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Published Tuesday, Nov. 23, 2010 | 9:39 a.m.
Updated Tuesday, Nov. 23, 2010 | 2:51 p.m.
Local housing analysts are pointing to October as if it’s the Las Vegas housing market’s version of Groundhog Day.
In this version, the groundhog has seen his shadow and there are six more weeks of winter. The October numbers portray weakness that could follow, analysts said.
What has sparked the concern is that the median price of homes sold in Las Vegas in October fell to its lowest point since 1994. Existing home sales have also fallen year-over-year for the sixth consecutive month.
“For those hoping to see some indication that the worst is behind us and recovery is just around the corner, October data will come as a disappointment,” according to a report released by SalesTraq President Larry Murphy and Steve Bottfeld, executive vice president of Marketing Solutions. “It looks like Las Vegas could be in for another two years of rough sledding in the housing market.”
Even Las Vegas housing analyst Dennis Smith, president of Home Builders Research, expressed concern about the direction of the housing market. He said his numbers also show this was the lowest monthly resale median price since 1996.
“One month doesn’t establish a trend, but it obviously bears watching,” he said. “It tells us that half of the resale homes in October that closed escrow were priced under $120,000, which by itself is a remarkable statement. It also indicates how weak the move-up and luxury segments are in the current environment.”
San Diego-based MDA DataQuick released their housing numbers Tuesday that showed the combined sales of new and existing homes in October was the fewest since October 2007, and it was 13 percent below the average for the month of October since 1994.
Sales are weak for a variety of reasons, MDA DataQuick reported, citing the expiring tax credits as part of the reason.
“The market suffers from renewed doubts about the strength of the economy and housing market, tight credit, anemic job growth and lingering concerns about job security.”
SalesTraq reported this morning that the median price of existing homes sold in October was $113,000, down from $118,000 in September and down 5 percent from October 2009. The research firm reports homes sold using Realtors and those sold by owners.
The 4,053 sales of existing homes recorded in October fell 21.5 percent from October 2009 and marked the sixth consecutive month that sales have fallen year-over-year.
Seven of 10 existing home sales were classified as distressed, meaning they were sold via auction, short sale or through foreclosure, the report said.
By SalesTraq’s count, 59 percent of homes sold in October were completed with cash in a reflection of strong investor interest but weaker demand from other buyers since the federal tax credit expired April 30.
Some 78 percent of the homes sold through the Realtor-based Multiple Listing Service were vacant, SalesTraq reported. Through the end of October, SalesTraq reported 19,032 homes have been repossessed in Las Vegas. The valley should fall just short of reaching the 24,000 repossessions recorded in 2009 based on those trends.
“If we agree that the distressed sales are responsible for driving prices down, then when do we expect to see distressed sales abate,” the duo wrote. “Not for some time, given the steady stream of bank repossessions which continue month after month, year after year.”
SalesTraq reported that 16 percent of all borrowers are late on their house payments and suggested there could be an additional 50,000 foreclosures entering the pipeline.
“Prices can’t recover until distressed sales are a thing of the past,” the two wrote. “New home construction can’t recover until 78 percent of homes sold through the MLS being vacant are a thing of the past.”
The new home market didn’t fare much better in October. The 325 sales were the second lowest total of the year after January’s 275. Sales were down 32 percent from 475 in October 2009 and 28 percent below September of this year.
“The expiration of the $8,000 homebuyer tax credit imposed a negative impact in the second half of the Las Vegas real estate year,” Bottfeld and Murphy wrote. “That program appears to have stolen buyers from the future. October, November and December will all feel the impact of the program’s demise.”
SalesTraq reported builders took out 277 home permits in October, the second lowest total of the year after the 198 in September. Builders have taken out fewer permits year-over-year for four consecutive months.
The weakened demand has bolstered inventory. The number of homes available on the MLS in October rose nearly 5 percent to 15,789. That’s 49 percent higher than October 2009 and at the current sales rate is at 4.6-month supply, SalesTraq reported.
Bottfeld said in order for the Las Vegas housing market to recover, the local economy must recover first. Signs are occurring with the unemployment rate dropping, he said.
Las Vegas visitation and room rates increased in October and airport traffic is up, he said. A recent Harris poll found Las Vegas to be the No. 3 city that people prefer for relocation, he said.
“But the October data shows the real estate market is still very far behind what appears to be the changing economic fabric in Las Vegas,” Bottfeld said.
The pessimistic outlook for the Las Vegas housing market mirrors a projection last week by Wisconsin-based research firm Fiserv that projected home prices will fall 16 percent by next June and another 7 percent in early 2012 before rising by the end of that year.
