Monday, March 13, 2006

HOUSING MARKET: Las Vegas home prices slip again

HOUSING MARKET: Las Vegas home prices slip again
Median down second straight month after boom of 2004, '05 Click image for enlargement. By HUBBLE SMITH REVIEW-JOURNAL
Home prices in Las Vegas continued their downward slide in February, dropping to a median of $309,000 based on 1,787 sales, according to figures from the Greater Las Vegas Association of Realtors.Prices peaked at $312,500 in December and retreated to $310,000 in January, prompting local housing analysts to project single-digit appreciation rates this year compared with 40 percent in 2004 and 20 percent in 2005. "We're definitely softening, definitely slowing down," said Linda Rheinberger, president of the Realtors' association. "We're catching our breath and getting ready for the next boom."Comparing December, January and February prices is like "splitting hairs" because there hasn't been a lot of movement, she said. February's median is up 8 percent from the same month a year ago.The number of new listings hitting the market in February declined 6.9 percent to 5,214, though the total number of listings rose 7.2 percent to 17,675.About three-fourths of the homes are selling within 90 days and nearly 60 percent are selling within 60 days, which is right on target with percentages from last year, Rheinberger said.Condominium and townhouse sales are stronger than last year. The median price increased 9.1 percent to $196,450, and 85 percent of the units sold within 90 days.Paul Kasriel, chief economist for Northern Trust Bank in Chicago, said Las Vegas was one of the hottest housing markets in the nation, leading speculators to buy two or three homes here in hopes of "flipping" them, or making a quick sale for a profit."With demand starting to slow, you're more inclined to get out of the house at a lower price. You may have negative cash flow on the place and if it starts to go down, you don't want to sell for less than what you bought for," Kasriel said.Nationally, the supply of homes has grown rapidly while demand has slowed. Certain markets that experienced sharp advances in pricing will see some softness, he said.A downturn in the housing market could damage the national economy in a number of ways, Kasriel said, such as slowing job growth and consumer spending.The run-up in housing has boosted consumer spending in two ways -- through a psychological "wealth effect" and by allowing owners to turn their homes into giant cash machines, he said. They withdrew equity at a record annual rate of more than $600 billion last year, compared with less than $200 billion a year in the late 1990s."This housing boom is bigger than anything in the past. There's been more expansion, more leverage and more speculation than ever before," Kasriel said. "As it slows down, that means the ATMs aren't going to be filling up with cash because there's less equity to extract and that's going to hurt the sales of plasma TV screens down the line."Statistics from the Greater Las Vegas Association of Realtors are based on records from the Multiple Listing Service and do not necessarily account for newly constructed homes sold by local builders or transactions not involving a Realtor."One thing that I have noticed that is slowing the prices down on housing in the valley is appraisals," Las Vegas Realtor Curt Liquin said. "Appraisers were liberal in the past and now they say the lenders are clamping down, which is making it harder for them to come in at the purchase price."Liquin said he talked to several appraisers in the past few weeks who told him they're being pushed by underwriters to tighten their criteria. They're not allowed to take into consideration builder upgrades that can add $10,000 to $50,000 to the original sales price of a home."One (appraiser) told me last week that it didn't matter what he or I thought the value was, it was the underwriters," he said. "There were a few that told me they are only being allowed to go back 60 days for comps (comparable sales prices) and cannot go farther than a mile away even if there are not good comps in the area or time frame. You can imagine how this may affect things when some areas are so new and there might not be comps in a mile radius of the property."Rheinberger said home prices may pick up in the fourth quarter and early 2007 as new homes close escrow in master-planned communities such as Mountain's Edge in the southwest Las Vegas Valley and Aliante in North Las Vegas.

Mar. 08, 2006


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