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September 19, 2014

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Research firm predicts continued erosion in Las Vegas house prices

Las Vegas home prices are projected to fall 16 percent by next June and another 7 percent in early 2012 before rising by the end of that year, according to a Wisconsin research firm.

The latest report by Fiserv, which produces the Case-Shiller Indexes, paints a poorer picture about the Las Vegas housing market than it did in July, when it projected existing home prices would fall 14 percent by early 2011 and another 4 percent in 2012.

Fiserv Chief Economist David Stiff attributes the worsening picture to the reduced demand for Las Vegas housing since the federal homebuyers tax credit ended effectively in April.

Starting in May and going through October — the last month of available data — Las Vegas-based SalesTraq has reported existing home sales have fallen year-over-year.

“What happened was the tax credit delayed the full correction in prices,” Stiff said. Fiserv reported prices fell only 5 percent between the second quarter of 2009 and second quarter of 2010, the latest period available.

The Las Vegas price decline of 5 percent in the second quarter contrasts to the nation as a whole as prices rose 3.6 percent, Fiserv reported.

“You have a large supply of distressed properties and with a high unemployment rate, you don’t have a high enough demand for your inventory,” Stiff said. “I think there is a lot of uncertainty of where prices will bottom.”

Fiserv’s housing numbers show bigger drops than other research firms, and their numbers have sparked debate.

The company calculates prices by what the same homes sold for in the past and not by comparing sales of whatever homes are sold in a particular month.

SalesTraq, for example, has reported that Las Vegas home prices have held steady for 18 months. Since June 2006, average prices have fallen $170,000 to $118,000, a decline of 59 percent, SalesTraq reported.

Stiff said investors have helped boost the Las Vegas market and keep prices up by their activity, which some analysts said falls in the mid-40 percent range of existing home sales.

If their activity falls off, that would further depress prices, Stiff said.

In the second quarter, Phoenix’s prices rose 5.5 percent, but Fiserv projects its prices will fall 16 percent through the second quarter of 2011. The nation’s prices are expected to decline 7.1 percent during that time span, the firm reported.

Meanwhile, CoreLogic, a California-based research firm reported that Nevada home prices in September fell 6.86 percent when excluding foreclosures and other distressed sales. When including foreclosures, prices fell 3 percent from September 2009, the firm reported.

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  1. In short I would say let it keep on falling so people don't have to lie and the banks don't have to fudge numbers again. Doing this, people can take pride in home ownership.

  2. This is poor research from a wisconsin research firm. I suggest
    Las Vegas Sun: Nov 3 "MGM:Las Vegas market stabilizing, but mid tier resorts challange"

    Marcus and Milchamp Commercial Real Estate
    Third-Quarter 2010 Real Estate Investment Outlook
    "Investors Go on the Offense- Improving capital markets spark renewed interest across property types"

    Barron's Oct 27 "Viva Las Vegas Sands: Even Vegas Properties Did Well"

    David Coooer

  3. Realtors want us to think prices are rising,but Las Vegas isn't gaining jobs or people and this research seems objective.

    Hi-rises and condos etc should do somewhat worse than Vegas as a whole but 2012 seems reasonable for a bottoming out.

  4. Try using these figures when submitting a bid on foreclosed and short sale properties and you'll see your offer rejected and a counter offer returned seeking the original asking price. Now who is being greedy here? Housing prices are still too high in Las Vegas on extremely distressed properties.

  5. I don't get it, Dennis Williams. Price and value are relative to the marketplace. My parents bought their 1500 sq ft house here in 1968 for $30,000. Does that mean the the 1200 sq ft house I bought in Las Vegas for $92,000 in 1993 was "overvalued"?

    Prices and values are set by the market, not by a comment on a news story.

  6. Incorrect. "Market values" are set, conveniently enough, by the market. If people don't pay, then prices adjust accordingly. Just because liar loans made it possible for many foolish people to, um, lie on their applications and buy more house than they were capable of affording doesn't change anything.

    When you start talking about "intrinsic value" you introduce a concept that has little to do with market value. Something is worth what people will pay for it, and what people will pay is determined by how much they are willing to spend, ie market value.

  7. While this report is probably going to be looked at 2 years from now as reasonably accurate, It certainly doesn't make one who is thinking of buying want to jump in, If they know they can wait it out another year or 2 and get it for 20% or so less. It seems that now that the election is over, the "good news" various government agencies had recently reported in prices has suddenly vanished as new reports like this show otherwise. If I was in a buying mood, I certainly would sit it out another year and re evaluate if it's even time then. There is a bottom, but I don't think we're there yet.