When will home prices rise?

Q: Are the prices of quality, move-in condition, used homes going to go up this year and next year, or down due to Bank of America unloading more foreclosures, (and) by what percentage?

---- Barbara C.,

Las Vegas

A: That's a big question with no easy answers. If I knew exactly what was going to happen with home prices, I'd be wealthy and wise. What I can tell you is what has been happening recently.

The Greater Las Vegas Association of Realtors reported that the median price of an existing single-family home in Southern Nevada in March was $125,950. That was down 1.6 percent from $128,000 in February and down 7.4 percent from one year earlier.

According to the National Association of Realtors, home prices nationwide have also fallen in the past year, with the median price in March being $159,600, down 5.9 percent from a year ago.

To understand why local home prices have dipped in the past year while sales have soared, I think it helps to look at who's buying and who's selling and what type of homes are being sold most often. From there, I think we can make at least an educated guess about what may happen.

You asked specifically about prices of existing homes in "quality, move-in condition." That complicates matters a bit, since that description is fairly subjective. Homes that arguably match that description make up a shrinking share of today's local home sales, which are being driven by investors buying mostly bank-owned homes. These buyers are looking for bargains, with many investors buying homes in need of significant repairs, then fixing and renting them.

Location is another big factor. For instance, we're seeing more price stability in more established parts of Southern Nevada, including some of our more popular neighborhoods and master-planned communities.

As for your reference to Bank of America, keep in mind that it is merely one of many large lenders controlling thousands of bank-owned homes in Southern Nevada, and nationwide. Now that banks are the sellers in about three of every four local home sales, it's increasingly clear that each bank operates differently.

I often hear people speculating about what "the banks" may or may not do with the so-called "shadow inventory" of homes they own but have not yet listed for sale. But only the decision-makers at each bank can answer that question.

Like most of my peers, I believe we are either at or near the bottom of the local housing market. Homebuilders have built relatively few new homes in recent years, adding little to the local housing supply. Demand remains high, as our soaring sales numbers indicate. And many existing homes here are already selling for less than what it would cost to build that same home today.

So, it seems logical to me that prices can't fall much further and figure to begin appreciating again as the economy and job market slowly improve.

To me, the real question is not so much if local home prices will start to appreciate again, but when.

If perception becomes reality, consider that a recent survey by UNLV's Center for Business and Economic Research showed local business leaders expect local home prices to rebound, though nearly 74 percent said it would be at least 2013 before that happens. Twelve percent expect such a recovery in the first half of 2012. Another 12 percent expect that to occur in the second half of 2012, with 3 percent expecting prices to bounce back in the second half of 2011.

In any case, I haven't heard any expert that I consider to be credible predict that local home prices will go up dramatically any time soon. It seems more likely that homes here will eventually begin to appreciate at historically normal levels of a few percent per year.

Paul Bell is the president of the GLVAR and has worked in the real estate industry for 30 years. To ask him a question, email him at ask@glvar.org.