Monday, April 23, 2007

LV housing slump worsens

Don't shoot the messenger,,,,steve

LV housing slump worsens

Prices plummet as existing-home inventory hurts new-home sales

By Brian Wargo / Staff Writer
Toll Brothers homes are shown under construction at the Retreat at McDonald Highlands in Henderson. The luxury homes start at just under $1 million and run to almost $2 million.
Photo by Steve Marcus
The price of new homes has tumbled nearly 10 percent this year, the inventory of existing homes has reached an all-time high and bank repossessions accounted for a greater percentage of existing home sales in Las Vegas, according to the March housing statistics.
The ongoing weakness in the housing industry was reflected in numbers released Tuesday by Larry Murphy of SalesTraq. The housing research firm reported the median price of new homes sold in March was $308,471, down nearly 10 percent from $341,990 in December.
The new-home market rebounded slightly in March with 1,771 sales, up 330 from February, but sales were down nearly 51 percent from March 2006.
Dennis Smith's HomeBuilders Research reported Tuesday that there were 5,204 new-home sales in the first quarter - the fewest since 2001.
"The first quarter of 2007 will go into the archives as one that most in the homebuilding industry would like to forget," Smith said.
Don Boettcher, an area vice president with Pulte Homes, said the price reductions are a reflection of the softening housing market. In a competitive market, it's part of a "continuing correction of supply and demand."
Since January, Smith said the price of new homes has dropped nearly $29,000 or 9 percent. He attributes part of the decrease to sales of condos on Las Vegas Boulevard South, with 37 at one project selling for less than $300,000.
On the existing home market, it recorded its highest sales this year at 3,175. But that was offset because the drop of nearly 28 percent from March 2006 was even greater than the percentage declines in January and February. In addition, 402 or 13 percent of those 3,175 sales were bank repossessions - the first time that figure has reached double-digits in Las Vegas in history, SalesTraq reported.
Bank repossessions accounted for 9 percent of the existing home closings in January and February. The growing number of repossessions isn't surprising given Nevada is No. 1 in the country in homes entering foreclosure.
The continued softening of the housing market comes as the homebuilding industry has expressed concern in recent weeks that any recovery would be pushed back by the tightening of loans. That was prompted by a large number of defaults in the subprime market.
The drop in new-home prices isn't surprising given the large number of existing homes on the market, said Monica Caruso, spokeswoman of the Nevada Home Builders Association. SalesTraq reported the 22,970 existing homes on the market in March was the highest in history and represents a 13-month supply.
"It is having a tremendous impact (on new home sales and prices) because there are a significant number of existing homes that are essentially brand new homes," Caruso said. "They have never been lived in. Homebuilders are competing against that housing. This has to do with supply. If new homes are sitting on the market and not selling, prices have to come down."
That competition is borne out because 44 percent of homes listed for sale on the Multiple Listing Service remain vacant, SalesTraq reported.
Not only does the large inventory compete against new home sales, but it also poses problems for homeowners who want to sell their house and purchase a new home, Caruso said. That's why so many builders last year had several months of inventory and offered incentives and reduced prices, she said.
Las Vegas housing analyst Steve Bottfeld, executive vice president of Marketing Solutions, said the resale prices will remain stagnant until the inventory is thinned. That could take into early 2009, he said.
The median price of existing homes stood at $280,000 in March, which is down 1.8 percent from March 2006.
Despite the lackluster sales and drop in prices, there is some hope within the housing industry for a rebound by the end of 2007. There were 1,550 permits issued in March, the highest since August. That mirrored the rest of the country where housing starts ticked up unexpectedly in March. Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4011 or by e-mail at

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