Thursday, December 08, 2005

REAL ESTATE: Las Vegas housing prices slip

Median price of resales falls for first time in six months Nov. 25, 2005 Copyright © Las Vegas Review-Journal REAL ESTATE: Las Vegas housing prices slip Median price of resales falls for first time in six months By HUBBLE SMITH REVIEW-JOURNAL The median price of existing homes sold in October declined for the first time in six months, an indication that some of the air is being released from the resale pricing bubble, a local housing expert said Wednesday. The median resale price in October was $285,000, down $5,000 from the previous month, said Dennis Smith, president of Home Builders Research. It's still an 11.1 percent increase from $252,000 a year ago. "We don't give a lot of importance to a one-month change, but it is something to monitor during the next quarter," he said. "It could be that the supply of resales is high enough that the resale prices are entering an adjustment mode. But not to worry. It is not a long-term trend that will alter the overall Las Vegas market demand." Smith said the resale price in Las Vegas was static until January 2004, when it began a steady climb from about $175,000 to $251,000 at the beginning of this year. "This might be a good argument for those who believe our housing market was undervalued and was just catching up with West Coast prices," he said. "Maybe." David Ehlers, chairman of Las Vegas Investment Advisors, suggests that Las Vegas residential real estate in general and high-rises in particular may be "on the verge of a major upheaval." Real estate sales for both condos and single-family homes have slowed to a virtual walk, he said. Construction costs have increased 30 percent in the past year, and even that percentage may be substantially underestimated. Ehlers said he's heard stories about construction material suppliers backing out of their contracts with general contractors and subcontractors, citing "acts of god" that have resulted in runaway material costs exceeding prior quotes by 40 percent and 50 percent. "There may be little question that residential housing may be able to sustain a years-long flattening of prices," Ehlers said. "The high-rise condo market, however, may be another matter." The problem with high-rise projects, he said, is many developers are unable to deliver at a fixed price because of escalating construction costs. Projects such as Vegas Grand, a development by Florida-based Del American, have been put on hold as the units are repriced. "This unfolding saga will likely result in major litigation," Ehlers said. New home sales and prices continue to increase. Home Builders Research reported 3,310 new sales in October, bringing the year-to-date total to 30,684, up nearly 30 percent from a year ago. The median new home price was $295,057, an increase of $22,127, or 8.1 percent, from last year. Excluding apartment conversions, the median price shot to $335,091, a 22.8 percent increase. Larry Murphy, president of SalesTraq, reported similar numbers. His median new home price was $297,289, up 6.4 percent from October 2004. He has existing home prices at $285,000, relatively flat from $284,500 in September, but up 14 percent from a year ago. Murphy said there is no housing bubble in Las Vegas, nor will there be one in the near future. "Frankly, the vaunted housing bubble is just like Y2K-- a scary proposition put forth by people who do not understand the real estate fundamentals of this market," he said. Homes are spending an average of 39 days on the market, which defines Las Vegas as a red-hot housing market, Murphy said. Homes sell within 60 days in a hot market and 90 days in an average market, he said. New home permits remain down 9.3 percent from a year ago at 26,497, even as resale inventory on the Multiple Listing Service has dropped 6.6 percent to 12,210. The number of resales topped 50,000, with 4,566 closings in October. However, the total is down 5,456 from a year ago, according to Home Builders Research. "That's the story. Watch the resale market," Smith said. "If homes are staying on the market longer, it's because of one thing -- greed. That's part of the market here." The new home market is on pace for a record year and last week's Bureau of Land Management public auction sets the stage for 12,000 to 14,000 more homes coming to North Las Vegas. Standard Pacific, a home-builder partner with Olympia Group, which paid $639 million for 2,675 acres, has announced that construction on the single-family homes, townhouses and apartments will begin in late 2007, with completion expected eight years later. Ken Schmidt Vision Home Mortgage (702) 813-3559 cell (702) 736-3116 offc (702) 736-2671 fax Visit www.loansforyoulasvegas.com for all your loan needs! 6372 McLeod Dr Ste 1 Las Vegas, NV 89120

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