According to data released by the Greater Las Vegas Association of Realtors, the median price of single family homes in Las Vegas fell 22.7% in April, from $305,000 in April 2007 to $235,875 in April 2008. Prices haven’t been this low since February 2004, when the median price was $220,000.
Inventory continues to grow, but at a more modest pace than we have seen. With 22,942 homes on the market, inventory is up 3.1% over April of last year.
The big surprise this month comes from home sales, which haven’t seen a year-over-year gain since September 2005. With 1,794 homes sold, however, sales are up 30% from last year.
Improving sales and a slower growing inventory has also helped months supply, which has fallen dramatically from a 22.5 months supply in January to a 12.8 months supply in April. While having over a year’s worth of homes on the market is a lot, it’s a significant improvement over having nearly two year’s worth.
Inventory levels remain near historical highs, and the imbalance between supply and demand will continue to put downward pressure on prices. This bear has to admit, however, that Las Vegas sales for April were better than expected.
With all due respect, the effect of countless foreclosures has badly skewed the Las Vegas numbers, IMHO.
We are No. 1 in the nation for foreclosures and defaults, and all of that inventory had to go somewhere. Instead of remaining on the MLS, where the GLVAR gets their statistics, those houses are now on lenders’ books as non-performing assets.
That’s why the MLS inventory has dipped — underwater home debtors have given up and are just waiting for the sheriff to show up. They know the banks are overwhelmed with foreclosures, and they know they can milk at least six months of free rent until they have to turn in the keys.
Also, more than half of the homes sold in April were foreclosures, as they were in March. I’m not saying that’s a bad thing — hey, someone has to set the new comps for the market — but the GLVAR wants to give the impression that regular ol’ folks are rushing back into the SFH market in Vegas.
Ain’t happenin’, regardless of what Hubble Smith writes.
For instance, in his latest story, Smith writes:
As in past months, Kelley attributes the slight decline (in price) to the number of short sales and foreclosures selling for prices below market value. Properties owned by banks and other lenders still account for more than half of all homes sold each month, she said.
Excuse me, but neither a 3-percent drop since March and a 22.7-percent drop since April 2007 are “slight.” Also, short sales and foreclosures are not “selling for prices below market value.” They are selling for market value. It might not be the market value the GLVAR or Hubble Smith want their homes to be, but them’s the facts.
– The Judge
Judge-
You made some excellent points. In addition, lenders are taking longer to foreclose, often adding months to the process, in an attempt to work out loans and to not put them on the books until they absolutely have to. I also believe that the banks aren’t listing all of their inventory. If a lender owns several identical properties in a neighborhood, why list them all and compete against themselves?
ARMS are still resetting, and with the median in freefall, more owners go underwater everyday. When homes are affordable, that doesn’t matter so much, but people are still stretching to make payments. That will continue to drive the foreclosures.
On top of that, there’s a cooling economy to deal with.
I don’t think the market is anywhere close to “recovery”, but I’ll admit it’s doing a little better than I thought. I disagree with Yun though- I don’t think the second half will look better, this may be as good as it gets this year.
Mr.Yun reminds me of Bagdad Bob,the Iraqi Information Minister. “There is no Housing Problem, Never. Don’t Believe them, those villians.”
The Phoenix area has a large amount of REO inventory under $150,000. I have made it easy for Doomers to see these homes by separating them into 2 categories: in the metro area and in the outlying areas (Maricopa, Queen Creek, and Buckeye):
http://www.foreclosureexpert.info/2008/04/check-out-the-l.html
Judge,
I thought those numbers were distressing also. Did you read the article in the RJ about sales tax receipts at restaurants? What spin. The hilighted restaurants were so hand picked. Get away from the strip and it is restaurant doom. The furniture industry here is worse. Unemployment increases are on the horizon. I see no Quick Fix.
Twist…
It’s getting to the point where we need charts for foreclosure sales & foreclosure months supply. If one were to compare these charts to the non-foreclosure sales & non-foreclosure months supply charts, they would indeed tell two completely different stories.
