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.