The Las Vegas housing market started this year with sluggish sales and lower prices, although new-home prices rose 2.8 percent, Home Builders Research reported Thursday.
The firm counted 232 new-home sales in January, eight fewer than the same month a year ago, at a median price of $208,145, an increase of $5,693 from a year ago.
Consumer sentiment appears to be on the upswing, judging by the dramatic increase in traffic through new-home subdivisions in the last two weeks, housing analyst Dennis Smith of Home Builders Research said. Several builders held grand openings showing off new floor plans.
“What that indicates is consumers want to see some new and innovative product because they haven’t seen that much new,” he said.
Builders have backed off during the downturn, pulling just 232 new-home building permits in January. That number is expected to rise in the coming months as builders gear up for the spring selling season, Smith said.
Existing-home sales dipped slightly to 3,098, compared with 3,111 in January 2010, Home Builders Research reported. The median price fell by $10,000, or 8 percent, to $115,000. The price had been ranging from $119,000 to $126,000 for the past 19 months.
The drop in January’s median price bears watching as it could be an indication of further price declines in Las Vegas. Some national reports are projecting home prices will fall another 10 percent to 15 percent this year.
That would take the Las Vegas resale median down to about $103,500.
“It wouldn’t stay there long as investors would flood our city snatching up homes and flipping some while others would enter the rental pool,” Smith said. “We’re already getting investors, but I know investors that are sitting on their wallets waiting for the lowest prices they’ve ever seen. They want to feel comfortable they’re getting the best prices they can get.”
For prices to drop that dramatically, Fannie Mae and Freddie Mac would have to begin dumping their local inventories, the analyst said. He does expect to see a rise in bank-owned homes sold at auction.
“Reports of the overwhelming supply of shadow inventory homes we have all heard about for the last two years may begin to slowly materialize in 2011,” Smith said.
Las Vegas-based SalesTraq reported a median resale price of $109,000, a 9.2 percent decrease from a year ago and the lowest median since 1991. The firm showed a 3 percent increase in existing-home closings to 3,785 in January.
New-home sales fell 15.3 percent to 233, while the median price rose 3.1 percent to $208,145, according to SalesTraq.
Short sales , or lender-approved sales of homes for less than the principal mortgage balance, are starting to force a change in the Las Vegas housing market, SalesTraq President Larry Murphy said.
They accounted for 20 percent of January sales and commanded a median price of $120,000, higher than even nondistressed properties ($110,000).
Given that 70 percent of Las Vegas home mortgages are “underwater,” this may be a signal that there could be a significantly higher proportion of short sales in the future, Murphy said. That would be an impetus to push prices higher.
Nearly 8 percent of Clark County homes had received a notice of default in January. Although that’s considerably less than last year’s 20 percent, Murphy said he still sees a significant number of foreclosures hitting Las Vegas in the near term. Still, given the nature of the Las Vegas economy, he expects to see a higher proportion of short sales later in the year.
Contact reporter Hubble Smith at email@example.com or 702-383-0491.