It’s been a long time coming, but the Las Vegas housing market has moved into negative territory. According to data from the Greater Las Vegas Association of Realtors, the median price for single family homes was at $308,000, down 0.65% from $310,000 in 2005. The median price for condominiums dropped 0.5% from $201,000 in November of 2005 to $199,500 in November of 2006. These figures are not adjusted for inflation, nor do they take into account the incentives being offered by sellers.
Single Family Sales
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Condominium Sales
Condominium sales fared even worse than single family sales. 324 units sold November of 2006 as compared to 601 last November, for a drop of 46.1%. This would be the worst month since January 2003, when 287 units sold.
Inventory data is not yet available, but it is apparent that sales are not making any headway in reducing the glut of inventory. Look for continued downward pressure on prices.
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Wow! Those are pretty graphs!
The colors are beautiful!
The data… not so much.
Let me offer a wild, stab in the dark guess at the REALTOR interpretation of the graphs:
Now is a GREAT time to buy!
Thanks again for all your work, and for sharing all the data & articles!
Asset Hunter-
How about this comment from Steven Bottfeld of Marketing Solutions in the Dec. 1 In Business Las Vegas:
While the rest of the country is experiencing falling prices, Las Vegas maintains upward pricing momentum,” Bottfeld said. “That’s the sign of a strong market.
http://www.inbusinesslasvegas.com/2006/12/01/realestate.html
It looks like kind of a downward upward to me.
The quotes in the link above aren’t surprising at all. Bottfield and the rest of the Las Vegas REIC spinners have spun themselves in circles trying to explain why all the national trends don’t apply to Las Vegas. Now they’re cherry-picking local data to indicate that the Vegas market is ready to go up, Up, UP.
These REIC types are so nakedly desperate and scared of what they know is truly happening to the market, they don’t even care about making outright lies anymore. They just want someone — anyone! — to take a few of these overprices houses off their hands. There are 21,000 homes on the MLS — seven months’ worth of inventory.
Aided and abetted by their MSM stooge — Hubble Smith of the Review-Journal — the spinners will give you 100 reasons why Vegas is going to have a “soft landing” — even though that possibility has long passed. They cherry-pick any data that spins positive and conveniently disregard the rest.
The poor sales of existing homes — down 27 percent this year — is the key statistic, not the slight increase in new home sales prices. As we all know, the builders are giving away everything except the kitchen sink to sell new homes without screwing up the comps in the entire development. So they give away 10 percent worth of extras and closing costs without lowering the price, and then the new-home price data makes it looks like prices are firming up, and even rising!
But existing home sellers are giving us a better indicator of the true market. They either don’t have room to drop their prices — because they bought in too high or maxed out their re-fi and have no equity — or they simply refuse to get hip to reality and give up any of their “paper value” from the boom.
At best, you get market stagnation, because people can’t “trade up” to a bigger home, because they can’t get the price they need out of their current home. At worst, you get a major collapse in prices, which is what will happen once existing home-sellers realize their paper value has gone bye-bye. They haven’t even come close to that realization yet. Give it a year, at least.
Once that happens, I can’t wait for the spinners to weigh in. But at least then, their “buyer’s market” spin might actually make some sense. Until then, though, I reserve the right to laugh at all of their bogus quotes.
Sorry for the wordy reply. I need an editor.
Judge -
You’re doing fine. At least you are using paragraphs.
If you can stand the blood pressure, have a look at this offering from our housing perma-bull friends at BMI. “TV News Ignores Surprisingly Strong Housing Data: Bubble bursting mantra continues to dominate reports despite evidence to the contrary”, by Noel Sheppard, Business & Media Institute, December 5, 2006.
Thank you, John M.
I read the above BMI link, and my main question is: What is their dog in this fight? Who are they spinning for? My goodness, they sound like they’re sitting in David Lereah’s lap.
The BMI writer seems to want to split hairs about what officially constitutes a “bubble” in the first place, and then what constitutes a bubble “bursting” or merely “deflating.”
Regardless of those semantic distinctions, perception is reality, and if MSM dunder-heads like Katie Couric, etc., are finally able to see through the REIC spin/fog, then we know something seriously bad is happening in the housing market, and it’s not nearly over yet.
“TV News Ignores Surprisingly Strong Housing Data: Bubble bursting mantra continues to dominate reports despite evidence to the contrary”, by Noel Sheppard, Business & Media Institute, December 5, 2006.
That’s odd. Noel Sheppard penned a rather cautionary piece on January 3, 2005:
http://tinyurl.com/y82cej
I wonder why he’s changed his mind now, two years later, especially with all the ominous data since then.
That was a real eye-opener! BMI is ideologically driven (Republican party loyalists) and this may sometimes limit their analysis.
“Has Greenspan over-pumped the real estate bubble?”, by Noel Sheppard, American Thinker, January 3, 2005.
The Judge-
I spoke with Hubble a couple of months ago about the Las Vegas market. He said his problem with the bearish news is that people have been predicting the downfall of the Las Vegas market for years, and it never happened. Certainly, it had continued to rise in spite of the predictions of Shiller and others. I blame the rise of blindless optimism, which encouraged people to stretch beyond their means, and exotic loans, that made these foolish decisions possible.
The house of cards is coming down, and the data is increasingly hard to ignore. I expect Hubble to have a different view here shortly.
Bottfeld:
He argues that Las Vegans can be thankful that the housing market defies the laws of gravity and economics.
twist:
It looks like kind of a downward upward to me.
Asset Hunter:
“I agree with twist. I hear when your looking up from under water, that up is down?!?”
