Housing Doom Housing Bubble Blog

In a February 2 Review Journal article by Hubble Smith, Perma-Pollyana Steve Bottfeld of Marketing Solutions stated:

"We’re creating this atmosphere of fear from nonsense, from negative national press," he said. "Everybody will say 2006 was a bad year, sales were off, prices went down. Wrong. What happened is we started the transition from a suburban market to an urban market and with transition, certain things happen."

Here are some of the "transitional" things that are happening in the Las Vegas housing market, and mostly they are transitioning down.

The Greater Las Vegas Association of Realtors is reporting 1,397 home sales for the month of January, down 21% from last January’s 1,778.  This is the worst January in at least four years- sales in 2003 were at 1,749.  It was not only the worst January, but the worst month during that period.

Prices aren’t faring any better.  The median price of a single family home was $302,000, down 2.6% from last year’s $310,000.  This is the lowest median resale price since June 2005. [data from GLVAR]

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"This house just came back to us yesterday," the salesman told me.  "The buyer loved it, but they just weren’t able to sell their other house.  We’ve had several homes come back to us, and that’s the main reason buyers give us- they just can’t sell the old one."

I’ve had that conversation, or variations on it, when I’ve visited different developments.  Larger homebuilders are reporting cancellation rates up to nearly 50%, so they must be having that conversation a lot.  That brings up the question- what about the deposit?  Is it refundable?

At the height of the boom, builders for the most part were very accommodating about refunding deposits.  They could easily sell the house to another buyer, and a couple of "quick delivery" homes can be handy for people who are moving quickly.  As the market has slowed however, builders have been less accommodating.  One development I visited had a rather large prominent sign warning potential buyers that their deposit will not be refunded.

A reader wrote me yesterday.  He had made a sizeable deposit, and now was not able to close.  I asked L for his opinion.  He said:
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Yesterday the US Senate Committee on Banking, Housing, and Urban Affairs held a hearing "Preserving the American Dream: Predatory Lending Practices and Home Foreclosures". The hearing site presently has the video of the hearing available, a member statement from Senator Dodd (the Chairman) and witness statements from all panel members. There is not yet a transcript of the testimony. Below are gathered up some reference links to additional stories relating to this hearing.

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