WHAT?!
but i thought all the "experts" said vegas was recession-proof.
vegas is just a hamster in a wheel now. they keep chasing that tourist dollar and they are getting nowhere.
Right on, stevem. In my subdivision in Henderson, the number of foreclosed and auction homes is slowly creeping up. Plus there are a bunch of others that have For Sale signs in the yard, and no one is living in the house. This adds to the total. Plus I know of one guy who overpaid for his house, and he hasn't made a mortgage payment since last April. Still living there, however.
It ain't over till it's over and we have many years to suffer. I would like to thank the Henderson City Council and the Building Department for rubber stamping developments that are now just torn up ground and fences. Check out Horizon Ridge at Gibson, nice empty buildings, especially the Slades half done Vantage Lofts, a sad joke if there ever was one. Back East, they require builders to provide performance bonds guaranteeing the work will be completed.
Here? Nah. Gotta' keep the inspectors and permit departments working. How'd that work out?
We should all rejoice that Harry Reid's pad at the Ritz Carlton has kept its value! Thanks Harry!
and the whole "unemployment rate is dropping" is kind of a joke, because how many people moved OUT of las vegas in the last 4 or 5 months.
less unemployed people IN a town means the unemployment RATE drops.
AND when will landlords LOWER RENT? Keeping your house occupied helps retain value.
I've said all along Las Vegas hasn't hit bottom yet, however I am not one of these pessimists who say that it will never recover- it will.
Unless you need a house to live in -its still better to wait a couple more years.
The high-rises and condo hotels will suffer more than regular housing as much more speculation was involved.
I read a great article yesterday that discussed the state of our country. One of the main points was that many people have really done an assessment on their lives and the way they live. I personally have done that and unfortunately for places like Vegas, that will have a drastic effect on the future. Of course Vegas will survive, but so many of the intangibles that had driven the growth of Vegas are gone for a very long time. Credit cards are maxed or not used, air travel is a pain in the butt and expensive, and people are just trying to survive. None of these items provide promise for Vegas. Unfortunately, alot of bleeding to come.
According to the BLS statewide numbers released today, Nevada's labor force shrank by about 10,000 people between Sep and October, while the number of unemployed dropped by 3,000 people. Which is why the unemployment rate went down, not because of new jobs.
The Las Vegas and Nevada economy is a disaster.
Thanks to Obama, Reid, and Pelosi.
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omg!!!
i can't believe my eyes...
did some "experts" actually issue a negative forecast???
holy crap...
what the hell happened???
are they finally tired of being wrong???
hey chuckles...
man that song is old...
and tired...
and just plain dead wrong...
Things are not going to get better anytime soon. If interest rates climb just a little bit it will kill any of the future buyers out there. There is not an endless supply of "cash buyers". As interest rates climb it puts downward pressure on home prices. Think homes in Detroit are cheap? Wait until interest rates hit 6%. The global financial crisis is just simmering right now which is why the Fed is trying everything it can to jumpstart the economy because ol Ben knows the clock is ticking.
Republicans: Heck, Heller, Ensign and Sandoval have sent a message. No more unemployment, no more help with mortgages, no more government funding projects like the VA Hospital, I15 improvements, the O Callahan Tillman Bridge and less redevelopment money for City Halls, Symphony Park, etc.
Fewer people will be able to stay in the area. Nevada will become a ghost State as other states give incentives to industry and individuals. The unemployment insurance checks are keeping many small business and landlords alive.
Every one's home value will drop.
I am sure glad that Harry Reid got re-elected and is busy fixing the housing crisis. NOT!!!
Harry says: Don't worry, take two aspirins and go to bed. In a few years, things will be better...
Another 50,000 foreclusures in the pipeline? Ouch!
But yet Vegas is still third on the list of places to which people consider relocating.
My gut tells me that the Vegas real estate market has bottomed, but that it's another two years before it starts upward. Buy now if you can stand two years of stagnant growth, buy in two years for maximum return, buy in three years and you've missed the optimum prices but will see good growth potential.
LarryV: This depression will go down in history as the Bush Depression, just as the Great Depression goes down to a previous Republicant President Hoover.
Harry Reid will go out on a wave of economic prosperity fueled by a Democratic resurgence in 2012.
Most of what you say is just plain wrong.
That's what Chunky Soup Tinks!
Larry Murphy and Steve Bottfeld? give us a break, those guys don't know anything.
In the late 90's I was dumbfounded by all the new housing tracts. When I asked how much longer this could continue, I was told until there wasn't anymore room. It never made any sense to me. This will not get any better anytime soon.