Analysts see prices at bottom

Nobody wants to take heat for declaring an end to the Las Vegas housing market downturn, but local analysts don't see the market going much lower, especially in terms of prices.

The median new-home price dropped to $205,490 in June, down from $212,900 the previous month and a 23.9 percent decline from a year ago, Las Vegas-based Home Builders Research reported Tuesday.

For existing homes, the median price was $125,000, a $5,000 decrease from May and a $93,000 decrease from a year ago.

"I don't think they're going to go down more," Home Builders Research President Dennis Smith said. "I think both of them are at the bottom. I think they're going to stay down low because of pressure from appraisals and REOs (bank-owned homes)."

Smith has been hearing about multiple offers on REO homes for several months in Las Vegas, a trend that's driving prices higher. He was told the foreclosure inventory has fallen below 1,000 homes, despite reports of Las Vegas leading the nation in foreclosure rates.

"Inventory is tight on REOs. Banks are still trickling out REOs and not dumping them," he said.

Existing-home sales exceeded the creation of foreclosures for the fourth consecutive month, according to local research firm SalesTraq.

There were 4,663 existing-home closings in June, a 67.4 percent increase from the same month a year ago. Of those, 2,855 were bank-owned dispositions, compared with 2,486 acquisitions during the month, SalesTraq reported. Total REO inventory dropped to 13,200 in June from 13,569 in May.

"In our mind, that is the beginning of a trend," real estate consultant Steve Bottfeld of Marketing Solutions said. "The impact created by the end of the foreclosure moratorium may interrupt this trend later this summer, but the trend now looks solid."

Of the existing-home closings in June, 62 percent were bank-owned homes with a median closing price of $113,900, SalesTraq reported. The remaining existing-home closings that were not bank-owned had a median price of $145,000.

After a long period of decline, both existing- and new-home prices are beginning to stabilize in Las Vegas, Bottfeld said.

"The question now is not when will Las Vegas hit bottom. The question now is how long will Las Vegas stay on the bottom," Bottfeld said. He was quoted in a recent U.S. News and World Report magazine article that put Las Vegas at the top of America's 10 Best Undervalued Places to Live.

Home Builders Research reported 476 new-home sales in Las Vegas in June, up from 378 in May. Through the first half of the year, new-home sales have decreased 60 percent to 2,329.

Builders pulled 368 new-home permits in June, compared with 884 a year ago, and are on pace to build about 3,000 homes in Las Vegas this year. The monthly permit count has gradually increased since January, but the total number is down 54 percent from a year ago.

While the U.S. Census Bureau reported that new-home starts surged in June, the rolling 12-month total should drop below 470,000 this year, said John Burns of John Burns Real Estate Consulting. He forecasts housing starts to remain extremely low through 2010, followed by a steady recovery in 2011.

Most of Burns' large home-builder clients confirm that they will have fewer communities open next year and that construction financing is very difficult to obtain. Although distressed land-buying activity is picking up, so far it's been insignificant, he said.

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