Las Vegas new home sales up in 2010, resales down

It was another tough year for the Las Vegas housing market, and the road ahead looks treacherous with forecasts of some 2 million foreclosures nationwide, a local housing analyst said Monday.

Las Vegas finished 2010 with 5,341 new-home sales, up 1.3 percent from the previous year, and 42,673 existing-home sales, a 4.9 percent decrease, Home Builders Research reported.

The median new-home price crept up about 1 percent to $218,080, while the resale median fell 3.3 percent to $119,000.

Not bad, considering early predictions that home values would plummet 20 percent to 30 percent in a city that leads the nation in foreclosure filings.

"Prices have not fallen off the cliff any further," said Dennis Smith, president of Home Builders Research. "They've been pretty flat. That's got to be encouraging. The biggest problem going forward is the unknown with houses that the banks are holding."

The "foreclosure mess" continues to put downward pressure on pricing and creates difficulty with appraisals for both homebuilders and owners, Smith said.

Nevada had 13,472 new foreclosure filings in December and 1,551 foreclosure sales at an average price of $164,800, Irvine, Calif.-based RealtyTrac foreclosure listing firm reported. For the year, there were 163,557 foreclosure filings and 34,683 foreclosure sales.

Home Builders Research reported 361 new-home sales in December, compared with 477 in the same month a year ago. The 3,835 recorded resales were down from 4,346 in December 2009.

Builders, subcontractors, banks, mortgage brokers, title companies and real estate agents all had to make adjustments to survive the worst housing depression in recent history, Smith said.

"All builders have changed something in their business plan to survive in the present level of consumer demand for new homes," he said.

Homebuilders pulled 307 new-home permits in December, bringing the 2010 total to 4,550, an 18 percent increase from 2009. Smith said he thinks the permit tally will drop to about 4,000 in 2011, given weak economic fundamentals in the market. He doesn't see a lot of new projects being planned, particularly large communities that would spur permit activity.

Resale prices are likely to dip a little in the first half of this year, Smith said.

"People talk about the banks, and that's easy to understand, but what we need to talk about is Freddie (Mac) and Fannie (Mae) and FHA. Those are the ones controlling the biggest inventory of homes," the housing analyst said.

Nothing happened with the foreclosure crisis last year, Smith said. Banks released some of the homes and those homes were sold, he said.

"We know there's going to be more houses released. That's what we're told by every source out there," he said. "From the banks, we hear they're doing all they can. Are they? We have no way of knowing. We hear 2 million foreclosures. Are they saying we're going to see double the number of foreclosures in Las Vegas?"

A January report from Credit Suisse shows Las Vegas with weak buyer traffic outside of distressed listings. December's traffic index improved from November, but indicated traffic levels below agents' expectations.

Agents said buyers remain focused primarily on distressed properties, although one agent noted an interesting shift.

"Cash buyers feel that they have been overestimating their return on investments as they have bought foreclosure properties that are not returning their resale expectations," the agent said. "They are moving toward short sales a bit more."

Prices remain pressured by foreclosures and short sales, or lender-approved sales for less than the mortgage owed, the Credit Suisse report said. The bank's home price index increased to 33 in December from 25 in November, but remained below a neutral reading. Anything below 50 indicates sequentially lower home prices.

There appears to be little reprieve in the near term as inventory levels continued to rise in December, Credit Suisse noted.

MarketWatch placed Nevada No. 1 among five states where housing recovery will take the longest.

The state has the highest mortgage delinquency rate in the country at 8.3 percent, the highest unemployment rate at 14.4 percent, and it has suffered the biggest peak-to-trough tumble in home prices at 56.4 percent, MarketWatch reported. The other states with a long recovery time are Michigan, California, Florida and Rhode Island.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.