If you listen to the Las Vegas pundits, demand is always strong for housing in Las Vegas. Question: If demand is always strong, then why is this the third consecutive February when single family home sales have dropped in the Las Vegas metro area? 1,407 single family homes sold in February. That’s down from 1,787 in 2006, 2,038 in 2005 and 2,431 in 2004. January also exhibited it’s third consecutive drop. From March through December sales declined every month from 2004-2006, the only exception being August and September 2005. Take a look: [Data from GLVAR]
Median prices are up- sort of. The median price for single family homes in February was $310,000 up 0.32% from last year’s $309,000. This figure is not adjusted for inflation, nor does it allow for incentives on the part of sellers, or for changes in the mix of homes sold. Therefore, this does not necessarily reflect same home appreciation:
In the February 7 Las Vegas Review Journal, Steve Bottfeld of Marketing Solutions stated:
The sky is not falling. In 2007, we’re going to have 38,000 new home sales, 50,000 existing home sales and 7,500 high-rise sales."
I’m assuming he’s referring to total sales- both single family and condominium. [even Bottfeld isn't that irrationally exuberant, is he?]
Here’s what total [SF and condo] annual existing home sales have looked like for the past three years:
| Year | Total Sales |
| 2004 | 42841 |
| 2005 | 41401 |
| 2006 | 29956 |
It’s too early in the season for me to feel comfortable with predicting a number, but I disagree with Bottfeld. Based on the sales graph above, my guess is sales are going to be south of 2006’s figure of 30,000- perhaps significantly so.
The sky is not falling, it’s "correcting" to much lower levels.
Twist -
By the look of that first graph, Bottfeld and friends should have fun ballyhooing the totally predictable MoM sales spike when the March ‘07 numbers come in.
Incidentally, Las Vegas inventory has reached an all-time high, according to Housing Tracker. Yes, even higher than last October. The new high is 23,820, beating the 23,747 in October.
Well, what a surprise. How about 25,000 by May?
Check out the new upward curve in the inventory graph.
http://www.housingtracker.net/askingprices/Nevada/LasVegas-Paradise/
– The Judge
“Sell now or be priced in forever.”
Judge-
You’re forgetting the mantra, “Strong growth will make this go away. Strong growth will make this go away…”
In regards to the sudden “appreciation” to $310k, the pundits will switch to using month-to-month growth. Now that the housing bear market is over a year old, YoY numbers are bad for spin.
I expect all the pundits to declare the new boom has begun. Hey, SFR prices are up 2.6%. If you annualize it, prices are growing at 37%! Now’s a great time to buy! Get your piece of Vegas dirt NOW, or else you’ll be priced out forever and forced to live in a tent city near city hall! Yippee!
Mum is always the word in Las Vegas. The NBA all-star game was a disaster but the news media didn’t run with the story. Vegas housing the same way, walk into any track and ask them how is it going and they all say greater then ever.
A quick drive around tells you the real story, house after house empty.
Chuck-
People see what they want to see. Often when I point out all the empty homes and how the builders keep going I’m told, “These builders are really smart. They do studies to tell them how many homes they neeed to build. Obviously the area is still growing.
There are none so blind as those who will not see.
Chuck - while the initial reports of the NBA all star game in vegas were full of boosterism, any person who read the paper, watched local tv, or listened to the radio in vegas, caught wind of the soaring crime rate, the hoodlum problem and other disasters that occured during the week.
It didn’t make headline news for a week, but that’s because it isn’t the most pressing issue.
As far as empty houses.. its hard to tell in vegas which house is empty. I have a neighbor whose home i thought was abandoned - turned out he’s a snowbird. Another neighbor works the night shift, and doesn’t come out. Its just vegas
Ingydesu-
That’s why I’ve learned to play, “Spot the spec.”
Does it have window treatments, landscaping, pots by the door, a floor mat, furniture. (You’ve got to be pretty sure it’s empty before checking on the last one!)
Even totally empty with a “sold” sign on a builder home can be a spec. You have to watch how long that “sold” sign is there. They can be waiting for their buyer to sell their existing home-maybe they can, maybe they can’t.
ingydesy> Well as the saying goes what happens in Vegas stays in Vegas is alive and well, Anna Smith’s burial got much more press then the happenigs on the strip with the thugs.
As for empty houses, i’ve been in Real Estate for a long long time, i know a snowbird’s house, who is a pit boss and sleeping during the day , and what house has no trash cans, no window coverings, know sign of life other then a bird sitting on a block wall waiting for a owner to put on the sprinklers so they can cool off?
take care
Ingydesu-
This quote is from the DR Horton link on the sidebar:
D.R. Horton, like its rivals Toll Brothers (Charts) and Pulte Homes (Charts), has cut the number of new homes it starts to build, but a large supply of existing homes is also forcing homebuilders to reduce prices or offer incentives.
For example, in Las Vegas, formerly a “hot” market, there are 2,500 unsold new homes, Tomnitz said. But Las Vegas has 25,000 unsold existing homes, many of them unoccupied.
The last I saw the vacancy rate for existing homes in LV is about 46%- that’s a bunch of houses.