Vegas Home Prices Continue to Fall; No Turnaround Yet

The January housing sales figures for Las Vegas are not pretty. The number of sales fell 11% from December and the median price was 8.6% lower than the earlier month. Not good signs on both counts. The sales market is still much stronger than a year earlier with sales 126% higher than January of 2008.

The median price remains suspect when 88% of sales are either short sales or foreclosures. These sales are from sellers much more interested in just moving the property rather than maintaining any pricing level.

January was the month when many started to realize the effect of the recession on the 2008 economy in the 4th quarter. Also, the nation was waiting for President Obama to take office and start to reveal his plans for helping the economy. February seems to be more of the same so I do not expect much to change for the Vegas housing market.

Although the sales levels are encouraging, I do not see a housing turnaround in any market until the average sales prices stabilize.

Comments

[Scott Sambucci:]

Hi Tim - Love the point about the pressure on the traditional resale market placed by the short sales and foreclosures. We're seeing a relative equilibrium in the number of new listings and listings absorbed each wekk - totial inventory is leveling off on a week to week basis, but the ask prices are continuing to fall as the same rate as they have been over the past two years:

tinyurl.com/cwyhdy

Now keep in mind the "listing absorbed" is "the total properties leaving the market" - could be solds, foreclosures, or frustrated sellers. Our conjecture is that many of these absorbed properties were listed as short sales that never entered contract and were eventually foreclosed upon so that bank takes possession.

These properties leave the traditional resale market, but still exist as part of the total inventory since the banks now need to off-load them in large asset portfolios or pools, which exerts pricing pressure on the remaining on-market properties.

Same situation in Sacramento:
tinyurl.com/c5394b

And Stockton:
tinyurl.com/dcz5sw

Feb 13 08:30 AM

[DuffBeer:]

There will be a bottom and it will end.
Those answers will come as we look back at the stats.
Here is the problem with housing ,real honest
to goodness numbers. We real use projections and they come from
much smarter numberites then me. Also each region,major city,
sections of those major cities and all the way down to your subdivision.
Marco --- micro ????
From a guy in the trenches in Chicago . I say the normal handshake
transactions are not many !!!! For now and sometime to come it is about distressed property sales. Sales up in that category. That brings us to another subject what amount home prices ?????
What will the TAX man do about your real estate taxes with fall off the cliff sale prices ? Will r/e taxes go down !!! How about your home owners insurance ????
This mess is far from over .
I am so glad that they stopped using hops to make gas with.
I do not know about you but I need a beer
Cheers,DuffBeer

Feb 13 11:11 AM

[jimmy46:]

Nevada has had the most population growth every year,
of any of the 50 states for over 10 years.

2.8% increase every year, compounded.

With building starts down more than 50%, recovery will come.

Feb 13 02:43 PM

[mister d:]

Tim,

As a real estate appraiser in Las Vegas I can tell exactly what the problem is. Values are continuing to plummet in Las Vegas due to the fact that lenders will not lend on Nevada. Period. The brokerage business has almost completely been wiped out due to current market conditions and the major receivers of TARP funds have no desire to try and catch a falling knive. Major lenders have an additional dilema that they can neither face or fess up to. Almost every sale in Vegas is a short sale or foreclosure and refinancing is almost impposible due to Loan to value problems created by declining home values. These short sale and foreclosure sales are not your typical short sale. A typical short sale prior to a few years ago was when a seller may be a little short to cover total selling costs. These short sales and foreclosures show losses so significant that the banks cannot afford to recognize them on their books. When I say significant I mean massive losses. They are typically blaiming end investors who apparently cannot come to resolution between first and second position holders. That is simple second needs to go away. You had less skin in the game for that position and you got what you paid for. Until lenders start to recognize losses, with financing in place via alternative mortage options. in Vegas values will continue to fall. On the brighter side I personally feel that vegas has undershoot quite drastically. There are investors with cash all over town looking at property and running into the same problems. I know of numerous situations where the only thing holding the deal up is the financing in place problems. Banks and loan servicers need to shit or get off the pot, they are destroying a vibrant valuable community. Not to mention creating an almost unattainable position for themselves as the values they are destroying are in fact more and more often becoming their property. Makes me wonder why?

I have always wonderd what real estate would be worth without financing. Anoyone else experiencing difficulties with signed contracts getting closed?

Feb 13 03:30 PM

[Urbane Gori...:]

Just keeping you honest... You've been parading the 'recovery' in Sacramento and 'Las Vegas' all along now. This is your article from December:


As Las Vegas Home Sales Continue to Climb, Recovery Seems Under Way.

by: Tim Plaehn December 16, 2008


Time to give up that 'Magic Eight Ball' of yours..... jegan ;-)

Feb 13 05:58 PM

[Steve Ward:]

Excellent point on the 88% of sales being short sales or foreclosures. Quite correct in a non stabilizing price environment.

Percentage of sales that are short sales and foreclosures would seem to be the chief indicator barring a surge in interest rates.

Feb 14 12:43 PM