Dennis Smith, president and CEO of Las Vegas analysis firm Home Builders Research, kicked off the two-day Real Estate Expo at the Cashman Center on Friday morning with an outlook on the Las Vegas housing market.
“It’s good,” he said. “It’s better than last year and the year before.”
Smith said the state of the housing market is impacted by the current stock market, type of buyers and job growth. In Las Vegas, over the last year, Smith said nearly 23,000 jobs were created.
“I was always told that job growth equals home sales and we’re selling some, but with that kind of figure, we should be selling more,” he said. “We’re more dependent on baby boomers and not as dependent on millennials because they have credit issues due to school loans but they’re young and they’ll recover at some point.”
Homebuilders Lennar, KB Home and DR Horton were at the front of the pack for builder net sales.
Smith also highlighted monthly new home closings over the past four years. As of March, there were 483 in the valley compared to the high of 763 in August of 2013.
“In 2016, we’ve seen an increase of 4 percent,” he said. “I don’t expect a huge increase in 2017 because I don’t see the number of lots materializing in the next few years.”
He added, “If we had more lots available, we would close more homes but it’s still hard for people in the area to qualify for a mortgage because some of them are still dealing with the effects of the recession.”
Smith said many homebuilders are facing consumer resistance.
“They’re shopping around more,” he said. “A lot of consumers are still feeling out the market and can’t make a decision. While mortgage rates are low and that isn’t an issue at the moment, credit qualification is.”
Summerlin is the most expensive community, according to Smith, with a new-home median base price of $508,950 so far in 2016 compared to $468,990 last year.
The northwest portion of the valley, however, has seen the biggest increase in average price per square foot. In 2015, it was $128.99 and is now $140.83.
“There are more projects going on out there including luxury and custom homes,” Smith said. “The older products are being replaced with bigger products.”
Skye Canyon, a 9,000-home master-planned community situated at U.S. Highway 95 and Fort Apache Road, is the latest northwest project.
During the first two months of 2016, Smith said there was nearly a 16 percent increase in monthly new home permits, however, he doubts that number will continue to rise.
“Permits should stay strong over the next few months during the spring selling season but they probably won’t be maintained throughout the rest of the year,” he said.
Over the last six months, while Lennar, DR Horton and KB Home dominated the amount of builder permits in the Las Vegas Valley, there were other notable mentions, Smith said.
“Pulte, CalAtlantic and Pardee all experienced a good six months,” he said. “Toll Brothers was also good relative to the past few years.”
In the near future, Smith said he anticipates new home and resale prices continuing to rise while consumer resistance will increase along with mortgage rates.
“If we see 4 to 4½ percent mortgage rates, these projections will need to be revisited because it would greatly affect this city,” he said.
Smith said issues that could affect the housing market going forward include the slow improvement of negative equity, getting people qualified for a mortgage, household incomes not keeping up with home prices and rental competition.
“Affordability of land must also improve, which I don’t see happening,” he said. “That will be more of an issue next year and an even bigger issue the year after that.”
The two-day Real Estate Expo drew more than 60 exhibitors. For more information, visit www.realestateexpolv.com.
Contact reporter Ann Friedman at firstname.lastname@example.org or 702-380-4588. Follow @AnnFriedmanRJ on Twitter.