Housing analyst predicts increase in sales, median price in the coming year
New-home sales in Las Vegas are projected to increase to about 5,400 in 2010 and the median price should be close to $220,000 by the end of the year, a slight bump from December’s median of $216,000, housing analyst Dennis Smith said Thursday.
The president of Las Vegas-based Home Builders Research reported his year-end data and 2010 projections in his first housing webinar, which replaces his annual housing outlook previously held at various locations around the city.
New-home prices fell 13.2 percent in 2009 and are down from a high of $330,900 in 2006.
"I think we’re going to see a slight increase," Smith said. "I’m not saying we’ll see a huge jump, but by the end of the year, I think we’ll be looking at closer to $220,000 than $210,000. The only thing that could change this is a flood of (foreclosure) inventory, the ‘silent inventory’ everybody talks about."
Las Vegas has the fifth-highest foreclosure rate in the nation with one out of 119 households in some stage of foreclosure filing, according to Irvine, Calif.-based RealtyTrac.com.
Bank of America plans to release about 500 foreclosure homes a month in Nevada, and that’s OK, Smith said. The market can absorb those.
"We’ve been hearing about this for over a year and it hasn’t happened yet. I don’t hear that banks are dumping a bunch of foreclosures on the market. Obviously, that could change. My best guess is the number of foreclosures will remain manageable as far as affecting prices," said Smith, who’s been tracking the Las Vegas housing market for 22 years.
He’s projecting about 45,000 resales this year, nearly identical to the 44,885 recorded resales he counted in 2009. The median price for resales will edge up 3.3 percent to $127,000 in 2010 and climb another 5.6 percent in 2011 to $134,000, based on a stable inventory of 8,500 homes on the market.
Las Vegas Realtor Steve Hawks said he respectfully disagrees with the analyst’s forecast.
"No way prices are going up," Hawks said. "Interest rates are going up, which will cause the average person to qualify for less home, which means sellers have to lower prices. And the new FHA (Federal Housing Authority) guidelines are knocking out about half of the FHA buyers that were looking in ’09, and then job losses from government agencies start to hit this year with the budget cuts. But the good news is sales volume should be just as high as ’09."
One of the key housing indicators is building permits, which decreased 37 percent to 3,850 in 2009. However, they steadily rose from a low of 179 in January 2009 to 355 in December. Permits were running around 20,000 a year in the late 1990s and peaked at 32,879 in 2004.
Smith said he’s fairly confident permits will increase by about 500 this year and climb above 5,000 in 2011.
"We’ve got other builders re-entering the market and the local builders that went away … I called it hibernating … they’re ready to get back in the picture," he said.
When will permits get back to 20,000?
"I don’t know when we’ll get to 10,000," Smith said. "I don’t see a lot of speculative building out there that would create more standing inventory. If the smaller and private builders are having a hard time finding financing, it’ll be a long time before they’re overbuilding again in Las Vegas."
John Restrepo of Restrepo Consulting Group said Las Vegas has unfortunately been one of the hardest-hit housing markets and is lagging the national recovery.
He’s concerned about a Credit Suisse report showing quite a boost in the number of Alt-A and option ARMs, or adjustable-rate mortgages, due to reset this year and into 2011.
"We haven’t seen the full ramification of that," Restrepo said. "Try to refinance? Maybe they can’t because of declining values. That has an effect on consumer confidence and that’s important to us."
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.