****LAS VEGAS REAL ESTATE****

Posted at 5:37 PM, Jan. 23, 2007

No matter how you look at it, 2006 was a year in which you just could not compare apples to apples.  It wasn't a question of whether the glass was half full or half empty.  Ultimately, analysts were left trying to guess where the glass actually was.

In our opinion, the Las Vegas real estate market began a major transition in 2006, the beginning of a new era.  That means that some traditional numbers fail to identify what is really happening inside the market.

In fact, our analysis of final housing numbers for 2006 suggest the year was much better than some analysts have indicated.

----->And, like every other analyst in the market, we are reviewing  definitions and even the methods by which median prices are computed.

In a moment, we'll give you an example.  But, first, let's look at some housing data that nearly everyone expected.

The number of new home sales ended the year 2006 at 35,484, an 8.5% decline from 2005.  December's drop was more powerful: 2,970 or 29.4% from last year's all-time record high.

The number of existing homes sold dropped to 41,771, a 24.1% decrease from last year.  December saw a drop of 31% to 2,907.

On January 1, Existing home inventory was at 19,482 -- the lowest level since June of last year.  (We don't expect that downward trend to hold in February). The number of active new subdivisions climbed to 530 in December, the second highest in history and a 13.5% gain over last December.  The number of new home permits finished at  905 for December, 64.7% less than last December and down 30.3% for the year.

----->That's all traditional.  But, here's one area of analystical change that is not: Housing prices.

If you look at housing prices traditionally, they continue to defy the laws of gravity and economics.  December 2006 median new and resale home prices were up.  Median prices of a new home ended the year at $336,641 up 7.9% from last December and 14.8% for the year.  The median price of an existing home in December was $284,000, a scant .2% up from last December, but 3.6% up for the year.

But, let's take a look at new home prices more closely.  The figures we cited include apartment-conversions, traditional single family residential and attached and both Mid-Rise and High-Rise.  Last year, we came to believe that the lower prices of conversion product offset the higher prices of Hi-Rise and Mid-Rise.

But, this year, conversion sales were considerably less than last year -- while Hi-Rise and Mid-Rise continue to grow in importance.  If we look at ONLY at Single Family Residential and Traditional attached product, the last two months of the year would have been negative, but the overall year was still up 6.6%.

Larry Murphy, Sales Traq