After a strong 19-month upswing, home prices in Southern Nevada dropped off a bit in September, with the median price of single-family residential units falling 1.1 percent to $180,000. When compared against the housing crash six years ago, and the market cratering in January 2012 with a $118,000 median price, Tuesday’s report by the Review-Journal’s Benjamin Spillman wasn’t really bad news.
It appears home prices are at a point where further dramatic appreciation is unlikely. The stunning recent gains in home values have lifted many thousands of homeowners above water. But two factors have driven the housing recovery: Assembly Bill 284, a law enacted in October 2011 that put huge restraints on the ability of banks to foreclose, thereby limiting the inventory of distressed properties; and large numbers of cash buyers snapping up those distressed homes and any other properties on the market.
Furthermore, as reported by the Review-Journal’s Jennifer Robison on Friday, the Homeowners Bill of Rights — a law that went into effect Oct. 1 — puts all-new limits on banks, including mandates to give homeowners alternatives to default. This law appears likely to put new downward pressure on inventory in the near term, possibly pushing prices up a bit more.
Heavy-handed government intervention is not a way to sustain a housing recovery. Rather, what Southern Nevada needs for a long-term, stable housing recovery is Vice President Joe Biden’s favorite three-letter word: jobs.
Jobs have been notably missing from the recovery. Mr. Biden’s command of numbers notwithstanding, to get back to a normal housing market, private businesses must have the ability to provide good-paying jobs — something that could get much more difficult in Southern Nevada over the next year or so. Businesses got a one-year reprieve from the Affordable Care Act, but penalty taxes on employers are set to go into effect in January 2015. The law remains a wet blanket on job creation — look at what Obamacare has already done to many companies large and small, and it doesn’t even officially go into effect until Jan. 1.
In addition, should Nevada voters approve it next year, a statewide margins tax would deal a big blow to Southern Nevada businesses and have a negative effect on employment numbers. Nevada continues to have the highest unemployment rate in the country, at 9.5 percent, and the rate stands at 9.4 percent in Las Vegas.
The surest path to sustainable home appreciation — higher values that won’t crash during the next recession — is job creation. Nevada needs federal and state policies that encourage hiring. The expansion of government power and higher taxes will do the opposite.