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StumbleEconomists predict more struggles for Las Vegas housing market
Wednesday, Jan. 20, 2010 | 2:05 a.m.
The Las Vegas housing market will continue to struggle in 2010 as it faces more price declines and a growing number of foreclosures, economists said Tuesday.
In kicking off its International Builders’ Show, the National Association of Home Builders also released its forecast that showed new-home production in Las Vegas will be below 70 percent of normal production by the end of 2011.
“It will be continued suffering,” NAHB Chief Economist David Crowe said of the Las Vegas economy and housing market in 2010. “That is the simplest way to say that.”
Inventory remains at a high level because of the foreclosures and shows no sign of slowing, Crowe said. The demand doesn’t exist in Las Vegas to absorb the supply of homes on the market through this year and most of 2011, he said.
Crowe said that the country as a whole, however, has seen the worst of the housing price declines.
David Berson, a chief economist and strategist with California-based PMI Group, said he expects prices to continue to decline in Las Vegas, though not steeply.
Existing home prices have fallen more than 50 percent from the height of the market in June 2006. It’s going to take at least three years before prices rebound to the historical average increase in value of 4 percent a year, Berson said.
The return of investors to the market has helped eat up some of the inventory and that’s been positive — unlike their entry into the market during the boom that drove up prices, Berson said.
“If they can take those properties off the market in the short run and put them on later when the economy gets better, there is job growth and people moving here, that is a good trade-off,” Berson said.
The good news relayed Tuesday is the recession ended in the third and fourth quarters of 2009, but the problem for the U.S. economy is that the recovery won’t be a strong one, Crowe said.
The economists said the problem facing housing markets like Las Vegas is no longer adjustable rate mortgages that triggered a wave of foreclosures but steep job losses.
Frank Nothaft, chief economist and vice president of Freddie Mac, said foreclosures typically don’t peak for six months or longer when jobs start to be created.
“We are not going to add jobs for at least several more months,” Crowe said. “The return of employment will be the first indication of the return of the housing market.”
Berson said this will be different from other recessions.
“If you look back historically, economic declines are followed by strong economic recovery. But the consensus is this time it won’t,” Berson said.
Berson said it’s been fortunate for the economy that lenders have been slow to put foreclosed upon homes on the market, otherwise prices would have fallen much further. That is why they aren’t putting them all out there at once, he said.
Crowe said it’s been tough for builders facing the greatest downturn in the housing market since the Great Depression.
Even for builders who have orders, the credit crunch has kept many from obtaining the loans they need to construct projects, Crowe said. That continues to hamper the recovery of the new-home market, he said.
The positive news about a slow recovery is that it holds inflation low, which means prices for building materials and labor remains low to build homes, he said.
The tax credit for first-time homebuyers has helped spur demand and after a slight dip, should do so again this year, Crowe said. It expires June 30.
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economy in this city is totally different from united state economy we will be the last to recovery. finally someone hit it on the nose. u can't trust GLVAR they will lied thru there teeth. i think they should not renewed there tax credit after june 30. everybody knew banks were holding back on foreclosure to keep the prices plunging. screw these banks they get what they deserve if they don't want to negotiate.
i love the grammar and spelling of people that hate realtors.
it's simple supply and demand. we aren't building houses or hotels anymore so there are more houses to live in than people to live in them.
demand = low
supply = high
= low prices.
no conspiracy, no tricks. just economics.
Thanks again to George W. his presidency lives on !!
"Berson said it's been fortunate for the economy that lenders have been slow to put foreclosed upon homes on the market, otherwise prices would have fallen much further. That is why they aren't putting them all out there at once, he said."
And how many of those foreclosures were wrongful -- either from the "lenders" not actually owning the loans or MERS being on the deeds of trust??
Thank you, Judge Riegle!! @ http://www.lasvegassun.com/news/2009/oct...
No Jobs = No home sales
Banks are probably waiting on another home owner bailout before they release the foreclosed homes. All these bailouts do is prolong the inevitable and make everyone in the economy suffer.
The tax credit now will keep prices inflated above what the market demands. After it expires you will likely see a small drop in prices again...assuming the government doesn't offer another tax credit.
That just leads me to my next point - the government wants to make homes more affordable by making the price artificially higher than the free market would allow. Does that make sense to anyone?
The tac credit is no problem as long as the home purchasers are vetted properly and they have the income to pay the mortgage. The real result of the tax credit is on home prices is to gauarantee that the home prices will remain flat for quite awhile. The important objective is to get enough homes off the market so that once again there is a balance of sellers and buyers once the tax credit expires.
The high priced gas triggered the real estate crash. People didn't have the money to run a 50 mile commute to a cheaper house in the "edge cities." People were over housed. Someone driving from Silicon Valley to Modesto so they can live in a 5000 sq ft house occupied by two people.
The average foreclosure is a first or second time move up home, and there are just as many high end homes upside down as low end ones. The notion that banks "were forced to loan money to poor and minority people by CRA and that caused the crash is completely bogus.
Here's your proof that the government forced the banks to make bad loans to people that could not afford them, it all started during the Carter/Clinton years and ACORN jumper in to help assisted by Obama! >>
http://www.youtube.com/watch?v=ivmL-lXNy...
Any more questions
Where will the jobs come from?
It's simple economics, folks.
