September 2, 2016 - 7:38 am
Las Vegas home prices have bounced back in recent years, but Southern Nevada’s recovery has the longest way to go in the country, a new report shows.
Mortgage-data site HSH.com this week said Las Vegas-area home prices would need to rise 44 percent of current value to regain peak.
That was the widest gap among the 100 metro areas listed in the report, surpassing other boom-and-bust cities including Riverside, California, would take 29.2 percent to regain the peak; Orlando, Florida, would take 25.6 percent to regain the peak; and Phoenix, would take 17.1 percent to regain the peak.
Denver has recovered the most, with prices 53.6 percent above their prior peak, HSH said.
Las Vegas was a poster child for America’s housing boom and bust, and its ranking underscores how bloated prices became last decade, how badly they collapsed when the bubble burst, and how the market overall isn’t moving nearly as fast as it used to — which might be a good thing, given how badly the go-go years ended.
“It is important to note that many markets, even the 10 that have recovered the least, have made significant price recoveries since hitting their bottom values,” the HSH report, released Tuesday, said. “However, home prices in areas like Las Vegas may have been inflated to such a degree that even when they return to a ‘normal’ value, they may still be well below their previous price peak.”
In a phone interview, HSH Vice President Keith Gumbinger said Las Vegas has mounted an “impressive recovery” but “still has so far to go.”
“The depths are so deep, it’s hard to overcome it,” he said.
Cities that had the biggest booms also crashed the hardest, he said, and markets that have surpassed their previous highs didn’t experience such extreme ups and downs.
According to Gumbinger, about 45 of the 100 markets his company tracks are at or above previous peaks.
“Everyone else is still trying to play catch-up,” he said.
Riverdale, New Jersey-based HSH — formally known as HSH Associates, Financial Publishers — said its report was based on the Federal Housing Finance Agency’s home price index.
And it’s not the only group this year to highlight Southern Nevada’s yawning gap from the boom era.
Home-listing service Zillow reported in March that Las Vegas-area home values were about 34 percent below their peak, the largest gap among the 35 metro areas in its report.
Nationally, home values were 6 percent below their peak, Seattle-based Zillow found.
Just because homes values in some cities were off by double digits did not necessarily mean “those markets are far from being recovered,” Zillow chief economist Svenja Gudell said in the report. “It just highlights how extraordinarily inflated home values had been during the housing bubble.”
The median sales price of previously owned single-family homes in Southern Nevada — the bulk of its for-sale market — hit $236,000 in July. That is double the price from when the market hit bottom, at $118,000 in early 2012, but still far below the peak of $315,000 in mid-2006, according to the Greater Las Vegas Association of Realtors.
Lower prices can cause heartburn for homeowners who paid hefty amounts during the boom years and want to sell today. But cheaper housing is good for buyers.
Overall, says a new report from Bankrate.com, Las Vegas is the fourth-best metro area in the country for homeowners. Its findings were based on several factors, including affordability, price appreciation, property taxes, maintenance costs and foreclosures.
John Restrepo, head of Las Vegas-based RCG Economics, said the gap between current and peak prices shows the valley’s housing market still is recovering from the worst recession in decades.
“It just takes time for the market to heal,” he said.
That’s not necessarily a bad thing, either.
Asked whether the pricing gap is good, bad or somewhere in between, Restrepo said: “Depends on whether you’re buying or selling.”
Contact Review-Journal writer Eli Segall at (702) 383-0342. On Twitter at @eli_segall.