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Thursday, Jan. 20, 2011 | 12:36 p.m.
A Las Vegas housing analyst said today the new home industry should expect a tepid recovery over the next five years and predicted existing home prices won’t improve for about five to six years.
Larry Murphy, the president of research firm SalesTraq, gave the gloomy forecast at the quarterly Crystal Ball seminar he co-sponsors. More than 100 Realtors and housing industry executives attended the conference at the Alexis Park Resort.
Las Vegas recorded 5,244 new home closings in 2010, and Murphy predicted it would stay around that number in 2011 and 2012 before edging up to about 7,500 closings in 2013, 10,000 in 2014 and between 12,000 and 13,000 closings in 2015.
The Las Vegas housing market had 40,000 sales in 2005, but Murphy said those days are gone.
“New home sales are a direct function of job formation,” Murphy said. “If the population of your community goes flat, how many new homes do you need to build? The answer is almost zero.”
As for the existing home market, Murphy said that will continue to be dominated by distressed sales that include foreclosures and short sales, in which owners sell their properties for less than is owed on the mortgage.
Of the more than 52,000 sales of existing homes in Las Vegas in 2010, 40,000 of those were distressed sales, Murphy said. He said he expects a similar number of distressed sales through 2013.
“Twenty percent of the mortgages are delinquent 90 days or more. That tells me ultimately those homes will be foreclosed and that should keep prices depressed for the next couple of years. We are not going to see them get better for a long time.”
Murphy had the median price of homes sold in December at $114,500. He predicts the prices won’t start to improve until 2015 and 2016.
Investors are driving many sales, but Murphy said the affordable prices will attract seniors to Nevada.
correct. Of course they are not building apartments and condos, so rental prices might edge up, which would cause the stalled condo projects to be completed.
We need the high speed rail. People are not going to drive 10 hours in a jam to get to LV from LA.
Maybe the Chinese can fund it.
It is time to stop all building projects for 24 months. I wont hold my breath waiting for our gutless county commission to do whats needed.
People, with their being only so many jobs available for a person to make a living. Construction is over! Those people are on their way outta town. Now we have all these existing homes, but don't have people with jobs to fill them. Don't need a crystal ball to see that. Where was the crystal ball in 2005? Must have been broken.
In 1989 I remember all the experts saying that So. California homes would not get back to their peak for at least 20 years. They where about 12 years off. Within 7 to 8 years they had recovered and the prices where even higher then before.
Will that happen in Vegas? No expert or anyone posting here knows for sure. It will be a slow road due to many of the "type" of employment and people in Vegas but it will come back.
The good thing about today is if you have some cash you can buy some decent properties to rent and have your money back in 5 to 7 years. Not a bad investment for those that plan ahead. ;-)
"Twenty percent of the mortgages are delinquent 90 days or more. That tells me ultimately those homes will be foreclosed and that should keep prices depressed for the next couple of years."
This guy Murphy seems to not have a clue about what's REALLY happening. These homeowners can be delinquent ONLY if they actually owe the mortgagees, which is dictated entirely by their Notes. And every standardized Note out there says the same thing in "1. Borrower's Promise to Pay" -- ONLY the Note Holder is entitled to receive payment. No Note, or no Holder, no one owed. It's literally that simple.
"If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"
No One knows when prices will stabilize,increase or decrease. Just track the supply and demand curve
over a six month period and look for general trends.
Anyone that tells you anything else is about as accurate as your local Palm Reader.
It's a Chinese fire-drill. (Forgive the racist connotations of that phrase.)
People are shifting out of their over-leveraged, over-priced properties and buying or renting your formerly over-priced, over-leveraged house for pennies on the dollar, while you do the same.
My personal prediction (worth what you paid for it) is that most of this will be sorted out within the next three years. I don't believe that we will see 2006 pricing for a stucco-box in the desert again for a very long time, and that's not a bad thing.
The wildcard is the water. If Lake Mead reaches crisis levels, then our elected officials will have no choice but to limit growth, and then prices will explode. When that happens, I'm outta here.
ah yes...another liberal with ZERO economics education.
mred...
ok, here we go...
rent prices will continue to fall in vegas until some miracle happens and there is a sudden rush of people back into town to build a new resort or highway.
there is nothing like that on the horizon.
Yeah but, SteveM, people I know in the market for a rental all say the same thing: rents are still high. I pay less a month for my mortgage (and we bought in 2004, around the middle of the bubble) than renters do in my neighborhood.
Now, I KNOW that these high rents aren't sustainable -- it doesn't make market sense. Yet, here we are. The one thing we should have all learned by now: the markets DON'T always make sense/behave rationally, despite what some ideologues would have us believe.
SteveM,
Okay, I just reread your post and realize that your point is more that there is no *growth story* on the horizon, than anything else. Well, that's a whole other discussion. But for purposes of this discussion, if we were to stipulate that "no growth is on the horizon," then, yeah, rents aren't about to go up.
Ah...nothing like optimism...even if it's years and years away.
I love the way the modern analyst (they actually get paid, right?) skates over the HOW.
HOW is this going to happen?
Okay, got the WHERE...here.
Got the WHEN...in 5 years.
But the weenie analyst and the expert reporter forgot the HOW.
This is the only section that consistently reminds me of the RJ, rather than the Sun.
I usually pass the buck, but I'll take free entertainment where I can get it sometimes.
"... the existing home market ... will continue to be dominated by distressed sales that include foreclosures and short sales ... ."
This is the key point of the article IMO. When prices dropped 50% or more, somebody took a hit. Until those paper losses are absorbed by that somebody as REAL losses, and the property is sold at MARKET price, the overall market values will not go up. Lenders, Owners, and Real Estate Professionals should be focusing on expediting this unwinding process in order to reset the market.
Predictions about when all this unwinding will be completed are just conjecture, and irrelevant really. We should be glad that prices have stabilized.
I live in an area of Colorado that has many of the same problems facing Vegas. The economy is based on the tourism, construction, real estate cycle with no real solid economis base, so we go through boom/bust cycles.
I take my daily walk through a beautiful subdivision of $500k homes that are now worth $250k. Anyone involved with these properties is seriously underwater.
Last spring I happened to observe a homeowner being served with (what I assumed to be) foreclosure papers. Last week, a For Sale sign went up on the property. In two days, the sign was changed to SOLD. The next day a woman was moving in.
The old homeowner (and maybe some lender) took a bath and the new homeowner got a great deal(probably). Scenarios like this need to happen over and over until the market is reset.
Affordable prices will not attract seniors... they are not that simple minded. Las Vegas and Nevada has nothing to offer Seniors that isn't better someplace else. This state is 1st on all the bad lists and last on all the good lists when it comes to offering what seniors need or want. Mr. Murphy has obviously not been keeping up with the news in seniors publications.
maybe that's a good thing considering the source. larry murphy has almost never been right. he announced at one of his "crystal ball" seminars in the spring of 2007 that "the market has officially hit bottom". that's right, 2007. this guy is a hack.
The "experts" have been wrong before but things do look slow. Now if the builders had built for seniors and retirees--single story with garages, large back yards, close to major streets, bus lines, groceries. Forget the two and three story condos. Forget all the "service fees." Haven't you heard about the senior "revolt" in Florida where they are all but violent with homeowner and association fees and dues?
mred. . .the high speed rail system won't help address what you are talking about. It will go from VICTORVILLE to L.V. not L.A. to L.V. See what you got with your vote for Reid?