Las Vegas Sun

March 30, 2015

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Analyst: Price of existing Las Vegas homes won’t increase for 5 years

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.

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  1. 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.

  2. 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.

  3. 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.

  4. 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. ;-)

  5. "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"

  6. 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.