In Las Vegas the number of foreclosures continue to grow. Like it or not, this is a natural cleansing of the market. There are winners & losers in this game. This is the time when affordabilty (based upon sales price & one’s abilty to purchase) makes its appearance. It is a time when responsible buyers can win. Is it a time for greed? I don’t think so. For most people, if you purchase in LV anytime soon…be prepared to hold on to the property for a while.
As an agent I am seeing the daily number homes going under contact rising. I am also watching w/ curiosity to see if the number of foreclosure homes sales will hit 60% of the total sales.
…”I disagree with Yun though- I don’t think the second half will look better, this may be as good as it gets this year.”…
In regards to the typical seller here in Las Vegas, it’s going to take some time before it gets better. On the other hand, foreclosures (that are well-priced) should do very well.
Is Daddymunster really Lawrence Yun?
Judge,
Thanks for your argument that many of the homes may now be on lenders books as non-performing assets. I’ve been wondering how come it is reported in the RJ that we are #1 for foreclosures when Countrywide is showing that the number of REO’s for Las Vegas has dropped in half just from April 1 to May 1. Maybe the auction sales, which are not on MLS, and lenders holding non-performing properties accounts for the discrepancy.
Maybe you can answer another question I’ve had. Looking at Twist’s chart of SF home sales, one can see that sales were already way less in 2006 than in 2004-5. Beginning in July 2006, sales really start to tank. The oft reported main culprit for the majority of foreclosures is ARM type loans resetting to higher rates. I’ve read that most ARM’s reset in 2 years. So even if most of the loans in 2006 and later were ARMs, there are just plain less of them. My question is how can we expect foreclosures to continue to rise going forward when the number of loans made two years earlier is decreasing each month?
madwaloo,
Las Vegas is going to see a lot more foreclosures because the rest of the economy has Tanked. Thanks fed.
“So even if most of the loans in 2006 and later were ARMs, there are just plain less of them. My question is how can we expect foreclosures to continue to rise going forward when the number of loans made two years earlier is decreasing each month?”
There are many 3, 4, 5-year A.R.M.S. , etc.
Houses are worth less and some people “need” to refinance to pay bills (even if they have a fixed loan). They will be unable to refinance in many cases.
People who are walking away based on declining asset value are eventually put in the “foreclosure” category, absent a “deed in lieu of” situation.
More people will walk away as values decline to lack of credit access and plain lack of interest in buying SFHs.
jryskmpr…
Lawrence Yun has an agenda, I don’t. Thanks for asking tho.
Twist…
If a lender owns several identical properties in a neighborhood, why list them all and compete against themselves?
Good question!…Does it cost the lender anything to hold onto a property?
Is the lender only competing w/ themselves? There’s a lot of other banks to compete w/ in this scenario. Sooner or later the properties have to go on the market. The banks are not the typical seller. Plus, there are more foreclosures on the way. May as well get them on the market ASAP & maybe a buyer may prefer the upgrades of one house over the next house even tho they are the same model next door to one another. For the banks it’s probably just a numbers game.
Russ-
To add to what you’ve said, as jobs are lost, many people will be forced to move. So, even if the owners could afford the payments and did not want to walk away from a house worth less than they paid, they may not have any choice.
madwallo,
It appears that Countrywide isn’t even filing foreclosures in Las Vegas. The Las Vegas RE blog at
http://www.city-data.com/forum/las-vegas/271683-current-update-real-estate-market-part.html
reveals that Countrywide doesn’t even want to deal with it. One defaulter even offered as many as twelve buyers and Countrywide hasn’t even filed an NOD according to one affected poster. I know of one other similar situation.
Is this going to the latest response to the ever-growing default crisis by the lenders?
Better to keep it on the books than declare it a loss?
I think that if the banks started getting hit by the association fee’s and various taxes (like they are supposed to) then you would see far more pressure to list everything and get it moving.
wow I never thought I would cheer on a home owners association…
That appears to be one of the major factors in the equation. They are not responsible for the taxes, HOA dues and maintenance until they start to take some action. It just adds to the cost of eventually disposing of the asset. In this market, it doesn’t make any sense to foreclose especially if they feel that the market bottom is approaching. The taxes will eventually have to be paid but they may be delaying it as long as they can,they are swamped with foreclosures or waiting for the next bailout bill from congress to save their bacon.