Home sales tumble in 2007

The housing market in Las Vegas ended the year with a whimper, tallying just 1,340 new-home sales in December for a total of 19,670 in 2007, down 45.6 percent from the previous year, Home Builders Research reported.

Existing-home sales were equally weak, with 1,339 escrow closings in December, bringing the year's total to 24,838, a 40.7 percent decline from 2006.

Las Vegas' housing recession is struggling to find the bottom in a "totally unique cycle," Home Builders Research President Dennis Smith said.

The only hope is that the market reaches bottom by midyear and sales start to climb entering 2009, he said.

"The change might be slow, but that's OK for the long-term vitality of the industry," Smith said.

Larry Murphy of Las Vegas-based SalesTraq counted 1,278 new home sales in December for a 2007 total of 19,299, down 45.4 percent. Sales of 1,452 existing homes brought the annual sum to 23,956, a 40 percent drop from 2006.

Murphy noted that the 43,255 combined sales in 2007 was the lowest total since 39,187 in 1997.

"We're still sliding," he said. "This (December data) reflects decisions that buyers and sellers made 60 days ago. They signed papers in October. Based on that, we haven't seen the bottom.

"In all honesty, I don't see the first-quarter statistics being any different than the fourth quarter," he added.

Any upswing in buyer behavior won't come until March, traditionally a high-volume sales month, which would show up in second-quarter data, Murphy said.

The median new home priced dropped to $273,359 in December, down 20.1 percent from the same month the previous year, SalesTraq reported. Existing home median prices fell 11.2 percent to $253,000 in December.

The median is about where it was in 2004, wiping out that year's 40 percent appreciation and any other gains over the past four years, Murphy said.

"I think we could see the median go to $240,000 before it stops and goes back up again," he said.

Yale University economist Robert Shiller said there's a good chance the housing recession could linger for years.

"This is a classic bubble scenario," Shiller said on Nationalbubble.com. "A few years ago, house prices got very high, pushed up because of investor expectations. Americans have fueled the myth that prices would never fall, that values could only go up. People believed the story. Now there is a very real chance of a big recession."

Until two years ago, nearly every state had experienced a prolonged housing boom. Nevada, California, Arizona and Florida saw prices double, aided by cheap credit and lax lending practices to borrowers who ordinarily would not have been able to secure a mortgage.

The S&P/Case Shiller index showed that house prices had declined in October at their fastest rate in more than six years, with homes in Miami losing 12 percent of their value. Futures contracts are pointing to losses of around 35 percent in areas such as Florida, California and Las Vegas, Shiller said.

American real estate values have already lost about $1 trillion, and it could be three times as much in the next few years, Shiller said.

"This is a much bigger issue than subprime," he said. "We are talking trillions of dollars' worth of losses."

Smith of Home Builders Research said he thinks new home prices will decline further this year as builders continue to offer discounts and incentives. Rhodes Homes and Avante Homes were advertising $100,000 discounts on some of their remaining homes, he said.

In particular, there will be extra problems with several attached housing projects, Smith said.

"In most down housing cycles, it is common for an oversupply of condominiums to arise. It normally takes some time and price reductions to rectify the matter," he said.

California-based DataQuick showed the housing slump hammering Orange County, Calif.; Las Vegas; and Phoenix. Orange County's median home price dropped 9.7 percent to $582,750; Las Vegas is down 13.5 percent to $269,990; and Phoenix fell 8 percent to $235,000.

The median price has fallen for 10 consecutive months in Phoenix and seven consecutive months in Las Vegas, according to DataQuick.

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