Las Vegas is on pace for 40,000 existing-home sales and 5,000 new-home sales in 2009, but a second wave of foreclosures will continue to put downward pressure on pricing through the end of the year, housing analyst Larry Murphy said Thursday at his quarterly Crystal Ball seminar.
He thinks monthly sales for existing homes may have peaked in June at 4,663 closings.
The median price appears to have stopped falling in the second quarter, settling in at $125,000 for both May and June.
Foreclosure inventory has declined for four consecutive months as bank-owned dispositions outnumber acquisitions. However, acquisitions rose in each month of the second quarter, from 1,300 in April to 2,486 in June.
“I’m not here to be optimistic or pessimistic,” Murphy, president of Las Vegas-based SalesTraq, told his audience of about 100 real estate professionals. “These are the numbers. New-home prices continue to gradually go down and will probably be $200,000 by year’s end.”
While some signs are showing that Las Vegas’ housing market has bottomed out, Murphy questions whether it’s a real bottom or a false bottom. Prices dropped 16 percent in the second quarter, same as the first quarter, he said.
Murphy suggested earlier this year that median resale prices could drop to $100,000 in Las Vegas. He’s not saying it will happen, but it’s possible.
Comparing median prices in the first half of this year with the same period a year ago, Murphy found that single-family homes turned out to be the least harmful real estate investment in Las Vegas, losing 34 percent of their value.
An acre of land dropped 42 percent in value, mid-rise condos were down 49 percent and high-rise condos were down 50 percent. The worst investment was apartment conversions, which fell by 56 percent.
The worst overall performance was the 680-unit Mer-idian apartment conversion at Flamingo Road and Koval Lane. Chicago-based American Invesco sold units new at $539,000, or $604 a square foot. The average resale is $87,600, or $121 a square foot, and 30 percent of the units went to foreclosure.
“So if you made an investment you’re not happy with, at least you can say it did better than this,” Murphy said. “Sometimes it seems you just can’t win. There’s nowhere to go, nowhere to hide. It’s like the guy in bed reading ‘101 Positions’ and his wife next to him is reading ‘102 Excuses.’ “
Prices for the next wave of foreclosures are going up, said Steve Bottfeld of Marketing Solutions consulting and research firm. The first wave was mostly subprime mortgages, but foreclosures are now affecting middle-class homeowners who have lost their jobs, he said.
“I think prices will travel a narrow range — plus or minus 4 percent — for the rest of the year,” Bottfeld said. “I think we’re near the bottom of prices, I don’t care what anybody says.”
Homebuilder DR Horton had the most new-home closings in the first half of the year, with 425 at an average price of $224,000, Murphy reported. The top-selling master-planned community was Mountain’s Edge, with 220 closings at an average price of $216,373.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.