Right now, supply is greater then demand. This is because the average buyer cannot afford or cannot get a mortgage at today's prices. This also means that a big percentage of the homeowners (including banks) cannot sell at todays prices, and they will continue to lower prices until supply reaches demand. So...., prices will continue to drop, month after month, year after year, until supply finally equals demand. This will occur when, and only when, the average buyer can afford to get a mortgage at the then prevailing prices. If wages should also drop during this period, then the real estate prices when supply equals demand will also drop.
This is going to amount to a hugh correction in real estate prices, one that needs to happen, and one that should happen. There is no reason why the average worker, at whatever his salary is, should not be able to afford a home.
So hang on to your hats, it's going to be a long ride.
Part of the problem is developers.
The developers kept building further away from the Central Business District. There are housing plots that are least ten miles away from Summerlin. If you have to commute to shop, work, and everything else, I believe this is unsustainable. If one goes to Alliante Stn Casino, one will see the folly of this over-development. It is under populated.
Our macro-economy can't sustain these Exurbs. Some Economists and Urban Planners think these Suburbs will be ghettoized in the near future.
I don't understand this need to be in a gated community, which has no sense of community or security.
Gasoline is not going to go decrease in price to justify these long range commutes.
Our Urban Planners and developers will have to stop the uncontrolled sprawl.
However, I don't think it will happen, because there isn't the will or forethought to change in the valley.
NO, IT'S NOT SIMPLE SUPPLY AND DEMAND.
THE SYSTEM WAS GINNED WITH LIAR-LOANS THAT DROVE UP DEMAND - PHONY ITEM #1
THE POLITICOS APPROVED ZONING FOR THEIR PALS THAT NO ONE IN THEIR RIGHT MIND WOULD BUILD ON - DRAINAGE LAND, EARTHQUAKE FAULTS, SUB-STANDARD SOILS - PHONY ITEM #2
EVERYONE WHO WAS "PAID OFF" LOOKED THE OTHER WAY IN CONSTRUCTION DEFECTS, SHODDY WORKMANSHIP, SUB-STANDARD COMMUNITY APPEARANCE - PHONY ITEM #3
THIS IS JUST THE BEGINNING. WE HAVEN'T TOUCHED THE SURFACE OF THE INVESTIGATED CONSPIRACIES TO COMMIT FRAUD, ACTUAL FRAUD (WIRE AND BANKING), SALES MISREPRESENTATION - PHONY ITEM #4
REAL ESTATE, MORTGAGE LOAN, BANKING, CONSTRUCTION, DEVELOPERS, "PAID OFF" INSPECTORS, "DONATED TO" POLITICOS MADE THEIR OWN BED
I, FOR ONE, AM NOT GOING TO LIE IN IT...BUT THEY ARE...
(AND NEITHER SHOULD YOU...)
I feel sorry for those of you who haven't walked yet. Your houses will lose more, and your just throwing you money down into an empty hole. We walked a few months ago, and it was the best thing we ever did!
Now we live where there are jobs that pay good, crime rates are low, and the cost of living is manageable. Las Vegas will not recover from this any time soon, so unless you still have a really good paying job, and don't care that your home isn't worth diddly squat, get out while you still can!
To those investors who are scooping up foreclosed homes and paying cash, I hope you end up losing your b---s! Buying rentals aren't gonna pay you a thing when no one has a job to pay the rent! You get what you deserve!!!!!
it was all based on a house of cards, boys and girls. people selling their starter house that they could afford for a mega shack that they couldnt afford; then they needed the boat and suv and an inground pool, so lets get a loan off the equity from the house. multiply this by some odd millions and you got this current mess; then these poor schmucks blame the banks and realtors for the entire fiasco. welcome to america, the check is in the mail!
Solution: GET THE BUREAU OF LAND MANAGEMENT OUT OF THE CLARK COUNTY AREA!! THEY ARE RESPONSIBLE FOR THE HOME FORECLOSURES!!!
Those cowards made it diffuclt for builders to keep up with the demand and allowed home prices to jump up and allow Fannie Mae/Freddie Mac Intervention!!! LOTS OF PEOPLE IN THE VALLEY DONT KNOW THAT!!!
No more land controls....means an abundant supply of affordable housing!!! After the next crisis... WE SHOULD AND WILL BE SAFE!!! I WILL MAKE A DIFFERENCE AND START A REVOLUTION!!
Analyst believe that the average person IS that stupid because they ARE that stupid. Do you know how many people believe everything they hear on the news? How many people NEVER once investigate the truth for themselves? How many people just take every word for golden and live their lives based on that truth?
I have met with client after client who has told me that they're delinquent in their mortgage loan because some uneducated, untrained 18 year old at their lender told them they needed to be...so they ruined YEARS AND YEARS of great credit...FOR WHAT? So they could save $300 on their mortgage payment? Guess what? That 5% interest rate on your credit cards just got jacked up dumb*ss. So, it all came ot in the wash. Only now, you have crappy credit to show for your hard earned efforts. Analysts can say whatever they want because (like organized religion relies upon) we live in a world of MINDLESSNESS!!!!!
Kristy Sinsara
feds at the end month are not going to buy toxic loan anymore look for housing prices to plunge. it not over yet see more foreclosure and bankruptcy coming even more.