Sunday, February 02, 2003
Copyright © Las Vegas Review-Journal
HOUSING MARKET: A rate to appreciate
Median home prices rise 7.4 percent valleywide in 2002
By HUBBLE SMITH
REVIEW-JOURNAL
The median price of existing homes in Las Vegas Valley appreciated by 7.4 percent in 2002, led by a 20 percent gain in the south Summerlin ZIP code of 89135, a local housing expert said in his year-end report.
Median prices rose to $149,300 last year from $139,000 in 2001, an increase of $10,300, said Larry Murphy, president of SalesTraq, a research company that tracks the Las Vegas housing market.
That's an enviable growth percentage compared with modest returns for a certificate of deposit or the declining stock market, Murphy said.
"I think it's interesting when you look at new home prices being up 8 percent and resales up 7.4 percent. That's almost the same," he said.
"Everybody has to remember this is the median price, so half of the houses sold for less and half sold for more. If you want to find the real value of your home, you should contact a Realtor or an appraiser. Don't generalize from this."
Along with the Summerlin area, double-digit appreciation rates were reported in Green Valley's 89074 ZIP code (14 percent), Southern Highlands' 89141 (13 percent), the northwest's 89131 (13 percent), the southwest's 89113 and 89118 (both 10 percent) and Anthem's 89052 (10 percent).
Only two ZIP codes showed depreciating home values, and Murphy said an asterisk needs to be placed next to the minus-17 percent in Lake Las Vegas' 89011.
The 20 homes that were sold there in 2002 had a median price of $665,000, down $135,000 from $800,000 the previous year.
However, Murphy noted that the average size of homes sold in Lake Las Vegas also dropped from 3,948 square feet in 2001 to 2,839, driving the average price per square foot up 15 percent to $269.51.
"Last year was the first year we brought on much lower-priced product, condominiums and some of the single-family, small resort villa-type homes," said Brad Nelson, chief operating officer of Lake Las Vegas. "Our product is unlike anything else in town in that it's a resort product geared toward second- and third-home owners."
Nelson said Lake Las Vegas homes in the early years were going for $1 million and higher on custom lots. Two years ago, villas in the $400,000 range were added to the mix.
Last year, three existing Bella Vivente homes by Amstar sold for $505,000, $695,000 and $750,000. The previous year, five Bella Vivente homes were sold, the cheapest at $650,000 and the most expensive at $925,000.
Murphy said there's a strong correlation between the average age of a house and its appreciation rate because the first homeowner usually puts in the most improvements.
"He puts in the landscaping and does the upgrades and decorating, so if he should sell his home two years after he buys it, he's going to recapture much of the improvements," Murphy said. "The second homeowner ... chances are he doesn't put in as much."
That's one reason why home prices in Henderson's 89014 ZIP code, with an average age of 12.1 years, slipped $3,000, or 2 percent.
"I think it's a mistake if people look at a ZIP code like Summerlin and say, `That's our baby, 20 percent.' It's really not so much whose baby it is. It's the age of homes in that ZIP code, regardless of who built them," he said.
Karyn Shaunnessy, a Realtor with Century 21 Money World, said 89014 is an older part of Green Valley, and although the median price has dropped there, early home buyers in that neighborhood made out nicely when they sold.
"Every three to five years, people are looking to move again," she said. "I think it's a hobby in Las Vegas. People stay in a home five years and them move up, so that's what you're seeing there."
Another factor boosting appreciation rates in Las Vegas from the 2 percent and 3 percent range of the late 1990s to 7.4 percent today is the lowest interest rates in 40 years.
When mortgage interest rates are down below 6 percent as they are now, people can buy more expensive homes for the same monthly payment.
"That allows people to move into a house that if interest rates were 10 percent, they flat couldn't afford it," Murphy said. "People can pay more and that's what's kept the housing market as the bastion of the economy."
Home sales and mortgage origination volumes have never been stronger and single-family home-building and house price gains are as strong as they've been in a quarter century, said Mark Zandi, a Boston economist who conducted a study for the Homeownership Alliance in Washington, D.C.
"Last year's recession would have been substantially more severe and this year's recovery stalled if not for the strength of these markets," Zandi said.
Mortgage refinancing now accounts for 20 percent of real gross product growth, Zandi found. Since the refinancing boom began two years ago, close to $2.5 trillion in mortgage debt has been refinanced.
"Predictions are that's going to tail off as interest rates go up in '03, but nobody knows when that's going to happen," said Matt Wells, product manager for Lowermybills.com, a California-based Internet mortgage company.
"In a lot of areas around the country, the inventory of homes is pretty tight, so with the interest rates and the demand, prices will continue to go up. We've seen some prices in San Francisco come down. That's kind of correlated to the unemployment rate."
