Once more, the Las Vegas single family market has managed to underperform my expectations. June is typically the month with the greatest sales activity in Las Vegas, but not this June. 1,476 homes sold in June- down 41% year-over-year and down 6% month-over-month. [Data from GLVAR]
The typical seasonal bump has not occurred this year. In the four months from February to June, the rise is usually significant, but not this year: [Edit note: 2007 is red for emphasis, number is not negative.]
With inventory remaining high and sales in the cellar, this does not bode well for the housing market. Homes are more likely to go into foreclosure in a down market as it is more difficult for a distressed homeowner to sell their way out of trouble. Additionally, the discrepancy between supply and demand puts downward pressure on prices.
The median price for a single family home was $305,000- up 1.2% from last month, but down 3.2% year-over-year from last year’s $315,000. Last June was the record high month for the median home price.
It is important to remember however, when looking at the median, that higher prices and tighter lending have taken many first time buyers out of the market. While the median has declined slowly over the past year, this is a reflection of the mix of homes sold, and is not necessarily indicative of same house appreciation. In addition, home prices are somewhat skewed by seller incentives, and these figures are not adjusted for inflation.
Don’t expect the rest of 2007 to be anything to write home about. It’s going to be a rough ride the rest of this year.
Looks like sticky prices at least for a little while until the REOs pile up. Goin’ to Grand Junction, CO today.
Metro-
I think “same house” prices are less sticky than the median- the folks who are selling are the ones that are willing or able to be more flexible. The median though, isn’t moving very fast.
JUst my recollection of the past post 80’s runup. These things play out sloooowly. However, that said, desperate sellers can and will be found in the next few years with RE agents trying to stop the slide.
Metro-
No question there’s still a lot of stickiness in "same house" appreciation as well, just less than the median. Hat tip to the Judge is forwarded this letter to the editor in the Review Journal:
Buyers need a reason to get off the fence in LV, and so far they aren’t seeing it.
Twist, you are exactly right.
Here in Las Vegas, we don’t have a reason to “get off the fence”.
I was speaking with a friend of mine who’s mother wants to sell her house in Summerlin and buy a bigger house. Her mother is retired.
Her mother thinks she can get $405 for her house that is really worth about $275. For her, she has no incentive to sell at a lower price. If she can’t get her price, she will not sell, b/c if she can’t get her price, she can’t buy that bigger house.
I suspect there is alot of “the above” going on in Las Vegas. People who want to move up, but cannot and will not unless they can get an inflated price for their current house. With the market in the outhouse, these people just sit and wait – and will not lower their price.
This is what is keeping the the Vegas market level in a declining market. Eventually, prices will fall. But Vegas will trend 2-3 years behind CA and FL.
-Leggo
We’re seeing this all over the country. Those people that say now is a good time to buy (see recent AZ Republic article w/Realtor shill) are insane.
The recent MBA study that showed 2006 originations to be heavily subprime-based also points to another part of the problem. The subprime loans that brought in a new wave of new home buyers just aren’t available any more. 2006 was the last gasp of the lending industry to prop up unsustainable lending activity – which in turn was the last gasp of sustaining unsustainable home prices.
Leggo
“Her mother thinks she can get $405 for her house that is really worth about $275″
Who says what a house is worth? Ultimately a house is worth what someone will pay for it. If i had to sell my house today it would be worth substantially less than if I could take time to find a buyer.
There are deals to be had, and homes you wouldn’t touch with a 10 ft pole. In our neighborhood the homes are 1550, 1800, 2000, and 2400 sf. At the peak of the market, the largest homes were selling for $450-$480k. They are on decent lots (8000sf), had a 3 car garage, nice. They sold for substantially more than the 1800 and 2000 sf models (325-350). A friend just bought a bank owned repo of the largest for $330k.
Ingydesu-
You make a great point. Market is what people will actually pay. I love those ads that say “Going for 20% below market,” or some such. As soon as someone pays that price, market changes.
That said, I watch the prices in my neighborhood, and I see the disconnect between asking and selling. I’ve watched some homes in my neighborhood drop over $200K- and I knew they’d have to do it, as their house wasn’t worth what they were asking. It’s tough to sell a house for that much over the comps.
Checking out the top graph on this thread, if previous years are any indication, then we should be seeing even *fewer* sales for the month of July ‘07, as hard as it may be to believe!
Yikes! If you are selling a house – that’s it – the graph is proof that the busiest time of the year for sales is now over (Are you sure you want to keep sitting on your on that ridiculous asking price?)
Keeping in mind again, the bloated (nay, *Obese*) inventory… how long will it be before real esate agents realize it is better to make SOME (any) money by convincing owners to sell at reasonable prices, than to make *NO* money by trying to resist the lowering of prices….greedily not willing to give up the commissions they were getting in 2005???
The real estate investors’ and professionals’ own greed is what is doing them in…
Not mine. Vegas still has a long way to fall.
With the subprime fire hose feeding suicide loans to underqualified buyers shut off now, there can’t be any movement upward in sales until prices revert to the mean, about another 25% down from where they are now.
NVMike-
Oh I figure it will be hurting for awhile. I just thought there might be a slight MOM increase in honor of it being June.
Didn’t happen.
Ingydesu-
I can’t argue with your point – Ultimately a house is worth what someone will pay for it.
However, I take a different approach.
I look at the 4% trendline based on what the house sold for new and the current Y-O-Y 4% increase in price. A house is worth what “I” say it is worth, not anyone else, especially the sheeple.
-leggo
I quit smoking and I’m bitchy!!!
Leggo-
Hats off to you for quitting smoking!