It’s a good thing that “it’s different here” in Las Vegas where Bottfeld lives…
or was that Phoenix where I live that was different…
or San Diego… or Atlanta… or Denver… or Florida… ?????
Heck, now I can’t even remember which time zone had the RE market that was “different” and not subject to the laws of economics!?!?!?!
I’m so confused that I think I’ll distract myself, and just go buy a house or condo or something!
Anyone know where I can get an ARM loan for no money down?
Asset Hunter-
Somehow there’s a lot of folks who can only envision blighted neighborhoods to lose value. I was speaking with an analyst about new homes in Queen Creek (Phoenix SE Valley). The base price for one model has dropped 40% (that’s in the town of QC, not way out in Pinal) The analyst asked if there was anything wrong with the neighborhood. My response? Absolutely not. Nice neighborhood, green belts, parks, nice location, nice looking houses, no power lines, noisy highways, etc. It was just priced too high, and has too much competition. A house doesn’t have to be a dive to go down in value.
Was in Lake Las Vegas 2 weeks ago and stopped in to look at a model homes (800k to over a million range), i ask the agent how are things going fine he said we are going to have a drawing in Feb for new lots be here early?
I left and drove the 1st phase, about 75% of the homes empty,talked to a home owner and he said nothing is moving these homes have been sitting for months.
I should have gone back to the models and ask “so you are having a drawing for lots and want me to be here early how early”? I didn’t have the heart to do it the poor guy probally couldn’t believe that a person even walk through the models let alone show up for a drawing?
Chuck 7, A little over a month ago 5 agents in a row in Vegas wanted to take me to Lake Las Vegas. I went by myself and checked out the omni-present power lines, got the same story and had the same impressions as you did. One side of the “Lake”(mostly completed customs) was very nice and very pricey. The other side was just pricey. I wondered why all the realtor interest. Is there a special co-brokerage deal? When I compared it to a far less expensive Montebello(admittedly a lower income neighborhood) just a few miles away, with Vegas strip views possible, I figured something very odd was happening, but never got much of a straight answer. Any infor you have on sound developments in the area would be appreciated.
Mike many areas are in trouble.In Lake Las Vegas the Hotels are really up against it the Monte Lago a nice place as all the hotels are just can’t get the public out there.
I also think the Red Rocks-Summerlin area is very nice but again lots of very over priced property and homes with very small lots.
Vegas just depresses my wife and i in general we drive around and many bad areas, broken down cars, crime and the such.
I guess when gambling is the big business in town it will have its poor element for sure.
We had friends who wanted to live in Scottsdale but couldn’t afford it and retired in Anthem Vegas they are very unhappy and wish they didn’t move their. But when you can’t afford a area you want to move (they waited to long to move to AZ the boom hit you know the rest of the story) it gets you mad and they bought on a whim. I just don’t really know a good solid area in Vegas i can trust take care
Thanks Chuck. Our reaction was just the opposite. Phoenix and Scottsdale would be good if your raising a family or chasing the little white ball as a form of retirement(and then go to the mall) but have you been downtown after 9 pm? Want to buy veal and not pay $26 lb at “AJs”? Want to drive without unsecured construction debris flying off half the traffic in front of you(do their cameras enforce that?)But you point out what makes real estate “local” I guess. When in Florida we chose Miami over Naples. I have not seen a big price difference between similar properties in areas of Vegas like Lone Mountain and Summerlin compared to Scottsdale so its really not an affordability issue…in fact the amount of inventory to chose from in Scottsdale is hugh by comparision and I suspect more people in Scottsdale will lose houses even without casino assistance. Never been to Anthem but dig Bouder City as a “compromise”. Small town feel, yet 15 minutes to world class entertainment and restauants. We are not gamblers, but I actually prefer areas supported by sales and stupidity taxes so Nev. has the edge there. Thanks for the advise, we are still looking both areas since neither will be the final destination. Do you think international demand for housing at the higher end is better in Vegas?
Thanks to Santa Monica, who gives us this info on the much touted, boundless LV growth:
Per the U.S. Census (http://factfinder.census.gov) fact sheet for Las Vegas,
the city’s population grew from 478,434 in 2000 to an estimated 538,653
in
2005. Dividing by 5 years and 12 months yields only 1,004 per month net
in-migration, far below the 6,000 cited.
The usual numbers I see from LV are based on the number of drivers licenses issued each month, and assumes that no one ever moves out.
No question the cost of living in Scottsdale is high and with the new one Scottsdale and the new Mall the cost will be very high end for sure.As for international i do know the people from the Far East like Vegas because of the gambling and night life they poor a lot of money into that town and do buy high end homes.
In the end Mike no matter where or what something will have to give, either call the hand dealt or get out of the game.
Cal,AZ,Fla, and Nev have high stakes now, the housing industry is huge for these states i hope it all gets back to some sanity take care
I have been living in LV for over 6 years – and yes, this is the BullS*** capital of America.
The population figures of 538,000 people are for the City of LV – but there are other areas (Henderson, North LV, Unincorporated LV) so it is the greater LV area that has approx 1.8 population.
Approx 6000 have been moving here monthly and 1-2000 move out monthly. But, I suspect that is starting to change as housing becomes exceedingly more difficult.
The LV real estate market may be slower to react bcs this is a “new” city with many homes being purchased during 2004+ 2005. Those often have exotic mortgages and those homeowners can’t sell today w/o writing a check to the bank. And they are having more difficulty making payments bcs of mortgage resets. So they just wait and pray.
Eventually – and this is starting to happen more + more — the banks repossess and the comps will be driven down as the REOs get sold by the banks. Personally, I think the YOY prices are generally 15% lower right now.