The Las Vegas Housing Market: Perspectives

Las Vegas has suffered through the housing market turmoil like few other places and based on the opinions of many, it still has further to fall. Sin City’s metro area has led the nation in mortgage defaults for 22 straight months through August 2011 and home prices have plunged a whopping 60 percent from the peak in 2006, according to RealtyTrac. Financial analytics company Fiserv projects that Las Vegas’s home prices could fall another 16 percent by June, 2012.

Positively identified as the nation’s foreclosure capital, Las Vegas has lost more than 100,000 homes to bank foreclosures since January 2007 – roughly 18 percent of the valley’s privately owned housing stock, according to housing analyst Larry Murphy of Vegas-based SalesTraq.

“Sadly, Las Vegas is nowhere near finished with foreclosures”, Murphy said. Most likely another 100,000 foreclosures are on the way, and at the current rate, that process will continue for another five years.

“It’s been really horrendous that 1 out of 5 homes are foreclosures and we are not done yet” said Murphy. “By the time we get to 10 years, it could be half or 40 percent, and that’s staggering. It’s unbelievable”.

In a relatively new area in North Las Vegas the median home price dropped from $298,949 in 2007 to $145,000 last year, SalesTrac reported. While it’s close to the northern Las Vegas Beltway and Interstate 15, the area may have been a little ahead of its time for new-home development.

In contrast to the comments stated above, these days many real estate investors and homebuyers are betting that the Las Vegas market is poised to stage a comeback.

Home sales, especially of bank repossessions, have picked up significantly. Nearly 36,000 homes have been sold so far this year as of September 30, an 11 percent increase as compared to the same time period in 2010, according to Lawrence Yun, chief economist for the National Association of Realtors.

As a result, inventory of both new and existing homes has shrunk significantly over the past year. According to David Tina, general manager of Realty One Group, there are currently about 10,000 single-family homes on the market. With the pace of current sales near 5,000 per month, that is just a 2-month supply. These inventory figures are consistent with inventories seen in extremely healthy markets.

“I think the turnaround will be slow, but new home pricing is close to its bottom”, said Tina.

Things are looking up. The Las Vegas metro area added 200,000 new residents since the bust first hit the valley in mid 2006, an 11 percent jump or over twice as much the national growth rate.

Reasons for the influx to the Las Vegas Valley:

1. Job Growth – The local economy has recorded job gains in several industries. These include the hotel and restaurant industry, health and education, business services, and retail, according to Metrostudy, a financial analytics firm.
2. Foreign Investors – There has been an influx of foreign buyers in the valleys real estate market, especially from China and Canada. For investors willing to stick it out there is a lot of potential in Las Vegas.
3. Cost of Living – Las Vegas with its warm, dry climate, low cost of living and all the attractions make it an attractive destination, especially for vacation homebuyers and retirees. After all Vegas is the place to go to have fun.

Unfortunately nearly two thirds of all homeowners owe more on their mortgages than the homes are worth. But for all of those who lost or will lose their homes, there are others who see this market as an opportunity. Foreclosed homes make up more than 50 percent of the sales in the Las Vegas real estate market.

Best said if you would like up to date information on the Las Vegas Market, please contact Robin I. Smith and The Smith Team for all of your real estate advice!