The tailwind from the homebuyer tax credit has ended and some housing analysts are concerned the market may be headed for further decline.
Home sales declined 11.2 percent in June from a year ago and inventory of homes for sale continued a steady upward climb to 21,361, the Greater Las Vegas Association of Realtors reported Thursday.
Realtors sold 3,360 homes during the month, a 16.5 percent increase from the previous month, but down from 3,785 sales in June 2009. With 4,759 new listings, inventory has increased six consecutive months and is up 3.6 percent from a year ago.
The median single-family home price was $140,000 in June, unchanged from a year ago. It’s the third straight month that year-over-year prices were either stable or increasing.
The local housing market seems to be taking two steps forward and one step back, association President Rick Shelton said.
“To really rebound from the downturn of the past few years, we need to see home sales, inventory and prices all pointing in a positive direction for an extended period of time,” he said. “It’s always tough because you get certain indicators for a month or two months and then you get a month of contrast. At worst, it’s kind of bubbling at the bottom of the market.”
The number of condos and townhomes sold in June was 905 units, a 1.3 percent decrease from a year ago. Median condo price rose 6.1 percent to $70,000.
A Las Vegas housing update from St. Petersburg, Fla.-based Raymond James brokerage said sales have slowed despite the tax credit tailwind.
“Looking ahead, given the moderation we are currently witnessing in sales activity, we would not be surprised to see sales tail off further in the wake of the tax credit expiration,” Raymond James analysts Buck Horne and Paul Puryear wrote in the June report. “Thus, while the Las Vegas resale market has demonstrated signs of stabilization, we are becoming increasingly concerned about the potential for renewed price declines.”
The trend toward more short sales, or sales for less than the mortgage balance owed, and fewer foreclosures continued in June. Short sales accounted for 34 percent of the total, an all-time high, while foreclosures fell to 38 percent of all sales.
With short sales playing such a big part in the Las Vegas housing market, Shelton said thousands of home buyers were helped by last week’s extension of the closing deadline for the federal tax credit. Buyers who had a sales contract by April 30 now have until Sept. 30 to close escrow.
The tax credit is one of many outside influences on “turning that corner” toward recovery, Shelton said. Banks are another controlling factor.
“The banks seem to be getting more aggressive in working on short-sale transactions,” he said. “Through that I think more and more inventory will come to the market.”
Shelton said the expiration of the tax credit should theoretically reflect a decline in buyer activity, at least in the short term. The market experienced a spike in inventory that was almost parallel with a drop in absorption, he said.
The percentage of local homes purchased with cash — a good indication of investor activity — peaked at nearly 50 percent a few months ago and fell to 42.5 percent in June, he noted.
California-based real estate consultant John Burns said the housing market is at the bottom and heading into “stage two,” which is the beginning of the next up cycle.
Job growth is coming back slowly and renters are figuring out that this may be the best buying opportunity of their lifetime, he said. Mortgage rates and home prices have fallen dramatically, creating the best consumer affordability in more than 30 years.
“While we think stage two will last longer than usual, we want to point out that the downside of investing in housing right now is about as low as you will ever see,” Burns said.
The total value of local real estate transactions tracked through the Multiple Listing Service in June decreased 11 percent from a year ago to $564 million, the Realtors association reported.
Statistics from the Greater Las Vegas Association of Realtors are based on data collected from the Multiple Listing Service and do not necessarily account for sales by owners, homebuilders and transactions not involving a Realtor.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.