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]
Not everything is down- listings are moving up quickly. With 5,809 new single family listings, that is the greatest number of new listings in January since 2003, and the most new listings in one month since last August. Linda Rheinberger, former president of the GLVAR told potential sellers to wait to put their homes on the market. A lot of sellers listened, and they are coming out of the woodwork now. Total inventory is at 18,774- up 5.3% from last month and 14% from last year.
Condominium sales are following a similar pattern. 318 units sold, down 30% from January 2006. This was the slowest January since 2003, when 287 units sold. Median prices surprisingly showed an increase. At $204,450, prices are up 4.2% from last year. However, median price can be a reflection of the types of units purchased, and is not necessarily a reflection of same unit appreciation. In addition, when inflation and incentives are taken into consideration, it is likely that this number overstates appreciation.
In a Hubble Smith article in today’s Review Journal, Dennis Smith of Home Builder’s Research said:
The (builder) incentives worked. They’re out of inventory. The investors are looking to buy 20, 30 or 40 homes, but they can’t find them now.
Dennis Smith’s comment seems to contradict the statement of Bottfeld earlier this week, who told the Review Journal that 20% of the current market is investors.
Perhaps Smith should check the websites of homebuilders to look for some of that builder inventory. KBHome, Toll Brothers, and Richmond American all list plenty of inventory. As of this morning, there were 34 properties on the Toll Brother site, and 40 on the Richmond American site- those investors that he is referring to must not be looking very hard.
Devin Reiss, president of the GLVAR told the Review Journal:
"When we see sources outside of our area making predictions about our local housing market, we find that they usually don’t take into account many of the things that make Las Vegas and our local economy so unique," he said. "They don’t necessarily understand that we have a lack of private land available for development. And they don’t always understand that our population and job market will continue to grow faster than almost anyplace else in the country."
What Reiss is failing to take into consideration is another factor that is unique to Las Vegas- the strength of its construction industry. Las Vegas builders can and do build homes faster than people move in. Take a look at what has happened to the resale market:
The high level of speculation in new homes has continued to feed inventory in the resale market. At the current rate of sales, it would take 13 months to sell all of the current single family inventory- assuming no other homes are listed. Given all the homes taken off of the market last year, 2007 may be the year of "deferred pain," as sellers return to the market and the market continues to "transition" down.