Another rough year forecast for Las Vegas housing

The Las Vegas real estate market is headed for another tough year, analyst Larry Murphy said Friday.

The president of research firm SalesTraq projected more foreclosures and as much as a 10 percent decrease in home values at his annual Crystal Ball seminar, which drew about 150 real estate professionals Friday at Alexis Park.

"I don't think we're there yet," Murphy answered when asked about a bottom in prices. "I think they will continue to sag or decline. Prices are still falling, but they're not free-falling. They may go down another 10 percent, but not as far as the past."

SalesTraq reported a median existing-home price of $104,900 in December, down 8.4 percent from the same month in the previous year. Prices are down more than 60 percent from their peak of $275,000 in 2007.

Murphy said he'd like to see banks approve more short sales, which now account for about 25 percent of Las Vegas home sales. Foreclosures still outnumber short sales 2-to-1 because lenders have more financial incentive to foreclose, he said.

With two-thirds of Las Vegas homeowners owing more than their homes are worth, the housing market remains depressed, Murphy said.

"Pretty certainly, I can tell you we're going to have another 100,000 foreclosures (over the next five years) because about one-fourth of our housing stock is still in default," he said.

The analyst had nothing positive to report on the new-home industry. New- home sales fell 30 percent to 3,793 in 2011, and new-home permits were down 15 percent to 3,740. Both are more than 80 percent below the peak.

The new-home market won't recover until the existing-home market does, and that's years away, Murphy said.

Why does he expect another 100,000 foreclosures in the next five years? Why are home prices still dropping?

"Because the same people in the same positions making the same policies and earning the same obscene salaries and profits continue to rape our economy," he said, rattling off a list of widely known investment bankers who walked away from the meltdown with big bonuses.

Nevada Bankers Association President and Chief Executive Officer Bill Uffelman wasn't at the seminar. Later, when briefed on Murphy's comments, he said everybody wants to blame the banks for the housing crisis, but lenders are no guiltier than anyone who signed off on documents, including the buyers.

"People got caught up in the frenzy that was Las Vegas," Uffelman said.

Bob Hamrick of Coldwell Banker Premier Realty heard Murphy's presentation and said he expects an increase in short sales due to Nevada's new law requiring lenders to provide an affidavit of authority to foreclose. That's going to push banks to approve more short sales where parties aren't forcing the issue of deed ownership, he said.

"Short sales will continue to be a big part of the market," Hamrick said.

About half of real estate-owned homes in Las Vegas are being purchased by investors, renovated and returned to the rental pool, Robert Ray of Nevada Title Co. said. And, he added, institutional investors and hedge funds are looking to buy single-family rental homes in bulk.

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