The slowdown in the Las Vegas housing market appears to be bottoming out in the fourth quarter, but that doesn't mean it will return to any kind of boom any time soon, a local research analyst said Friday.
Dennis Smith of Home Builders Research reported a slight increase in new home sales in November to 2,829, up from 2,606 in October. He counted 2,753 resales, the lowest monthly total since early 2004.
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Median new home prices climbed to $335,850, an 11.3 percent increase from the same month a year ago. However, factoring out the 366 high-rise condo units that closed escrow in November with average prices from $452,474 at Platinum to $823,413 at Turnberry Place, the median price of a "traditional" single-family home rose 2 percent to $329,655, Smith said.
"Don't forget there are also sales incentives that could average 10 (percent) to 20 percent. That would result in a year-to-year decrease of about 17 percent. This would be closer to the real price points of new homes," he said.
The median price of existing home sales was $285,000, where it's been floating for the past 15 months, Smith noted.
"People are getting used to it," he said. "They're getting accustomed to a slower pace. Boomtown only applies to the Strip. That's our saving grace."
SalesTraq, another Las Vegas-based housing research firm, showed similar numbers, with 2,868 new home sales, down 24.6 percent from a year ago, and median price of $339,888, up 12 percent.
Despite slower sales in both new and existing homes, the market continues to eat through inventory, SalesTraq analyst Larry Murphy said. The number of active new home subdivisions declined in November for the first time since July 2005. New home permits dropped 63.8 percent to 706 and existing home inventory declined to 20,684, according to SalesTraq.
Murphy maintains that Las Vegas is not in a housing "bubble" as some people have suggested.
"I've taken a short-term look at the market today under the microscope and placed it in perspective of what the market was not only last year, but the last 10 years and it's phenomenal," he said.
Murphy collected data from the Clark County Assessor's Office on more than 650,000 residential records for each decade since the 1920s. He estimates that 300,000 homes will have been built from 2000 to 2010, compared with 180,000 homes built in the 1990s.
"What's happening right now today with this blip of a slowdown is microscopically small in the overall universe of Las Vegas," Murphy said. "Put yourself in 2010 and look back. The only thing that concerns me is water. We're going to whip that problem. I walk through these new (home) lots and every one of them has desert landscaping. You can see they don't use five gallons a day on the lawn."
Employment has been growing nationwide at slightly more than 1 percent and this is key to housing, Tim Sullivan of the Sullivan Group said. Two of the weakest housing markets are Las Vegas and Phoenix, but together they should generate over 120,000 jobs in 2007 and represent over 10 percent of the nation's job expansion, he noted.
"What we are experiencing can best be defined as a supply hangover," Sullivan said. "We have too much supply and have to burn through it to get back to market equilibrium. We went too far too fast and in the early 2000s, we effectively ate up some of the demand that should have taken place in 2007 to 2010. During this correction, prices are being reduced and while we have not seen land prices drop considerably yet, we anticipate some reduction in land prices in 2007.
"Today the buzzword is normalcy and stability. But keep an eye on supply, as it will be a key indicator for any recovery. And as we look forward to some level of improvement in the coming year, remember that the basic tenets of economics reign supreme over irrational buying," he said.
Kurt Lehman of Realty One Group in Las Vegas said he reviews the MLS about twice a month and since the first of December, 583 houses have closed escrow and 836 houses have gone into escrow, which means they may not close before the end of this month.
