New housing indicator in town – and it’s different
There’s a new housing indicator in town.
Before your eyes glaze over with housing-analysis fatigue, listen up: This report is different.
The Nevada Department of Business & Industry on Thursday unveiled its first Nevada Housing Stability Index, a report designed to look in-depth at multiple measures of residential vitality. And unlike looking merely at prices and sales — two measures that signal the market is going up, up, up — the stability index gives the state’s housing performance much lower marks.
For overall housing health in the first quarter, Nevada earned a D+. That was up from what would have been a D had the index existed a year earlier.
“While conditions have been improving in recent quarters, concerns continue to loom given the clear dichotomy in a market leading the nation in both price appreciation and mortgage holder delinquency,” the report said.
A C would represent an average market, so Nevada was still subpar overall.
Thursday’s index looked like the report card of a high schooler with a bad case of senioritis. Nine of 12 indicators, including percentage of homes under water, share of investors, foreclosure volume, delinquency rate, housing affordability and availability, registered in the D or F range.
Nevada got high grades for its balance between supply and demand for new construction, and middling marks for distressed home sales.
The Department of Business & Industry, in partnership with UNLV’s Lied Institute for Real Estate Studies and Lee Business School, released the report at a real estate forum at The Orleans.
Each half of the state had its strengths in the first quarter, said Bruce Breslow, director of the Department of Business & Industry. In Northern Nevada, for example, just 30 percent of home sales were cash purchases, compared with 60 percent in the south. Cash purchases reflect investor activity, and too many investors can squeeze out owner-occupiers and create long-term instability in the market.
But Southern Nevada won for its high new-to-resale price ratio, which indicated a supply shortage that could give the green light to builders for new projects.
“The recovery in housing is happening faster than normal because of a lack of supply, but things are going to balance out,” Breslow said.
Local research firm Applied Analysis crunched the index data.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.