Friday, Jan. 29, 2010 | 3 a.m.
Leave it to economists and housing analysts outside the Las Vegas market to put a damper on predictions that the valley’s market will be stable in 2010.
Although local analysts say they expect prices to remain stable and existing- and new-home sales to mirror 2009, economists who appeared at the International Builders’ Show last week weren’t as enthusiastic.
Some national economists say the Las Vegas housing market will struggle in 2010 as it faces more price declines and a growing number of foreclosures.
The National Association of Home Builders forecasts new-home production in Las Vegas would be below 70 percent of normal production by the end of 2011.
“It will be continued suffering,” association Chief Economist David Crowe says of the Las Vegas economy and housing market in 2010. “That is the simplest way to say that.”
Inventory is at a high level because of foreclosures and shows no sign of lowering, Crowe says. 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 says.
Crowe says the country as a whole has seen the worst of the housing-price declines, but as for Las Vegas, David Berson, a chief economist and strategist with California-based PMI Group, says he expects prices to decline more in Las Vegas but the declines won’t be large.
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 historic average increase of 4 percent a year, Berson says.
The return of investors to the Las Vegas market has helped eat up some of the inventory and that’s been a positive, unlike their entry into the market during the boom that drove up prices, Berson says.
“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 are moving here, that is a good trade-off,” Berson says.
It’s been fortunate for the economy that lenders have been slow to put foreclosed homes on the market, otherwise prices would have fallen much further, Berson says. That is why they aren’t putting them out there all at once, he says.
The economists say 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, says foreclosures typically don’t start to lessen 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 adds. “The return of employment will be the first indication of the return of the housing market.”
Dennis Smith, president of Home Builders Research in Las Vegas, says new-home sales and permits won’t increase until the jobless rate falls below 9 percent. That’s what it will take to get people to move to Las Vegas, he says.
Because of that, no new large housing projects are planned. And besides, financing is hard to obtain anyway, Smith says. The one positive for builders is that the lack of foreclosures on the market has pushed more people to buy new homes.
Smith says it’s difficult to predict how government intervention will affect the housing industry in 2010 because the tax credit for first-time homebuyers expires June 30. Unless the credit is extended or expanded, sales will lull in the third and fourth quarters, he says.
Smith says Bank of America is expected to release 6,000 foreclosed properties into the Nevada housing market in 2010. If other banks also release hundreds of foreclosed homes each month, that could prompt prices to fall, he says.
“We know the shadow inventory of foreclosures is there,” Smith says. “I don’t think 500 a month is enough to change any projections, but if other lenders follow suit, that could.”
Other housing analysts have suggested the number of homes that will be released by Bank of America is inflated, and it won’t have much of an effect on the market.
The most recent breakdown of lenders and their foreclosure inventory, according to SalesTraq — the total was 13,789 as of June:
US Bank — 1,759
Fannie Mae — 1,518
Deutsche Bank — 1,465
Wells Fargo — 1,255
Bank of New York — 997
Bank of America/Countywide — 985
Freddie Mac — 950
HSBC — 929
Aurora Loan Services — 454
Nevada State Bank — 323
All others — 3,151
The North Las Vegas ZIP code that includes the Eldorado residential development led the valley in foreclosures in 2009, according to statistics released by SalesTraq.
ZIP code 89031 recorded 1,167 foreclosures, easily topping No. 2 on the list, 89108 in Las Vegas with 902. It is bounded by
Rancho Drive, Washington Avenue and U.S. 95.
SalesTraq President Larry Murphy says the top 10 list essentially is the same from 2008 with the one addition, 89178 in Mountain’s Edge. It entered the list at No. 10 with 680 foreclosures.
Four of the highest ranked ZIP codes were in the north valley and four were in the southwest. Two were on the east side. None were in Henderson.
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