rent payments alone.

For example, the median house purchased in cash at the beginning of the year for $140k is likely renting for $1,000 month. The taxes, insurance, and maintenance costs per year are probably less than $2,500. Do the math and that house is paid for entirely by the tenants in roughly 15 years. So, even if the house value drops to zero the investor will have lost nothing. And don't believe for a second that the owners will not be able to find a renter willing to pay $1,000 per month to live in a house, as compared to an apartment for roughly the same amount.
By dipstick

11/7/09 at 4:03 a.m.

Suggest removal

you gotta hope theres plenty of renters available to be able to rent; no jobs no renters.vegas population is decreasing and price of rents will fall. think about it, who would want to move into an area w/ no jobs? (detroit anyone?) drive around the neighborhoods and count the 'for sale' signs. the banks are holding on to foreclosed property not even on the market yet. recovery is years away, if ever. the next shoe to fall will be when you see casinos closing due to lack of interest. its a snowball effect and until vegas starts diversifying its economy its all downhill.
By PrecisionPEI

11/9/09 at 12:12 a.m.

Suggest removal

Perhaps this is blasphemy but I feel that it doesn't make any difference what the experts say about the market:

http://lasvegasrealestate.precisionpei.c...

SteveM, I'm interested to see the data source for your comment above regarding 90% of the revenues in Las Vegas coming from tourism. According to the BEA, only about 19.4% of the Las Vegas GDP comes from Leisure & Hospitality. Do you have different data?

http://www.bea.gov/regional/REMDchart/de...

Dipstick, I'm also interested to see the data source for your comment regarding our population falling dramatically like Detroit. According to Clark County, only about 10,000 people left between 2007 & 2008. Do you have more recent data from 2008 to 2009?

http://www.accessclarkcounty.com/depts/c...

David Kang
InBusiness@precisionpei.com
http://blog.precisionpei.com
http://lasvegasrealestate.precisionpei.c...

« Previous Ten Next Ten »

Live chat: Tuesday, noon PST; Chat with Krista Creelman; Problem Gambling Center executive director Krista Creelman will answer questions about gambling addiction from Las Vegas Sun readers from noon to 1 p.m. Tuesday, Nov. ... Submit question