Expert addresses the housing market in 2010

Q: What do you think is going to happen to our housing market next year? Do you think prices in Las Vegas will fall like they have been, or will we finally start to see prices go up again? -- Rob C., Las Vegas

A: Like other real estate professionals, I get these questions all the time. I generally answer by reminding people that I'm a Realtor, not a fortune teller. I only wish I had a crystal ball to help me predict the future performance of the local housing market.

Since this is the most common question I've received during my year as president of the Greater Las Vegas Association of Realtors, I thought I'd at least share some thoughts with you from our local and national experts. One of these experts is Lawrence Yun, the chief economist of the National Association of Realtors.

Yun was kind enough to share his views and expertise on the housing market here in Southern Nevada with me and hundreds of my closest friends and colleagues during a Nov. 20 event where we installed the GLVAR's newly elected officers for 2010.

During his video message to us, Yun said that he expects home prices in Southern Nevada to begin increasing during 2010. Of course, local homeowners would be happy to hear that, especially after seeing home prices here decline over the past two years or so.

I was also encouraged to hear him recognize that sales of existing homes in Southern Nevada reached record levels in 2009 and that he expects "that momentum to carry over into 2010."

Of course, no one is ignoring the painful impact that foreclosures continue to have on thousands of local homeowners.

However, as Yun pointed out, the tide may be turning. Consider that most people seeking to buy these bank-owned homes are competing with multiple offers and that more than 40 percent of all existing homes here are being purchased with cash.

That speaks volumes about the continued demand for homes in the Las Vegas area.

At the same time, GLVAR statistics show a gradually declining inventory of homes through 2009 and show local home prices stabilizing in recent months.

"I see prices (in Southern Nevada) clearly bottoming," Yun said. "I would not be surprised, in fact, to see a double-digit price increase in 2010, say in December of 2010 compared to December of 2009. That is a possibility, not a guarantee."

He went on to say that it would not surprise him if local home prices appreciated by as much as 10 percent from the beginning to the end of 2010.

Like other local and national housing experts, the NAR economist suggested the recent extension and expansion of the federal income tax credit for homebuyers will continue to boost home sales here and nationwide through June 30, when the tax credit expires.

Beyond that, Yun said the forecast gets a bit cloudy. Fortunately for Las Vegas, he said the fundamental factors that have always attracted people to visit and move here are still in place. They include our warm weather, world-class entertainment offerings and no state income tax, to name just a few.

Given these attributes, Yun is among those predicting that the population of Southern Nevada will begin increasing again, after being fairly flat in the last year or two.

Combine more newcomers with far fewer new homes being built and Yun said it's possible that we could see a local housing shortage in two or three years, "unless the builders respond and start building."

I'd also add that mortgage rates have been hovering around 5 percent since the spring. These historically low mortgage interest rates are a sometimes overlooked but important factor in fueling home sales and making housing affordable.

For more information on such subjects, consult a qualified local Realtor or visit lasvegasrealtor.com.

Sue Naumann is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for nearly 30 years. GLVAR has nearly 13,500 members. To ask her a question, e-mail her at ask@glvar.org. Questions may be edited for space and clarity. For more information, visit lasvegasrealtor.com.