Las Vegas Fast Facts

Posted at 11:10 PM, Feb. 28, 2007

Most people don't know that there was a recession in the middle of the Great Depression (1936-1937).  The years 1936 and 1937 experienced both record cold winters and record hot summers as well.   Those two curious facts give you some perspective on Las Vegas' January housing statistics.

January's weather was among the coldest in recent memory. That certainly had a negative impact on sales.  What hurts sales tends to depress prices as well.  But, there's more than weather at work here.

Let's look at the details:

----->Sales were off significantly in both the new home and the existing home markets.

New home sales were off 26.2% at 2,135.  Existing home closings dropped 14.3% from last January to 2,770, and were essentially the same as the prior month of December, perhaps signaling the bottoming out of the downturn we’ve witnessed since last August.

------> Not surprisingly, home prices remained relatively stable.

We predicted last year that home prices would remain relatively stable over the first six months of the year, although we felt the first quarter might see some decline. 

The median price of ALL new homes rose 10.7% over last January to $336,309.  The median price of just single family residential and traditional condominiums slipped 3.3% from last January to $328,667.  Both were below December numbers.

The price of a resale home dipped 0.7% from last January to $278,000, also below December's figure.

----->Inventory rose ... and fell. 

RISE: As predicted last year, resale inventory rose to 21.458 -- just about 2,000 units above the December figure.  Look for the MLS inventory to continue to rise through the first quarter before leveling off around 24,000 in March, and then declining to end up the year around 16,000.  The disturbing aspect of the still swelling MLS inventory is that 44% of those listings are vacant, and a significant number of them may fall into foreclosure.  This will serve as a dampening force on existing home prices, which may decrease in the first half of the year before climbing back up in the second half.

FALL: But, perhaps much more importantly, new home permits fell in January by 53.9% from last year to 1,002.  That's barely above December's level.  In fact, from September through January, only 4,422 new homes have been permitted. More than 13,000 new homes were sold during the same period.

If we continue to see new home permits decline, will that impact the size of our existing home inventory?  The answer to that question is how much demand will there be in the second quarter.  The measure of 2007 will be taken early ... and it will be new home statistics.

A note of caution here.  Las Vegas has 542 active new home subdivisions, the highest number per capita in the nation.  The average sale per subdivision was 3.94 in January, about 1/3 under the level of last January. 

So, watch three numbers very carefully in the first quarter:

(1)  The number of new home sales
(2)  The number of new home permits
(3)  The average sale per subdivision.

Those numbers will tell you if the recovery begins in the second half of this year or the beginning of next year.

Remember, real estate runs in cycles.  We are at or near the bottom of a cycle

Larry Murphy, Salestraq