Housing in Las Vegas: 'C'mon Black!'

If you've played the roulette wheel and watched red numbers come up over and over in a row without a break, you ask yourself before the next spin - "It can't possibly come up red again, can it?" That's been the Las Vegas housing market over the past two years.

TraderMark wrote an excellent piece on the Las Vegas market this week - "Las Vegas Homeowners Lose Their Bets as Home Prices Fall" - that spurred me to support his writing with some more market data reflecting current conditions as of May 1 in Las Vegas.

Inventory has leveled out in recent months, though much of the inventory exiting the market is likely to be foreclosed homes that become part of the "shadow inventory" sitting on banks' balance sheets and rentals (something discussed in a look at the Phoenix housing market - "Spring Cleaning in Phoenix.")

This is visible when you consider that prices continue to decline despite the slower rise in inventory throughout 2008. TraderMark referenced a median home price of $144,000, so the slightly elevated ask prices below fall right into the 95% list-to-sale ratio in Las Vegas.

There's also a pretty close correlation to the number of new homes entering the resale market to those exiting, which makes sense considering the inventory plateaus we're seeing:

Over the past 45 days or so, the price of homes entering and exiting the market are also quite close, which would indicate that sellers are responding to buyer activity and starting to "price right."

But don't despair... Even places like Sacramento are starting to show early signs of a turnaround:

So if you're a betting man (or woman), and wondering when black is going to hit on the Las Vegas wheel, there's promise that eventually it will turn.

Disclosure: No positions

Comments

[pick freedom:]

I was thinking about buying a home about 20 minutes south of Salt Lake City but have changed my mind after seeing that the default rate is going up now that banks are foreclosing again.

Unemployment is also still going up, over 500,000 a month, leading to more homes going into default over the next 2 years.

In addition many mortgages will be re-adjusting the notes interest rates, needing re-financing, but will not be able to because home prices have fallen below the equity that is left in the property. Causing more homes to go into default.

It seems that supply will increase over the next 12 months. I feel prices will be much lower this time next year. So I will wait.

I have seen MLS asking prices on homes just 2 years old drop $50,000 to $100,000 dollars in 6 months to a year here in Utah.

Whats it like were you live?

May 03 05:00 AM

[ubuy2w:]

Great article my thoughts exactly deals abound and while no one can predict a bottom with any sense of certainty the combination of extremely depressed pricing wit super attractive financing make the purchase of residential real estate extremly compelling in many mkts.

May 03 09:36 AM

[notsosmart:]

be patient. arms are still resetting & i guess there must be app. 16 mos supply of houses.unemployment will rise more but the figures may be skewed by the govt.between different ports there must be app. 100,000 cars(new) or more just parked in the weather.hopefully the so called green shoots arent weeds.

May 03 10:21 AM

[Rhino Realty:]

What about those 2 green numbers: 0 and 00. ? If the wheel hits those numbers does Las Vegas blow up ?

May 03 01:16 PM

[Valley Boy:]

The situation looks dicey. There are still the other mortgages
supposed to be ballooning over the next couple of years. The
casinos have cut back drastically. Perhaps the warehousing
industry is holding up so far.



On May 03 01:16 PM Rhino Realty wrote:

> What about those 2 green numbers: 0 and 00. ? If the wheel hits those
> numbers does Las Vegas blow up ?

May 03 11:09 PM

[B smith:]

Some recent articles have suggested that resets will be minimally impacted due to recent dramatic drops in the index rates, which could help people with arms. Many may see decreases in rates rather than increases, unless they have a floor.

The 10yr Treasuries spiked up from 3.0 to 3.2 thursday and friday, because the fed did not signal a new buy. This says mortgage rates are due to rise, so If you are looking to buy locking in a sub 5%fixed rate, prior to possible substantial rate increases and inflation could be a good investment. I expect currency inflation with minimal asset values increasing, but paying back a loan with inflated money still makes is a good investment compared to many others, and cash could become a liability if currency inflates substantially. The whipsaw will reward those with some hard assets that float with the currency revaluation. Land, minerals, probably Oil.

May 04 01:16 AM